Thanks for joining the call today. I hope that you're all safe and well. You'll have hopefully noticed that we've started providing some additional color on our activities with the teach-ins on both Rough and the EM&T route to market activities in the second half of last year. I'm delighted that we've got the chance to connect with you all again today on another important part of EM&T, our LNG trading and shipping business. I'm joined today by Cassim Mangerah, who's the Managing Director of Energy Marketing and Trading. Arturo Gallego, who's the Global Head of LNG for Centrica, and Russell O'Brien, who became the Centrica CFO in March. I'm going to spend a few minutes on the role that EM&T plays as part of our balanced portfolio and its absolutely crucial importance to our group.
Cassim will remind you of the scale and the capabilities in that business before Arturo goes into more detail on LNG. I'll then briefly summarize, and we'll have some time at the end to take any questions that you've got. Now, I would ask that you keep the questions focused both on EM&T and LNG more particularly, and not the wider group results or outlook, because we can't comment on those. I'd like to remind you that we've got a finish time of around about 3:30 PM this afternoon. Let me remind you how I see Centrica today. We are a uniquely integrated energy company, able to unlock synergies across three pillars of retail, optimization, and infrastructure. We've got a diverse and balanced portfolio, and every one of our businesses is core to us.
The strength of each business complements, de-risks, and adds value to at least one other business in our group, making the whole greater than the sum of the parts. We're the largest supplier of energy to domestic and small business customers in the U.K. through British Gas Energy, and the largest provider of energy services to U.K. households through British Gas Services and Solutions. We have a number of other strong and recognizable retail brands in the U.K. and supply both energy and services to customers in Ireland through Bord Gáis Energy. We've got valuable baseload power and gas production, infrastructure positions in the U.K. and Ireland, and we also have a growing portfolio of flexible electricity generation and storage assets, in addition to the U.K.'s largest gas storage facility, the Rough Field. All of this is supported by our world-class optimization capabilities in energy marketing and trading.
We've always had physical trading and risk management capabilities to both hedge and support our retail and infrastructure businesses. We've developed these capabilities, our proprietary digital platforms and our team that allow us to add incremental value in related areas. We've been steadily building our expertise in LNG and in route to market to add to the capability we have in optimizing storage and taking some measured risks in proprietary trading within energy markets. Some of this activity does at times utilize working capital or margin cash. As evidenced by our strong EM&T results in 2022, any capital deployed into optimization activity is expected to make a good return with the rewards across the portfolio more than outweighing any additional risk that we take. As I said, today's teach-in will be focused on the LNG part of the business.
This is a business that we're very, very excited about for this potential, having built a strong and diverse portfolio over recent years. Arturo will cover LNG in more detail shortly. First, let me hand you over to Cassim, who's going to remind you of the world-class capabilities across our Energy Marketing and Trading business. Cassim, over to you.
Thank you. As Chris has said, EM&T evolved out of our requirement to procure gas and electricity for our customers and manage commodity risk for the group. Over the years, we have built on these capabilities and grown our business to what we believe to be a leading position in our markets. Our scale today demonstrates the sophistication of our capabilities, and what we've created is very hard to replicate. We are a 24/7 logistics and physical energy trading business, and this is at the heart of our business model. We understand energy markets very well and are able to manage system complexity to add value in all commodity price environments. By having the assets and the ability to move gas and power across Europe, we are able to capture value from our broad portfolios.
Our renewables route to market business has one of Europe's largest third-party renewable and optimization energy portfolios, with nearly 16 GW of assets under management and one of the most advanced cross-European virtual power plants. To put this capacity into perspective, 16 GW is enough to power around 9 million U.K. homes. We now trade across more than 25 European countries. All are connected. However, each country has its own unique supply and demand dynamics. Our contracted physical interconnector and pipeline capacity allows us to capture value from any regional arbitrage opportunities by moving gas and power to the highest priced markets. In LNG, the focus of today's teaching, we have built up a broad and diverse range of positions.
To date, we have delivered LNG cargos to 36 different countries, and in 2022, traded 284 cargos. We have a well-established operating model with strong symbiotic relationships, which are the elements required to make it effective and add value for Centrica. These include leading physical trading capability and best-in-class risk management, while having a scalable and digital platform able to operate across markets is key. Our ability to develop a world-class capability in one element requires other elements to be reinforced. For example, developing leading risk management capabilities requires investment in a comprehensive trading platform and the scale of our trading platform, in turn, underpins our ability to access different markets and products with confidence. This means we trade a wide range of physical and financial products, providing the benefit of diversification in our profit streams.
Having built up our capabilities over the past years, we think about the business in three main profit pools. We have delivered good gross margin growth across all of these activities, with additional returns delivered when prices are high and or volatile, as we saw in 2022. Gas and power trading across Europe remains an important and valuable activity for us as we utilize our optimization capabilities, our wide range of contractual physical positions, and deep knowledge of European markets to make attractive returns. We have also focused on diversifying into alternative activities, creating two additional and typically more stable profit pools. We covered renewable energy trading and optimization, our route to market business in our December teaching.
An increased proportion of renewables coming online across Europe creates a great opportunity for us, both due to growing the size of the market and the volatility in prices created by the increased intermittency of renewable generation. Today's focus is on energy trading and shipping. Here, we've built up a range of contractual positions across the globe, which, combined with our risk management capabilities, means we are well-placed to benefit from the globalization of gas. Arturo will provide more detail on our activities and strong position and capabilities in this space. Before I hand over, I would just like to highlight again how well-placed M&T is to benefit from key global trends. The drive towards decarbonization will create significant opportunities for us, particularly for our route to market business as a diverse set of energy owners invest in renewable energy across Europe.
Given our capabilities and range of contractual positions, we're also well-placed to benefit from the important role that gas will continue to play as it replaces coal as part of the global energy mix. Arturo will elaborate on how this is playing in LNG fundamentals. Security and supply concerns in Europe are only accelerating the above trends. With that, I'll now hand over to Arturo, who will help provide more color on some of these themes, as well as why our positions and capabilities in LNG leave us incredibly well-placed for the future. Thank you for your time.
