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Shrinking Dynegy sells UK gas storage

STRUGGLING Dynegy sold its remaining UK storage assets to Centrica last month, in an attempt to rescue itself from liquidation.

Centrica bought the Rough gas-storage facility, an offshore, partly depleted gasfield in the North Sea, and the Easington gas terminal, on the northeast coast of the country for $0.5bn.

Rough is used by half of the country's natural gas shippers and has throughput capacity of 1.5bn cubic feet a day (cf/d) and a storage capacity of 100bn cf. The Easington terminal processes Rough and third-party natural gas into the country's gas transportation network.

The sale is "another significant accomplishment in our capital plan, which continues to improve our liquidity and enable us to focus on our core businesses", says Bruce Williamson, chief executive of Dynegy. "When combined with the steps we are taking to restructure the organisation and address financial obligations, we are continuing to build momentum for the new Dynegy." 

The move seems good business for the troubled company. With September's sale of the Hornsea gas storage facility to Scottish and Southern Energy for $200m, the company recoups $0.7bn in its departure from the UK gas business. It paid $0.59bn last year to buy all of the assets it has now sold.

The UK sales are part of Dynegy's worldwide plans to liquidate its failed energy trading and marketing business and concentrate on power plants, natural gas liquids and its utility, Illinois Power.

Dynegy says it will sell its other energy businesses in the rest of Europe and North America over the next three to six months. It recently sold its Northern Natural Gas Pipeline, in the US, for $0.93bn and also hopes to divest its telecommunications unit.

Meanwhile, Dynegy said last month that it had been notified by the New York Stock Exchange that its common stock, which has been trading at under $1, might be delisted. Dynegy will be given six months to prevent the action being taken.

Last month, Illinois Power said that unless its parent company formed a viable plan to cope with debts maturing next year, it could be forced to file for bankruptcy.

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