WATCHING THE WORLD BRITISH GAS OPERATIONS

with Roger Vielvoye from London The warmest winter in 300 years following closely on an unseasonably sunny summer in 1989 seems to have convinced the people of Britain that the evidence in support of the global warming theory has considerable merit. Arguments now seem to center on the exact role of man-made carbon dioxide emissions in this process and how to finance programs to limit those discharges and protect low-lying areas from rising sea levels.

June 11, 1990

3 min read

The warmest winter in 300 years following closely on an unseasonably sunny summer in 1989 seems to have convinced the people of Britain that the evidence in support of the global warming theory has considerable merit.

Arguments now seem to center on the exact role of man-made carbon dioxide emissions in this process and how to finance programs to limit those discharges and protect low-lying areas from rising sea levels.

So far Britons are ready to ignore the longer term consequences and revel in the first signs of the warming process: the end of the daily winter ritual of scraping ice from windshields and the pleasure of sunny summer days uninterrupted by rain.

ANNUAL RESULTS

As might be expected, companies that make money from protecting the population against the winter cold are less than ecstatic about the warmest winter in 3 centuries. The annual results of British Gas plc showed that global warming could be very bad news for bulk energy suppliers.

The largely frost-free winter chopped 2700 million ($1.17 billion) from British Gas's revenues and 250 million ($420 million) from its profits.

British Gas Chairman Robert Evans does not expect next winter to set any records and sees very little effect from global warming on the company's results during the next 5 years.

But in a business that relies so heavily on soaring winter demand for heating fuels to turn ordinary results into an exceptional performance, it would be difficult to take a more radical view of future weather trends.

A winter like 1989-90 makes British Gas's postprivatization move into world exploration and production look like a sound decision.

Overall, the company made a before tax profit of 1.051 billion ($1.78 billion), down only 0.3% from last year. While the company's 6.9 billion ($11.59 billion) gas supply business saw a drop in operating profits - from a little more than 21 billion ($1.68 billion) to 867 million ($1.46 billion) - exploration and production operations showed a dramatic increase in profits.

E&P showed an operating profit of 149 million ($250.3 billion), compared with 42 million ($70.56 million) in 1989. Operations cover long standing gas production in the U.K. North Sea, U.K. oil assets from Texas Eastern and Acre Oil, and an international spread of properties acquired from Tenneco's big oil and gas asset disposal.

E&P GROWTH

British Gas's E&P business is scheduled to continue to grow rapidly. It recently acquired an interest in an undeveloped gas field off Thailand and signed letters of intent with ARCO and a unit of BHP Petroleum for joint gas exploration and development in the U.S. It has now joined industry's chase for acreage in the Soviet Union.

Diversification to reduce dependence on the U.K. gas supply market is not restricted to exploration and production. British Gas also acquired a minority share in a Spanish gas distribution company and is seeking to take over Canada's largest gas distribution company, Consumers Gas Co. Ltd.