SCOTTISH Gas owner Centrica has underlined its desire to exit the oil and gas business even after increasing the valuation of its North Sea operation but has had second thoughts about plans to sell its nuclear division.

The utility said yesterday that it is investigating new ways of selling its Spirit Energy oil and gas operation after struggling to find a buyer amid the fallout from the coronavirus crisis.

“Our intention remains to exit oil and gas production in line with our strategic shift to simplify the Group, focus on the customer and decarbonise the Group’s portfolio,” said Centrica.

The comment provides further evidence of the scale of the change that is under way in the energy sector as firms look to respond to growing concern about the impact of emissions related to the use of fossil fuels.

Scottish Hydroelectric owner SSE sold its North Sea oil and gas business in December after deciding to focus on renewables.

The Perth-based giant yesterday underlined its desire to expand in the windfarm market.

READ MORE: BP claims ScotWind bid could unlock £10bn investment 

The company noted it had bid for licences off Scotland in the ScotWind round, which attracted very strong interest. The round closed last Friday.

Crown Estate Scotland said yesterday that it has received 74 applications in respect of the 15 areas of seabed available for development.

However, SSE said output of electricity from renewable sources was around 19% below plan in the quarter to June 30, mainly due to weather conditions.

The reverse highlights the fact that the performance of windfarms is weather dependent. Some say this means nuclear power has a valuable role to play as a source of baseload power that is always available.

Centrica said yesterday: “As we look to help our customers reduce their carbon emissions, our Nuclear stake provides us with an important source of zero carbon electricity. Therefore, we may decide to retain our 20 per cent interest.”

READ MORE: Should Scottish Government end ban on new nuclear plants?

The group noted that in 2018 it had announced plans to sell its interest in the UK’s seven-strong fleet of operating nuclear stations. The fleet includes Torness in East Lothian and Hunterston B in Ayreshire.

The rally in oil and gas prices that has been fuelled by the rollout of coronavirus vaccines may help to generate renewed interest in Centrica’s stake in the Spirit Energy business, which has acreage off the UK and Norway.

Spirit tripled operating profits in the first half to £104 million from £34m.

Centrica said it had increased the valuation of its exploration and production business by £366m in the first half, “predominantly due to the increase in near-term liquid commodity prices”.

The group slashed the valuation of the oil and gas business by £640m last year to reflect the impact of the fall in commodity prices triggered by the coronavirus crisis.

It has been trying to sell its 69% stake in Spirit since 2019.

READ MORE: Hopes for West of Shetland oil boom fade amid fallout from pandemic

“The disposal process has been impacted by the uncertain backdrop created by the Covid-19 pandemic, and the joint venture structure which limited the number of parties interested in buying the business as a whole,” said Centrica yesterday.

“We have now made progress towards pursuing alternative sale options, which will simplify the sale structure and enable us to maximise the value of our assets.”

The planned sale forms part of a process to simplify Centrica, which has decided to focus on the supply of gas and electricity and related services to consumers and businesses.

The group said that its British Gas Energy business increased first half operating profits by 121% to £172m, citing the impact of colder than normal weather.

However residential customer numbers fell by 114,000, or 2% over the first half of 2021. Centrica said the increase in the price cap from April encouraged switching by customers. The price comparison website market remained fiercely competitive.

READ MORE: Glasgow-based energy giant grows profits as investment in windfarm pays off

Regarding the outlook for demand, the group said: “Although Covid-19 had a material impact on the financial result in H1 2021, the easing of restrictions are expected to result in some recovery in business energy demand.”

A reorganisation launched by chief executive Chris O’Shea will lead to a reduction of around 4,000 jobs. Some 3,000 of these went in 2020,

In an update on trading, SSE said it was seeking to add to its considerable pipeline in renewables.

Spirit invested heavily in the West of Shetland area after buying stakes in Hurricane Energy’s acreage in 2018. Hurricane went on to slash estimates of the size of finds it had made after suffering problems on the flagship Lancaster oil field. German energy firm Stadtwerke München has a 31% stake in Spirit Energy.