Centrica Expands to New York With Build-Out of Gas Trading Unit

Centrica Plc is opening a trading office in New York that will underpin its growth in natural gas.

Subsidiary Centrica Energy will establish its first US commodity-trading office aimed at building a physical gas business, Chief Executive Officer Chris O’Shea said in an interview. The sector is betting hundreds of billions of dollars that the fuel has a place in the world’s energy mix through at least 2050.

“Trading physical gas is good business, it gives us the option to do a lot more,” O’Shea, 51, said. “In order to do that, we will need boots on the ground.”

The British company previously had a US business — an energy retail supplier and trader that it sold in 2020 as part of a restructuring. 

The gas and power trading industry has since soared as volatility and extreme weather create dislocations to profit from. Projected increases in demand from data centers are furthering that potential.

For Centrica, which can both store and transport commodities, it means being able to access and arbitrage areas that aren’t covered by derivatives. Such a business can also act as a natural hedge to financial trading, reducing risks.

Underpinning the rationale is surging consumption of liquefied natural gas, a fuel touted by President Donald Trump as key to attaining US energy dominance. America is already the world’s largest LNG exporter and is pledging investment into more massive terminals.

“We have a lot of expertise in physical gas trading and we are looking to be in places that would be linked to our global LNG business,” O’Shea said.

New Office

Markets have become far more interconnected in recent years, and the projected growth of LNG during the next decade will only accelerate this process, according to the CEO.

Centrica Energy’s managing director, Cassim Mangerah, is leading the effort for the New York opening. The office will be staffed with people hired in the US and current employees transferred from elsewhere. The company is looking at different addresses and intends to start trading in the coming months.

“This is an expansion of our global business rather than just adding a US arm,” O’Shea said. “For us, markets have to have certain characteristics: they have to be liberalized, liquid, and trading needs to be physical.”

Centrica presently has trading units in places such as the UK, Denmark, Germany and Singapore. A turning point to open the New York office came last year when the firm executed its first four US short-term power trades to “test and learn.”

North America Growth

In February, Centrica signed a 15-year agreement to supply American LNG to Petroleo Brasileiro SA, and last year it struck a deal with US-based Coterra Energy Inc. to secure more gas. The company may consider further moves into other corners of the North American market, according to O’Shea.

“I am not afraid to scale,” he said. “The US is not the limit of my ambitions for this business.”

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.