Gas break-up raises fears for the future

Article Abstract:

British Gas plans to divide itself into two companies, British Gas Energy and TransCo International. The new companies will be set up in 1997, and British Gas Energy will be faced with the task of renegotiating gas supply contracts. These contracts place a heavy burden on the company, and analysts argue that the liabilities of British Gas Energy are the reason for hiving off TransCo as a separate entity, to protect it from the obligations. The gas industry regulator could still affect TransCo's future with stronger price controls.

Mergers, acquisitions and divestments

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Gas market: spoiling for a fight

Article Abstract:

Amerada Hess aims to sell gas to domestic consumers in the UK at a lower price than British Gas. This announcement led to a drop in the price of British Gas shares. BP is another company interested in entering the UK domestic market. Companies may postpone a decision to follow Amerada's lead until the license terms have been clarified. British Gas may see an improvement in its position if it can renegotiate contracts to buy gas. The company argues that it can match price reductions made by competitors.

United Kingdom, Management, Licensing agreements, Amerada Hess Corp., AHC

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Claws out in gas contract dispute

Article Abstract:

British Gas faces problems with contracts to purchase gas at above the market price, a commitment made when prices were higher. Enron faces similar problems to British Gas, and is taking legal action to seek to end the commitment. British Gas announced a plan in Feb 1996 to divide itself into two parts, to separate the possible losses arising from the contracts from TransCo, owner of gas pipelines, which is profitable. The losses could amount to around 3 billion pounds sterling.

Contracts

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