British Energy turns to gas generation

British Energy, the nuclear power operator, yesterday revealed its first move into gas-generation since privatisation last year in a joint initiative with the French oil group, Elf Aquitaine.

Confirming British Energy's previously stated strategy of seeking other forms of electricity generation, the company said it would be investing pounds 20m in a 12.5 per cent stake in Humber Power, a large combined cycle gas-fired station south of the Humber estuary. Elf is taking a similar stake, adding to the existing four member venture which includes Midlands Electricity and Swedish industrial conglomerate ABB.

Humber Power is building a 1,260 megawatt power station in a project likely to cost more than pounds 800m, with the first 750 megawatt phase due to open shortly. British Energy said the second phase was under construction and would be commissioned in 1999.

The plant is one of several large gas stations which have been built since the so-called "dash for gas" began in the years following electricity privatisation. The development, a blow to the coal industry, was fuelled by the near-halving of gas prices during 1995.

British Energy has already examined building its own gas generating plant next to one of its reactors, but abandoned the proposal last summer. Though the group has seen big productivity and efficiency gains at its existing plants under Robert Hawley, chief executive, it wants to use the almost guaranteed income stream from nuclear generation to diversify into other energy sources.

Separately it emerged yesterday that Mobil, the US-owned oil group, has closed four regional offices in its gas marketing business which sells fuel mainly to large business customers. The offices, in Edinburgh, Birmingham, London and Sevenoaks, were run by outside contractors. The company said no Mobil staff were affected and the workers hit had been offered work elsewhere. A spokesman added the four centres accounted for 5 per cent of sales and had become uneconomic.