Thank you, Cassim. I will start today with a market view, explaining, as Cassim mentioned, how important LNG is going to continue to be for the world in the coming decades and help the transition towards net zero. I will dive into our portfolio, explaining how we have built it, why our business model has succeeded where others have failed, and what is coming in the following years that will continue to improve Centrica's portfolio. Finally, I will explain how we manage our exposure in our long-term contracts and how we create value for shareholders by optimizing our portfolio. I first want to highlight the importance of gas and LNG in the Global Energy Mix. As you can see on the top right, gas currently represents 23% of the global energy mix.
It is important to note that according to external providers, gas will continue to play a major role in the global energy mix through 2050, allowing coal and oil to be replaced by renewable energy and lowering global carbon emissions. In the graph below, we see the significant growth in energy in the last few years, mainly driven by additional supply. By 2050, global demand for LNG is forecast to nearly double, driven by a move to cleaner fuels and the ability of LNG to reach any country in the world. In Europe, the Russia-Ukraine crisis has completely changed the energy mix. Energy and security of supply have become more relevant. We are seeing a bigger focus on local renewables and imported LNG, with a significant number of new LNG regasification terminals being built in Northwest Europe.
Looking forward, it is forecast that in the period 2030-2040, 20% of global LNG produced in the world will be supplied to Europe. Moving now to the three key characteristics of the LNG market. One of the most distinctive aspects compared to, say, typical gas and power markets is that LNG is a physical product. We purchase it, loading it to a vessel, ship it to the destination, and deliver to our customers. It is critical that we ensure to our customers that we are arriving at the right time and with the right quality to their delivery terminal. It is a bilateral market. There are no screens where companies can trade the physical LNG. Everything is conducted through conversations. This means that it's important to know and understand your counterparts and have a relationship with them. Building that brand and relationships takes years.
The LNG market is global. As soon as the cargo is loaded, the LNG can travel anywhere in the world. This means that localized factors such as Chinese demand or Brazilian hydro conditions can affect the global demand and supply of LNG, and therefore, its price. The global LNG market is centered around three hubs. First, the United States, a very big and liquid market whose main gas price reference is the Henry Hub. Most of long-term supply contracts from the U.S. are indexed to Henry Hub, and the majority of LNG companies now have a contract buying gas from the U.S.. Next, Europe, a big but fragmented market that moved away from oil index contracts to gas prices 20 years ago. NBP, the gas index for the United Kingdom, and TTF, gas index for the Netherlands, are the main indexes.
As mentioned before, the Russia-Ukraine crisis mean Europe is currently the world's premium market, attracting all available LNG. Third, Asia, driven by the Japan-Korea market or the JKM price, which is also the price reference for the Middle East. Asia is home to the world's main LNG importers, Japan, South Korea, and China. Asia has historically been the premium LNG market, with volumes flowing from the Atlantic to the Pacific to fulfill their energy needs. These characteristics mean LNG is not an easy market to enter and succeed in. The build-up phase of an LNG business takes years. However, once you have built a portfolio of certain scale, there are significant benefits, which I will explain in more detail shortly. When building an LNG business from scratch, the first thing to highlight is that takes a long time.
Centrica started buying cargos in 2008 to supply our regasification capacity at the Isle of Grain. We launched our global LNG business in 2014 after signing our Sabine Pass contract with Cheniere. By the time our new agreements commence around 2027, excluding the first five years when we were buying for Isle of Grain, it would have taken 13 years to build the business. We have substantially developed our capability, allowing us to better optimize our portfolio. When comparing 2014 with 2022, we have increased our number of traders threefold, the number of cargos traded in one year by a factor of 10, and we concluded 17 charters in 2022 compared to one in 2014. We have also more than doubled the number of MSPAs or master sale and purchase agreements. All these are key ingredients to optimize our portfolio.
We now have Master agreements with most major market participants. Having this umbrella agreement means we only need to agree price, volume, and delivery dates. This gives us the ability to move quickly to capture optimization value as they arise. On average, a Master agreement may take one or two months to negotiate, signing close to 150 takes considerable time, effort, and dedication. It also demonstrates the credibility of Centrica as a trusted counterparty in the market. Since 2014, we have built the business step by step in a controlled and disciplined way. We started buying physical cargos for the U.K. market through the Isle of Grain, expanded into buying and selling cargos around the world. We spent three years building a bigger physical portfolio, started hedging our exposure with a dedicated financial LNG desk. In 2020, we received our long-term charter vessels.
We also needed to source other vessels to enable our optimization activities, we started our freight desk. On the right hand of the slide, we have a sentence that summarizes our approach. As a business model, we are building a diversified global position within a controlled risk environment and with embedded flexibility that can be monetized. Let's break this sentence up in its key ingredients. Diversification is critical across any portfolio or investment. Diversification means reduced risk, more opportunities to monetize arbitrage, more stable cash flows. Controlling risk is also critical. To that goal, we have a well-defined risk appetite and framework. The way we manage our portfolio means that we always try to be balanced.
Being balanced means that we are always hedging a significant portion of our portfolio to ensure that we cover any potential downside scenarios, even if that means foregoing some potential upside in high-price environments. Flexibility is a key differentiator of our business. Let's have a theoretical example. Company A buys 20 million tons of LNG ex-ship in their country with no flexibility. Company B buys 1 million tons with the option to send that volume anywhere in the world. Company A has a large volume, but there is no optionality to monetize. Company B can deliver significantly higher revenue if the global destination optionality is properly optimized.
We are more like company B, meaning that we can deliver more value with a smaller flexible portfolio than a company with a portfolio 20 x larger with no flexibility. I will provide a few examples of how we use flexibility to optimize as we go on. We now have a truly global portfolio, which includes short, medium, and long-term positions spread across the United States, Europe, the Middle East, and the Far East. We have two vessels on long-term charter designed and built for Centrica, the GasLog Windsor and the GasLog Westminster. These vessels cover our transportation needs from the U.S. to the Isle of Grain for our Sabine Pass contract. Another important piece of our business model is the midterm deals. We have been closing niche midterm deals to balance our portfolio, hedge our exposure. At the same time, we were adding flexibility.
Example of midterm deals are our multi-year positions in Dubai, Kuwait, and the U.S. What was the starting point for this global portfolio? Our portfolio was originally anchored on the Sabine Pass contract and our regasification capacity in Isle of Grain, the largest import terminal in the U.K. The Sabine Pass contract is a 20-year Henry Hub Index agreement, which started in 2019. We buy the LNG free on board, meaning the LNG is ours from the loading location, we are responsible to ship it, and can take the cargoes anywhere in the world. Two important points give us flexibility. First, we can cancel any cargo with two months' notice by paying a fixed fee.
