SIR ROY GARDNER, the chief executive of Centrica, has raised the possibility of a merger between his company and BG Group, the gas supply and exploration operations that demerged in 1997.

“It is something that has been suggested by banks and the people that would benefit from it,” Gardner said.

“If you look at their strategy and our strategy you can see that over time there would be some convergence.”

A merger would reunify two companies that split in 1997 when British Gas was divided into an oil-and-gas explorer — BG Group — and an energy supply group, Centrica. It would also provide Centrica with the control over gas supply it needs to make the group “a significant player” in the European market.

Last week, Centrica said its annual operating profits were up 16% to £1.2 billion compared with the previous year. Its share price has since fallen almost 8p to 234p, however.

Centrica, which relies on gas-fired power stations for the electricity it sells to customers, was hit when the price of wholesale gas went up last year. “BG is long on gas. Centrica is short on gas,” said one analyst, “so on that basis alone we can see how a merger of the two might suit Centrica. It might not suit BG.”

Centrica currently plans to invest £5 billion over the next five years on new reserves and infrastructure that will reduce its reliance on the wholesale gas market.

“If I could find someone that could help me without having to invest £5 billion acquiring a load of upstream assets then that would be sensible,” said Gardner.

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