Centrica Plc reaped a record profit from trading power and liquefied natural gas, helping to drive the UK utility’s best-ever earnings in 2022.
(Bloomberg) — Centrica Plc reaped a record profit from trading power and liquefied natural gas, helping to drive the UK utility’s best-ever earnings in 2022.
Britain’s top power and gas supplier joined peers across Europe in benefiting from the energy crisis triggered by Russia’s invasion of Ukraine. Energy costs soared to historic highs last year, combining with extreme volatility to make some previously loss-making deals profitable.
Centrica’s trading unit, which includes renewable-power assets under management and dealings in LNG, posted £1.4 billion ($1.69 billion) in adjusted operating profit for 2022, up from £70 million a year earlier, it said Thursday. That almost matched the results from the company’s lucrative upstream assets. After a bumpy first half, the LNG business turned an annual profit.
This year will also be strong, although the company doesn’t expect “the same levels that we saw for 2022,” Centrica Chief Executive Officer Chris O’Shea told analysts. Energy prices, together with volatility, have eased significantly, though they remain historically high.
Read also: European Energy Giants Prepare for Lingering High Gas Prices
Centrica, which has been expanding its LNG business over the past few years, boosted physical trade to 284 cargoes last year. One of the contracts that added to gains — after challenges in the past — was a 20-year LNG supply agreement with Cheniere Energy Inc., covering 1.75 million tons a year to 2039. Last year, a significant spread between US and European gas prices helped it capture “additional value,” the company said.
“It’s profitable at the moment,” O’Shea told reporters, adding that it includes cargoes sold forward to 2024.
LNG exporters, including those in the US, are seizing the moment as they count on demand for more long-term deals as Europe races to secure replacements for Russian pipeline gas.
Last year, Centrica signed heads of agreement with Delfin Midstream Inc. to take 1 million tons a year from the US’s first floating export facility, off Louisiana. A final agreement is being worked on and operations should start in 2026, Centrica said.
The UK company also has a contract with Mozambique LNG, a project which has been suspended for two years because of local violence linked to Islamic State. It’s not clear when that will restart, but hopefully later this decade, O’Shea said.
The company continues to look at new opportunities, including in LNG and nuclear power, and plans to set out its longer-term investment and return plans in July.
(Updates with CEO comments in fourth paragraph)
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