Second, we have a 10-year extension option fully at our discretion. Our capacity at the Isle of Grain allow us to bring in cargoes, regasify the LNG, and send the gas into the main U.K. network. The contract with the terminal gives Centrica access to up to 70 slot per year and 4.2 million tons of annual send-out into the grid. This is equivalent to 7% of the annual consumption of the U.K. Our contracts are more flexible than the average regasification contracts in Europe, allowing us to discharge up to a Q-Max, the largest LNG vessel in the world, and store it in tank for several months. To maintain a balanced portfolio and reduce our risk exposure, our base case scenario is that we ship our cargoes from Sabine Pass into the Isle of Grain terminal.
As mentioned before, we have the right to take the cargoes to other market in response to price signals, hence generating optimization value. As I mentioned before, one of the key pillars of our sustained growth is a controlled risk environment and how we hedge the exposure generated by our long-term contracts, in particular for Sabine Pass. We hedge exposure in two ways, through physical and financial hedges. Physical hedges are a critical tool to manage the exposure. We sell the cargoes to a third party, reducing our physical and financial risk. We can sell the cargoes either free on board or ex-ship. In the latter case, we're still responsible for shipping the cargo to the destination and therefore retain more flexibility. Usually, these are midterm deals where we can hedge the exposure for up to 5 years. We also use financial hedges.
We hedge the difference between our selling and buying prices financially. In the case of Sabine Pass, we hedge the difference between the NBP price in the U.K. and the Henry Hub price in the U.S.. Doing this, we guarantee a base case and retain the possibility to optimize the cargoes physically. When looking at the next few years of Sabine Pass, you can see in the graph that we have hedged our exposure for 2024 and a significant portion for 2025 and 2026 through a combination of physical and financial hedges. These hedges are at a positive margin on average when compared to the Sabine Pass contract. We continuously review market opportunities, screening for the right opportunities allow us to continue to derisk Sabine Pass at the right price positions. We can deliver incremental optimization returns on top.
In addition to our existing portfolio, we have three major new contracts coming on the stream in the coming years, which will be game changers for our portfolio, significantly increasing our diversification and flexibility. First, Mozambique LNG. This contract is unique. It's the first long-term contract jointly signed by two buyers, Tokyo Gas and Centrica, with completely different base markets, Europe and Asia. Our portion of the joint contract is equivalent to 20 cargoes per year. This contract is not free on board. Taking advantage of the location of Mozambique, that is equidistant to the U.K. and Japan, we have built similar degree of flexibility as if we were buying free on board and managing the vessels. The contract price is indexed to European gas and Brent. When considering the risk-reward of this deal, it's very balanced in our favor.
We will be able to deliver all the European gas price cargoes to Europe with no risk or profit by taking them to any other market that could pay above European gas. For the Brent index cargoes, we have hedged our portfolio by agreeing an oil index contract with Shenergy in China. The Shenergy contract has significant embedded flexibility that will allow us to deliver between four and eight cargoes per year. As a reference, a standard Indonesian contract will be around 10% flexibility and even less than that in the Atlantic contracts. As mentioned before, we started negotiating this contract with the aim of maintaining a balanced portfolio after signing Mozambique. The Shenergy contract ticks all the key values of our business model. It diversifies, it maintains a portfolio within a controlled risk environment, and it has plenty of flexibility. The third new agreement is with Delfin.
We signed a heads of agreement with this U.S. project for 1 million ton, we are currently in the final stages of negotiating a 15-year contract. We chose Delfin because of the price formula. Most U.S. projects are only indexed to Henry Hub, similar to our Cheniere contract. In the case of Delfin, the cost is indexed to the gas price in the U.S. and to the gas price in Europe. This is good for us as it reduces our price risk exposure and allows to optimize cargos by sending them to other markets. Furthermore, the Delfin contract is due to have a very low cancellation fee, which is beneficial in a worst-case scenario of European gas prices falling below Henry Hub. Finally from me, let me detail some strategies we can deploy to capture value from our optimization. First, marketplace.
As we have said, our base case is to sell our Sabine Pass cargos into Isle of Grain terminal. When hedging that exposure, we guarantee a minimum contribution. However, when price dislocation occur, for example, between Europe and the Middle East, we are able to buy back our hedges in Europe, ship the cargo to the Middle East and capture the difference between the two markets. This is a pure physical optimization. Having a diversified portfolio and a financial desk means that instead of committing to a firm physical sale in the Middle East, we will sell the JKM financially. If the price stays as it was, we will ship the cargo to the Middle East, and we'll sell it index to JKM, guaranteeing the profit.
If the price in Europe turns higher again, we will buy back the Middle East hedge and sell the LNG into the U.K. again. Each time we optimize in this way, we can add additional value. In a very volatile market, this difference can turn several times, allowing us to capture the spread several times. Floating plays. In our contracts, we lift our cargos on a regular basis during the year, but this doesn't mean we need to sell them on a regular basis during the year. Let's consider one cargo that we're buying at Sabine Pass in early October. Sabine Pass to Isle of Grain takes 13 shipping days, so this cargo would deliver in the third week of October in the Isle of Grain. The vessel would go back to Sabine to load an early November cargo.
If the November price is higher, we can capture additional margin by floating the cargo and delaying delivery. To enable it, we will charter another vessel to lift the November Sabine Pass cargo. Volume plays. Within our portfolio, we have purchased contracts with larger and smaller cargos, and we have sales contracts with different prices. Having flexibility in these sales contracts allow us to deliver the bigger cargos to the highest price contract, leaving the small cargos for the lowest price contract. All of these might sound relatively simple to do, in practice, it requires strong capability, technical expertise, industry reputation, and relationships. Let me provide a couple of specific recent examples of how we have added and captured value through optimization. The first one is from Denmark last winter. We saw an opportunity to add value through floating a cargo from Sabine Pass.
The vessel was not ours, so we had to discharge the cargo and return the vessel empty to her owner. We needed to transfer the cargo to a different vessel that we could float. There were no vessel available at the right time and location. By using our portfolio, we were able to free up one of our long-term vessels and charter a new one for Sabine Pass. We also had to find the right place to do the ship-to-ship transfer, as well as locating the equipment. There are only a few kits available globally. One was in Singapore. Our marine department was able to use the relationship to source the required equipment, negotiate terms, and transport it on a plane from Singapore to Denmark. This example demonstrated the benefit of having a full end-to-end LNG capability. Our capacity at Isle of Grain allowed the floating play.
