Centrica has climbed almost 3% following a buy note from Investec and suggestions that Qatar could take a stake in the British Gas owner.
Late in February Centrica announced a deal with Qatargas involving the delivery of 2.4m tonnes of liquefied natural gas to the Isle of Grain facility, enough to supply around 10% of the UK's annual residential demand. Investec analyst Angelos Anastasiou said today:
We have been waiting for Centrica to forge a deal with one of the big LNG players in the world, and we see this deal as a very important starting point. We believe that in time, it is likely to become a longer-term deal, extending to perhaps ten years plus.Anastasiou kept his buy recommendation on Centrica despite the tax raid on the north sea outlined in the budget, and raised his target price from 408p to 424p. In the market Centrica is 9.4p higher at 332p.
The strategic alliance is also likely to be expanded, and it would not surprise us to see a direct investment in Centrica from the Qatari Investment Authority or a similar body.
This would actually make good strategic sense for Qatar, creating vertical integration for it: Centrica is the biggest private gas supplier in the world; Qatar has the third largest gas reserves in the world and the largest LNG-export capability.
