Scottish & Southern Energy buys Hess assets for $423m

Scottish & Southern Energy, the electricity giant best known in London as Southern Electric, today followed a growing industry trend by entering the upstream gas sector, buying $423 million (£279 million) of North Sea gas assets from US energy firm Hess.

SSE, which has more than nine million customers in the UK, said the gas from its three new North Sea assets would provide about 8% of the amount it needs to supply its customers and fuel power stations every day.

The deal will help to secure a gas supply for SSE, which previously did not own any upstream gas or oil assets, as well as provide a hedge against downstream price fluctuations.

It follows a similar move by Centrica last year, when it spent £1.3 billion buying oil and gas firm Venture Production.

Chief executive Ian Marchant said: "These assets will provide a new source of primary fuel and a hedge for our gas generation and supply activities.

"The acquisition will also give us involvement throughout the gas chain — production, transmission, storage, distribution and supply.

"This timely acquisition will enable SSE to enter the upstream gas sector in a measured way by buying proven and geographically diverse production assets."

It will also give SSE the 18% stake Hess owned in a BP-operated pipeline that carries about 10% of the UK's total gas demand from the middle of the North Sea to a Teesside processing terminal.

Shares in Scottish & Southern Energy rose 2p to 1103p.