Our operational and marine teams had to organize and perform a safe operation. Our freight desk had to reorganize and charter the vessels. Our financial desk was able to hedge the exposure and guarantee the optimization upside. The second example is from the Caribbean and demonstrate the value of strong relationships. We were contacted by a counterparty in the Dominican Republic who needed to reload half of a cargo to make a space for another cargo that was arriving. We concluded that the best option was to transport that additional LNG to their sister company in Panama, but they had no vessel. We were due to deliver a cargo to Jamaica, but discharge would take five days, so our vessel would not have been there in time. However, we were able to agree with our buyer in Jamaica that we would only discharge half of our cargo.
We would go to the Dominican Republic, load their cargo in the 2 tanks that we have emptied, and transport them to Panama. This allowed us to capture the significant premium our counterpart was ready to pay to fix their prompt physical problem. The neighbors of the deal were the strong relationship with our Jamaican counterpart, as we did not have the contractual right to do a partial discharge. Having the master agreement in place to be able to act quickly, and our marine expertise to be able to manage partially loaded vessel, which is not a standard in the industry. I hope this example illustrates Centrica's expertise, both technical and financial, our knowledge, our experience and flexibility. All this enables Centrica to find opportunities to maximize our profit in the global market.
I hope that you have found the presentation helpful and it has helped you understand our LNG business better. Let me now hand back to Chris.
Arturo, thank you very much. You've heard from Cassim about the capabilities and the positions that we've got and how we are well-placed to benefit from key global trends. As well as providing risk management services and helping to deliver gas and power to our customers, this has evolved into a significant profit center in its own right. We've developed world-class optimization capabilities, and we're playing an important role in storing, transporting, and balancing energy supply and demand across Europe, all whilst facilitating the transition to net zero. As global commodity markets converge, utilizing the strong capabilities across the three pillars of gas and power trading, route to market, and LNG within our EM&T business will be key to our future success.
A good example of how these pillars work together was seen last year, when additional LNG volumes were needed to balance the European gas market, making LNG the price setter for both gas and power markets. The flow of information between the LNG team and our gas traders proved invaluable. It would have been difficult to have been as successful as we were if we weren't active in both of those markets. Arturo's provided a lot of color on our LNG business. It's a business that has grown its capability significantly in the last 10 years, having developed a flexible and diverse portfolio and a platform for future growth.
The Mozambique, Shenergy, and Delfin contracts will further strengthen the portfolio, and we'll continue to seek other opportunities to grow in a disciplined way, including potentially longer term in nascent energy transition markets such as clean ammonia, where LNG expertise will prove incredibly important. Thank you very much for listening. Cassim, Arturo, Russell and I now look forward to taking your questions.
If you wish to ask a question, please press star followed by one on your telephone keypad. If you change your mind and wish to remove your question, please press star followed by two. When preparing to ask a question, please ensure that your phone is unmuted locally. To confirm that's star followed by one to ask a question. Your first telephone question today is from Ajay Patel from Goldman Sachs. Please go ahead.
Good afternoon. Thank you very much for the presentation. I had a couple of questions.
Good evening.
I'm just trying to understand maybe how this picture fits in from the perspective of me looking at screens and differences. Like, for example, I know, I know you probably won't give us a profit forecast for LNG this year and next, but if I was thinking about last year and just looking at the spreads that were available from Cheniere, how much of what was on screen was actually capable of being locked in? In terms of the way that those profit opportunities can be locked in, so, the optimization on top of just what you would see on the spreads, how much duration can you have for that?
For example, could you have locked in a lot of these benefits for two or three years, and we should be thinking a little bit more of a premium to the spread in terms of what you may capture? Was it a case of when you look at screens, those are just not realistic and we should be taking a haircut? Then is there any kind of rough, and I know this will be really difficult, a sense of order of magnitude of what the optimization benefits could bring relative to ones that would be directly from the spread? Lots of questions there. Sorry. You, I can repeat if you need, but.
All right. That's all right. Ajay, thanks very much. It's Chris here. Basically, profit forecast for the year, really asking about how far out we've locked in the benefit and how you look at, think of the optimization for the spread. I'll ask Arturo to talk about how you think about getting the optimization on top of the spread and also how we lock them in. First thing is, you won't be surprised, no profit forecast for 2023 or 2024, but you should be applauded for trying. The second one, just before Arturo comes in, I would say that obviously we, across the entire business in Centrica, we manage, we take the risk that we manage very seriously, we hedge in advance.
The spread that you saw last year, and I think the maximum point was where the gas price blew out was at GBP 5 or GBP 8 a firm. If you could load a Cheniere cargo and simultaneously discharge it at Isle of Grain, you'd have loaded it for about $25 million-$30 million, you would have discharged it for about $300 million.
We don't go naked on prices like that. The people that would have been able to lock that spread in would have been people that had an excess unhedged cargo, and they would have looked like geniuses that day, but they would look like fools on other days. We lock in volumes in advance. It's one of the beauties I think of the team that we've got and the linkage you've got through E&T, gas to power trading and LNG, is despite the fact that a lot of the cargoes that we picked up last year would have been hedged prior to last year, we were still able to turn quite a bit of profit out of that, so by optimizing.
I'll ask Arturo just to talk you through the duration that we look at when we hedge cargoes, and also just to talk a little bit about how you would think about the base spread and the optimization. Just bear in mind that you can't just look at your screen and see the spread and think we're gonna lock that in because our business is not in sitting on a naked price exposure in any of our businesses, whether it's Rough storage, whether it's LNG, whether it's selling gas and power to our downstream customers or producing gas and power in our infrastructure businesses. We manage the risk quite a bit in advance. With that, I'll ask Arturo to talk a bit about how to think about that.
Thank you, Chris. No, I think, kind of, building on what Chris was saying, I think the key thing for us is that we're kind of, hedging our portfolio in advance. We're not just waiting for the very last minute to see where the market goes. I think this is, this is important because that gives us that kind of a potential, view on what we're gonna be doing rather than just waiting to see what the market decides to do. I mean, I think a great example is what happened in 2020. In 2020, the market was the opposite to 2023. If kind of, looking at the results of the business and the results of our kind of, risk management delivered us similar amount of money in both years.
