Fuel storage facility may shut with out authorities assist, Centrica boss warns

The UK’s largest gasoline storage facility might be closed if the federal government doesn’t assist assist a redevelopment of the location, the boss of the corporate which owns it has instructed the BBC.

Centrica chief govt Chris O’Shea instructed BBC One’s Sunday with Laura Kuenssberg programme that its Tough storage facility can be “shut down” with out authorities assist over vitality pricing.

Centrica – which owns British Fuel – says the location is ready to lose £100m this yr, and it desires to speculate £2bn within the facility so it may well use it to retailer extra gasoline, together with hydrogen.

The federal government stated the way forward for Tough was a business determination for Centrica but it surely was open to discussing proposals.

The Tough facility is off the coast of East Yorkshire, and accounts for about half of the capability the UK has to retailer gasoline.

It was closed in 2017, however then partly reopened in October 2022 following the vitality disaster triggered by Russia’s invasion of Ukraine.

Earlier this month, Centrica stated it was in “constructive discussions” with the federal government for a assist mechanism that may permit funding within the Tough website to proceed.

The corporate is searching for a “cap and ground” pricing mechanism. Because of this if vitality costs fall beneath a sure degree its revenues can be topped up, however costs can be capped in the event that they rise too excessive.

“What we’re asking for is just for the federal government to assist create the situations which is able to unlock £2bn of funding,” Mr O’Shea instructed the BBC.

“It’s going to create hundreds of jobs within the building section, and it’ll safeguard the roles of very extremely expert colleagues which can be offshore.”

With out this funding he stated the location can be decommissioned “and we’ll lose this resilience”.

He stated the UK at present has 12 days of gasoline storage, of which Tough offers six.

“So if we do not have Tough anymore, then we go down to 6 days. Now, if we take Tough to full capability, we are going to go as much as about 25, or 30 days.”

A Division for Vitality Safety and Web Zero spokesperson stated whereas the way forward for Tough was a business determination for Centrica, “we stay open to discussing proposals on gasoline storage websites, so long as it offers worth for cash for taxpayers”.

Final week, Mr O’Shea stated the way in which that the vitality pricing mechanism labored meant that constructing of renewables wouldn’t “materially” scale back UK electrical energy costs from present ranges.

He instructed Laura Kuenssberg on a go to to the North Sea platform that decarbonisation was necessary and likewise a “big financial alternative”.

Nonetheless he added that “the worth we see at present for electrical energy is similar as the worth that we’re given to new renewable developments”.

“Subsequently, that new renewable growth won’t deliver down the worth.”

He added that he thought the federal government’s 2030 goal for clear vitality was “very difficult, however I believe it is proper that the vitality secretary has set a really stretching goal”.

“It isn’t unattainable, no, but it surely’s not simple.”

The Division for Vitality Safety and Web Zero stated: “As proven by the Nationwide Vitality System Operator’s unbiased report, our mission for clear energy by 2030 is achievable and can ship a safer vitality system, which may see a decrease price of electrical energy and decrease payments.”

Final yr, Mr O’Shea instructed the BBC that the £4.5m pay he acquired the earlier yr was “unattainable to justify”.

And earlier this month, almost 40% of Centrica’s shareholders voted in opposition to the corporate’s newest pay plans.

When requested about this by Laura Kuenssberg, Mr O’Shea stated: “I do not set my very own pay.

“I believe it is actually tough,” he stated. “I’m unbelievably lucky. I’ve a job the place the market price is is greater than ever thought I’d have completed.”