Centrica buys 25 per cent stake in shale exploration licence

Centrica has bought a 25 per cent stake in a UK shale gas exploration licence.

The £40 million deal will see British Gas’ parent company take 25 per cent interest in the Bowland exploration licence from Cuadrilla and AJ Lucas.

Centrica will also pay exploration and appraisal costs of up to £60 million, and is willing to invest the same amount again if the project moves into a development phase.

At the Bowland site in Lancashire, there have been three exploration drills so far which have confirmed the shale formation thickness and the presence of natural gas.

Mark Hanafin, managing director of Centrica’s international upstream business, said: “With North Sea gas reserves declining and the UK becoming more dependent on imported gas supplies, it is important that we look for opportunities to develop domestic gas resources, to provide affordable sources of gas to our customers, and to deliver broader economic benefits to the UK.”

Francis Egan, Cuadrilla’s chief executive, said the deal “represents a significant step in our ongoing exploration programme for natural gas within the Lancashire Bowland Basin”.

Chancellor George Osborne tweeted about the deal, saying: “UK’s largest energy supplier is investing in Shale Gas. This is a key part of the future energy mix and could lead to lower bills.”