I think this is the kind of approach that we're taking to the market, kind of a conservative approach, we could say, in which we are just protecting our minimum base load, I would say, and just trying to optimize on top of that. When looking at optimization opportunities, I think it all depends on how the market moves and how quickly we are just to capture them. When looking at last year, for example, I mean, the difference between different markets move a lot, and that helps us just to take kind of a more optimization value on those on those movements. Somehow, what we are doing is hedging ahead, just making sure that we are just warranting a base case, and then we just optimize as the market comes, and we just add additional value on top of this.
Perfect. Arturo, thank you. Thank you very much. I think it's safe to say that obviously What we've hedged over the past 12 months or so, we have locked in an already positive margin on our longer term contracts for Centrica. Our expectation is we'd be able to optimize and create more value from that. Hopefully that helps answer the questions, Ajay.
Okay. Okay. Thank you.
Thank you.
The next question is coming from Jenny Ping from Citi. Please go ahead.
Hi. Good afternoon. A couple of questions from me as well, please. Firstly, just going back to your point around optimization based on the stuff that you've locked in today, and clearly you can create more value above and beyond that. Just based on what you have locked in, that positive margin, are you able to give us a sense? Are we talking about tens of millions here or hundreds of millions or something maybe a bit more meaningful? 'Cause I think at the moment, everybody is struggling to get a sense of the scale of profitability for this business. While I appreciate you don't wanna give and be pinned down to absolute numbers, exact numbers, but just a sense of scale would be helpful.
Also, I guess longer term, how should we, again, link to the profitability point? How should we be thinking about the extent of growth for this business? If I look at slide seven , that physical cargo traded chart, your year to date obviously is quite impressive compared to where you were in 2022. Is that trajectory a good way to think about profitability in my very simple mind? Or how else should we think about the growth of this business? Then just very lastly, around risks. You talked about working capital and margin cash being tied up. Are you able to give us some sense of what is the typical capital at risk for this part of the business? Thanks very much.
Jenny, thank you very much. Well, I'll try and take the first couple and ask Russell to talk about the working capital, the capital at risk. You got me right. It's neither tens nor hundreds of millions. I would say over the next few years, we would expect this business to return a nine-figure sum. You know, GBP 100 million plus from the LNG business. It's not in the tens, but it's also not in the hundreds. We have a very good team to optimize this, I think very well. And therefore it could get more. That should be the base load, as we lock in volumes over the midterm.
In terms of your question on the trajectory of growth, I mean, obviously, if that's about EM&T, I mean, obviously last year was I'd love to say, yeah, we're gonna grow from the GBP 1.4 billion pre-tax profit last year. I think that that was. I mean, if we saw the same absolute level of prices and the same volatility, and I'm looking at Casimm here. He's nodding. We'd expect to make the same amount of money, if not more. We haven't seen that this year. So we wouldn't expect to see that level of prices. You've got to look at more of a normalized level.
We'll probably get some more information as to how would you think about E&T through the cycle when we present our results in the first half and our strategy there. Obviously what we do expect to see is an upward sloping trajectory, not off a 2022 base. Maybe on the working capital at risk, I'll ask Russell to give you an answer, Jenny.
Yeah. Thank you. The question was, how much capital are we using working capital in the LNG business and any guidance there?
I can't give you a number today, but I can describe some of the moving parts and the dynamics. Of course, we manage capital margin risk across Centrica very tightly. That's something we're very proud of.
It's a core part of the EM&T business because we do take risks every day. We manage that very, very carefully. We allocate capital in a way that we, first of all, make sure it has an adequate return, but it's a risk-adjusted return, and that is the core part of the framework that allows us to allocate, whether it's working capital, margin capital and the other. The other thing to bear in mind is it's not linear. The amount of capital at work any day in LNG or in fact across the whole EM&T portfolio can move around because we make choices. We have flexibility. We trade off market risk, credit risk, and liquidity risk, and we do that dynamically. That we choose the strategy that best fits the situation of the day.
That then dictates how much capital is at work. Thanks. Hopefully that helps, Jenny.
Yes. Sorry. Just going back to the first part of the question. Can I just then follow up by asking another way? When you look at your hedges, that you say is in the positive margin territory, am I right in saying that effectively, that positive margin is in an upward sloping trajectory, i.e., 24 would be higher than 23 would be higher than 22? Is that a fair statement?
No, I don't think it is. I think it really depends on the point at which, you know, how we've hedged it, whether we've hedged it physically or financially, and the point at which we hedge. What we don't do is we don't go naked, but we don't also sit and look and say, "That's an amazing piece of business. Let's put everything on at that place," because we try and layer it in. I think I probably wouldn't want to go any further than to say we would expect over the, you know, in the, in the midterm for this business to be having a profit of at least GBP 100 million, the LNG part of the business. As you look out, you know, we've got all of 2024 hedged.
We've got the majority of 25, a slight majority of 26, and then probably about a quarter of 27 hedged. There's still quite a bit of open volume. You've got to have the liquidity. As Russell mentioned, you've also got to manage the credit risk as well. If we do physical hedging, then we flip market risk into credit risk, and that can be great as long as the counterparty performs. We've got to manage this really dynamically, you know, pricing and creditworthiness. I don't think it's enough to say we expect, you know, 23 to be 22 and 24 to be 23. However, I'm looking at Arturo just now. That is the target every year for every year to be better than the previous year.
It takes a lot of work, a lot of active management.
Brilliant. Thank you very much.
Thanks, Jenny.
The next question is coming from Mark Freshney from CS. Please go ahead.
Hello. Thank you for taking my questions. Firstly, if I could ask about something you haven't really spoken about, which is the Qatar contract, which is one of the oldest ones, which I think rolls off shortly or has rolled off. As I understand it, a lot of the gas didn't reach the U.K. The admin fee was paid, but or the admin fee per cargo. Can you talk about how important that contract was for your profit mix? I guess secondly, you know, I remember just three years ago when, you know, four or five years ago when similar sort of scale businesses like those at ENGIE or Ørsted had LNG businesses that they sold for a marginal price or even paid someone to take.
