Centrica's commitment to improve its upstream gas and oil assets was underlined today as the energy giant bought its first Norwegian gas producing assets.

The owner of British Gas has acquired interests in a number of gas and oil assets in Norway from Marathon Oil for £190 million.

Centrica has bought interests in the Heimdal area of the Norwegian North Sea, which includes producing fields, discoveries and exploration prospects.

The UK's biggest domestic energy supplier, which can currently supply only about 20-25 per cent of its energy needs from its own upstream resources, said it would invest £125 million in the assets to maximise the potential reserves. Centrica is aiming to supply 40 per cent of its gas needs from its own supplies, in years to come.

The total potential reserves from the new prospects add up to 165 billion cubic feet oil or gas equivalent. At the beginning of this year, 70 per cent of the recognised reserves were gas.

“This investment is in line with our strategy to reduce the group’s exposure to movements in gas prices through securing additional upstream assets,” Sam Laidlaw, chief executive of Centrica, said. “It also increases the level of gas reserves to supply our British Gas customers and gives us our first producing interests in Norway, building on our existing exploration position.”

Centrica will acquire a 23.8 per cent interest in the Heimdal field, a 46.9 per cent interest in Vale and a 20 per cent interest in Skirne/Byggve, all of which are producing fields.

It will also acquire interests in the Heimdal East and Peik discoveries which Centrica says could be developed by 2012.

Gas currently being produced from the field is contracted until 2011 at UK prices. Centrica said that beyond this the gas could head to either continental Europe or the UK.

Over the past two years, Centrica has acquired interests in 12 exploration licences in the Norwegian sector and holds interests in over thirty producing, development or exploration stage assets in the UK sector.

Separately, it has emerged that investment in the UK sector of the North Sea will be lower this year than in 2006, despite a doubling of oil prices to almost $146 a barrel.

Oil & Gas UK, the industry association, warned that rapidly rising costs and increasingly challenging fields threatened the viability of projects in the North Sea, adding that a steep decline could kill off the industry by the end of the next decade.

Oil & Gas UK estimates that if no new fields are developed, the North Sea will be, in effect, finished by 2020, after a further 7 billion barrels of oil equivalent [boe] have been extracted.

The industry association wants more tax incentives to encourage oil companies to extract the remaining reserves.

Malcolm Webb, Oil & Gas UK's chief executive, said: "There is little doubt that the need to maximise recovery of the UKs remaining oil and gas reserves is a matter of national importance and one that is well understood by Government at the highest level.

"Barrels left in the ground do not pay taxes, do not sustain jobs, do not help secure the nation's energy supply and provide no support to the country's balance of payments."

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