That was before the energy crisis, and the optimization was quite small. You know, energy is falling back now, hasn't gone back to pre-level, pre-crisis levels. As the differentials fall, can you envisage a scenario under which the optimization gains, you know, become de minimis and there's more LNG tankers, etc., and more floating LNG facilities in Europe hit the market? This is not a business that sees one-way profitability trends. Thank you.
Thanks very much. I'll try and do the second one about the, you know, the portfolios and the like, and Cassim will talk about the Qatar contract. I would look and say that there are many different forecasts about the tightness of the gas market as we go forward. As you know, it's a global business, so, you know, the impact of some activity in China can impact the, yeah, the power price in Europe by virtue of, you know, the LNG comes into Europe. It's not really about the absolute prices. It's about the relative prices as you know.
The thing that we look at on the junior contract is the delta between the Henry Hub price and the European gas prices, although we can take it elsewhere. I would look and say we are very comfortable with how the group is set up today. EM&T is a core part of the group, and I think LNG is a core part of the EM&T. I've said this all along, though. I have no emotional attachment to any of our businesses. You know, I enjoy very much working with Arturo, but he would be the same. If somebody came along and offered us a multiple of what this business is worth to us, it's in our shareholder interest to take that money.
That's, it's one of these things where nothing in the group is for sale and everything's for sale at the same time. That's just how you run a business. It's the same as the LNG cargos. Even the LNG cargos that Arturo's hedged are all for sale if somebody comes along with a bigger price. I would look into the portfolio we've put together. It's taken us quite some time, and we really quite like that. I think floating LNG in Europe, I mean, that's great, but that's just another store. You still have to fill it up. I wouldn't really look at. I look at that as being more about Europe has more gas storage capacity and therefore can better manage the short-term fluctuations in prices.
As we mentioned, we don't really go naked in the short-term fluctuation in prices. We hedge anyway. Whether they're taking LNG into the bridge head through the U.K. and sending it into Europe through the interconnectors or whether it's a German floating LNG receiving terminals, I'm not sure that really has that much of an impact. It just means that you won't have these kind of really volatile days in the U.K. where the interconnect it goes down and the gas price goes negative because there's nowhere to put the gas. It's a cyclical business. You know, last year, in EM&T in general, we saw biggest profits we've ever seen. I doubt we'll see profits at that level this year. Could we see them again going forward?
We absolutely could if you have the same tightness in the energy market. That's why what we'll do is we'll provide guide for people, which is through the cycle, what do we expect EM&T and our other commodity price exposed businesses to do through the cycle. You've really got to look at it on that basis. With that I'll ask Cassim to just talk about the Qatar contract.
Regarding the Qatar contract, it used to be actually really important to our portfolio. When we first set up the LNG business and we had the Isle of Grain regas facility and the tsunami happened, then Europe wasn't competitive on LNG. At that point, Qatar had a real value proposition for us. If you look at the role of QatarEnergy LNG now, actually it's not a significant contract from a PNL contribution perspective, from a portfolio perspective, but it's also playing to our longer term sort of objective, which is to diversify our contracts. What we are trying to do is to make sure that no one contract dominates our portfolio. As we look ahead, you know, we have choices in terms of how we manage our portfolio, how we procure different contracts, under what indices, etc..
QatarEnergy LNG as a contract is becoming less and less significant. We'll continue to evolve our portfolio. In the future, it may play a bigger part. We'll look at that from a market opportunity perspective. Hopefully, that answers the question.
Yes. Thank you.
Thanks, Mark.
The next question is coming from Harry Wyburd from Exane BNP Paribas. Please go ahead.
Hi. Thanks, everyone. Hi, Chris, thanks a lot for the presentation. Two from me. First, sorry to sort of labor on the numbers, I wondered if I could put some numbers to you. On slide 15, you're basically half unhedged on your Sabine Pass contracts, looking at the futures prices and running it through the numbers on shipping and regas costs and so on, that sort of suggests about a couple of hundred million pounds of margin for the whole contract. If it's half unhedged, you know, be looking at sort of high double-digit million pounds worth of profitability from that 46% unhedged portion. I wondered, are we looking at potentially an uptick here in 2026 when this specific contract comes unhedged?
How does that play into the numbers that you mentioned, Chris, earlier, sort of talking about triple digit million profitability on an ongoing basis? Just the second one in terms of growing this business, how do you see the business actually growing? Are you just gonna grow in line with the growth and the size of the market, or is this something where you think you can actually take share by, I don't know, maybe hiring more traders? It's notable that you're making a lot of money out of just eight people. I wondered what scope there was to actually take share. Also one other thing you've got, I guess, is a lot of cash.
You know, for instance, could you buy vessels or enter into new time charters that give you a bit of a competitive edge here and also use some of your balance sheet? Thank you.
Harry, thanks very much for the question. On the profitability, I've already got in trouble from Russell sitting to my left, and he's already given me a bit of a slap for giving numbers. I can't give any more numbers. What I would say is, remember, when the chart that you look at just now in a month's time will look different. It's not that we keep 46% in 2026 open, and then we decide in two years to hedge that. We always are looking for opportunities. But we like to We hedge our upstream portfolio on a rateable basis. We don't hedge this on a rateable basis, but we do keep in mind how much we've got open.
It's no coincidence that you look out, you know, the further out it goes, the more we've got open. It really does depend on the market conditions. It's all about risk management. Now, we could sit and have a fundamental view that 2027 is gonna be very tight in the gas market and keep 73% of these volumes open. Then we could get out that way and find out we were wrong, and that would have been a very expensive mistake. Even with our fundamental view, we will take risk off as we see a profitable ability to do that. On your growth question, I think we've got eight LNG traders. There are a lot more people that sit around that business to do, you know, what? The marine operations. I mean, this is a logistics business.
We've got 700+ people in Energy Marketing and Trading, principally in the U.K. and Denmark, but also in Singapore and Hamburg, in Belgium. This is a huge business. There's a lot, there's a lot of effort around it, and we've got a great team. The growth that we can see, obviously we're, we've got the Delfin contract, we've got Mozambique contract coming on. There might be other midterm contracts that we can take on. We might need other shipping capacity. How we think about growth is if you think about the three-legged stool that the group is, with optimization, infrastructure, and retail, we always think about keeping a balance.
We could go out today and do another five LNG deals, but it would make the group a bit more imbalanced, and it's not really what we want to do. What we'd like to do is to find a way to grow. All of our eight business units have good growth opportunities. We'd like to grow them over the midterm in lockstep. At some point, you'll have it, you'll have binary deals to do, but we're focused on growing all of our businesses because they all help and de-risk at least one other business in the group. The LNG growth will come from a number of areas. If we can get more traders, fantastic. If we can see more well-priced ships, then absolutely. That gives you option value.
We've just got to make sure we can get the extrinsic value out of those, out of those options. I would hope that we can grow these as we go forward. I wouldn't expect any more long-term LNG deals until we see more material growth in the infrastructure in the retail businesses though, because that makes groups like them more lopsided. Please, no more questions on profitability or I really will get a punch in the face from Russell, which you might hear. There's a sensitive microphone in here.
Okay. I apologize. Thank you very much. Thanks.
On the question of investments in more generally, do we have capital available for this business? Yes, we do. We are in a strong position with the balance sheet. Everything in Centrica is measured against risk-adjusted returns. Capital would only be going towards this business, whether it's new storage, new vessels, new opportunities, if we've got comfort that it meets the hurdles that we've put in place with the business, and we make sure that the risk is well managed. That's how we would approach new opportunities. If Arturo were to come to Cassim and I with an opportunity, we would look at it. We are looking at it, and we want to grab value where we can.
Got it. Thank you.
The next question is coming from Pavan Mahbubani from JP Morgan. Please go ahead.
Hey, team. Good afternoon. Thank you for the very insightful presentation and your answers to the previous questions. I have scratched out all of my questions on profitability, Chris. I'll just leave it to a high-level question on gas prices, please. I mean, clearly, warm weather and lower than expected demand in Europe and Asia has put downward pressure on gas prices. I was just wondering what your view is on whether you see more upside or downside risk to prices today and what areas you think the market should be focusing on going into, you know, the rest of this year and also next. Thank you.
Yeah. Pavan, let me try and then see if Cassim and Arturo wants to add to that. I think that Well, I'm sitting on the fence here. It's possible the gas prices will go lower, and it's possible that they'll go a lot higher. I think what we're seeing just now is, economic growth in China, or the demand in China hasn't really come back as we expected. There's more LNG coming into Europe, which is depressing the prices. The tightness in the market still exists. It really is the lower prices are not driven by a glut of supply, but they're driven by depressed demand. If that depressed demand stays and we don't have a supply shock, you would expect prices to stay roughly where they are.
If the depressed demand disappears and we don't have a supply shock, you'd expect prices to go up from where we are. If the depressed demand disappears and we have a supply shock, you'd expect prices to go through the roof. On how we think about it, and as Russell and Cassim and Arturo said, it's all about risk management. How do we manage the risk that we carry? I think our results over the years have demonstrated we manage it actually rather well. I think it's an area of real expertise in Centrica. My personal view is that the market is really quite tight and something will happen. I think it's been really benign.
When that happens, I can say this 'cause I'm not really a market participant in the likes of the traders and like, I think markets get complacent. I think there's a bit of complacency at the moment. I think there is a real risk that if something changes on the supply or demand side, you would see quite an overreaction because there isn't much spare there. Cassim, I don't know if you want to add to that.
No, that's a brilliant answer, Chris. I couldn't imagine anymore.
Thank you.
Yeah. That's very insightful. Thank you very much, Chris.
Thanks, Pavan.
The next question is coming from Martin Young from Investec. Please go ahead.
Yeah. Good afternoon to everybody. I am gonna ask a numbers question, but it's more about what is already behind us. Obviously, 2022 was arguably a bit of a special, you know, situation. If we think about the ballpark number that this activity would have contributed in the past, are you able to give some sort of rough indication of where that might be? Secondly, on slide 15, on the right-hand side of things, can you just talk me through again how you can still get optimization when you're delivering physical cargo ex-ship to a buyer? Thanks.
Martin, thanks very much for the question. I can't really give you any more color on the numbers. Obviously, we're only, what? Four and a half months into the year. Arturo will come on and talk to you again, just to explain how we can get an upside on a cargo we've already sold but not yet delivered. I would ask you to be around. As you think about this, remember, we've got seven and a half months left of the activity that Arturo was just about to describe to you.
This was.
Could it be better than last year? Yeah.
This was more about where we might have been in 2020 and 2021 just to get a sort of a feel for, you know, how this business is, you know, potentially significantly upsized relative to where it was earlier in its history.
All I can say is it's better than it was, and I hope that we can make it better than it is. would be the best. Again, part of it is really around. This is where I think that it's maybe underappreciated by the market, but what we've got. We have a material LNG portfolio. We have the ability to move incredibly quickly, and we are different to deal with than the really big companies. There are companies that don't want to deal with those that have massive LNG portfolios because they're not as straightforward to deal with. They're not as quick to deal with as we are. You remember when we did the PPA teaching, we pointed out that we could do a PPA in or the route to market teaching.
We could do a power purchase agreement in six weeks, and the competition would take three months. We weren't happy about the six weeks down to one week. It just gives you the idea of how quickly we can move against large competitors in any market that EM&T's in. I think there's a lot more that we can do here. I think we continue to push to make this business better. I don't know, Arturo, if you want to explain how we can get that additional optimization of the cargo that we've already sold.
No, that's fine. Thank you, Chris. I mean, I'm gonna just share one example of something that we did last year several times. We have one contract in the Middle East, kind of have index. Basically, that hedges completely our exports of Sabine Pass. The idea base case again is instead of taking that into Ukraine, we just take that into the Middle East. What happened last year is that the price in the Middle East, that is, as we were saying before, is indexed to JKM, was below the prices in Europe because the U... was a premium market because of the geopolitical situation.
What happened was that, we could take our Sabine Pass cargo into Europe, and as we have the flexibility to replace the cargo that we were shipping to the Middle East, we bought another cargo in the Middle East. The profit that we made was the difference between the JKM price that we could achieve on the cargo that we were buying in the Middle East and the price that we were getting by diverting our Sabine Pass cargo into Europe. It's similar to what we were saying before. I mean, this is why having an exit sale with enough flexibility, I mean, if the market moves, allow us just to replace those cargoes somewhere else and divert our own cargoes to the premium markets.
Thanks. Thanks, Arturo.
Thank you. Thanks.
Mark, I would just add on to that is, and the benefit is being able to move quickly means you can get it before your competitors. Being easier to deal with means that those that have got those square cargoes will be keener to deal with us than maybe with some of our competitors. That's not same for everybody, but I think it is the same when you're looking at optimization. I think it's the more flexible people than you want to deal with. Hopefully, that helps.
Thank you.
In the interest of time, the last question is coming from Sam Arie from UBS. Please go ahead.
Hi, everyone.
I'm sorry. Please go ahead now.
Thank you very much for the great presentation. We really enjoy these events, appreciate you putting them on. Let me say hello to my old friend, Cass, as well, and thank you, Cass, for your part today. I have a couple of questions. First one very easy. Just Chris, you danced a bit around this idea of guidance. At one point you talked about through the cycle guidance, you talked about the hundreds of millions. Harry played that back as if it was a firm comment, you sort of seemed to be saying, "No, wait a minute, it wasn't." Can you kind of give you the chance to be clear on whether you were sort of giving a through cycle LNG guidance there that we could rely on or not?
I'd just love to clear that up. Secondly, my sort of wider question is, if you just think about your LNG activity on a standalone basis, I'm interested who you think your kind of closest peers are in the world, who's doing the most similar thing to you, who's got the most similar setup and sizing to you. Sort of if you think of that LNG business as kind of nestled within the rest of EM&T, and EM&T sitting within the rest of Centrica with the downstream and upstream activities around it, but in a situation where last year it was creating half the EBIT.
I just wonder if you think that structure is mirrored anywhere else, obviously, in the world, if we should think of anybody else having the same sort of overall setup of an LNG business sort of nestled in a wider business in the same way. It just seems to me there's some, obviously, a business that's got tons of optionality, and you've got an amazing capability, and there's brilliant cash flow and so on at the moment in the right conditions. I'm wondering if there's some elements of the setup at Centrica that remain a little bit unusual and whether you see that as an advantage or an issue to resolve over time.
Sam, look, thanks very much for the question. Let me try and I'll ask maybe Arturo and Kevin to talk about like it reminds me of individual competitors in parts of the business. I think that on the first question, what I didn't say it was hundreds. I think the question was, is it tens of millions of GBP or is it hundreds of millions of GBP? What I said was it's neither really. It's several tens, which will get you to in the midterm, maybe GBP 100 million, I said slightly north of it. It's not hundreds and it's not tens. It's kind of in between. I think what I tried to say was I would expect a nine-figure sum in the midterm, but that's not just gonna be hundreds of millions of GBP.
It's some, you know, we'd expect it to be several 10s and that should add up to over 100. There's different things that can add here, and I'd like it to be higher as we go into the optimization activity that Arturo spoke about. You can see it, the market can be volatile. Although we've hedged numbers, although we've hedged cargoes in, Arturo just described it, we've obviously got an assumption on optimization. We can have hedged the numbers and still have optionality of extrinsic value that we estimate will be there if the market conditions don't provide that, then we can't realize it. If they do, I'm confident the team will get it because of the past performance. On the, you know, who looks like Centrica?
This is a question we've had a lot, and it makes your job more difficult, I think, as analysts. I think that how we think of our portfolio is, this is true, that all eight of our business units, every one of them de-risks the group and makes at least one other business unit better. If you take EM&T, for example, that is, I said before, that's the glue that holds the group together. It's there to hedge the downstream books and it hedge the upstream production, and it's grown over time into a business in its own right. If we didn't do LNG trading and the like, would we still have EM&T? Absolutely, we would. It wouldn't be as good.
The beauty of this business and the other businesses in the group is the more that you can I mean, think about extracting extrinsic value from a cargo you've already hedged, like Arturo described. That's how I think of how you grow this business, which is we exist because we've got a large downstream book and a large upstream production portfolio. As you put a bit of risk capital to work, we can grow. Our activities grow, we can attract better people, we can attract more people, and you get this really positive cycle, which. When you do that, you can then hedge your downstream book better. You can improve the downstream business. You can hedge your upstream book better. You can improve that business.
If you think what I said about the three-legged stool, then if those businesses grow, you can then grow your activities in energy marketing and trading. I struggle to think of another company that has all of the activities that we've got. The balance we've got between, if you look last year's results, gas production and electricity production, much the same in terms of the profitability. There'll be some companies that have lots of electricity and some gas or lots of gas and some electricity, but I don't think anyone's got that balance necessarily there. The scale of the customer book, there are probably one or two other companies that have a customer book of that scale embedded with infrastructure businesses, but the infrastructure business is probably dwarfed.
I think TotalEnergies have got about 6 million customers in France, but, you know, it's a really small part of their business, but it's a big part of ours. I don't think there's anyone else that's in the market that we're in and in the in-home servicing business. No, I don't think there are many that look like us. You know, the in-home servicing business is the area in which we are developing the integrated home energy management of the future. If you think of that will be kit that we install, EV chargers, Hive thermostats, off which you'll run your integrated home energy management system. We'll sell you energy, but we'll also have demand-side response. The people trading the demand-side response will be in Cassim's team in Energy Marketing and Trading.
Even when you look and see, there's a link between services and Energy Marketing and Trading. I don't think there is anyone else that looks like us. I think that we've got businesses that de-risk, and you've got some, you know, when you see higher absolute prices, there isn't a direct de-risking from the upstream business to the downstream business because we've got price caps. The higher the absolute price, the bigger the risk in the downstream business, but also the bigger the profits in the upstream business. If you've got the volatility as well, as we showed in EM&T, we can capture that. It's a long way there.
I can't think of any big corporate competitor, but I don't know, Arturo, whether there's one or two in LNG that you think of as competitors or Cassim in trading. Feel free to say no because I know sometimes you don't want to either flatter or antagonize any people.
If I just start with EM&T first, and then Arturo please feel free to talk about LNG more specifically. If I think about EM&T and the three pillars that we talk about, there's gas and power trading, there's LNG, and then there's what we call the route-to-market, the renewables business. I can confidently say that for renewables itself, we are the biggest third-party provider in Europe, if not in the top three, right? We've got some benchmarking data around that. If I look at gas and power, I think we are one of the prominent traders in Europe. The really interesting thing for us is when I look across the portfolio at the three pillars, I think we are one of the most balanced trading businesses out there in Europe.
Therefore, if I look at the relationship between gas and power, LNG and route-to-market, they actually play a very good portfolio sort of dynamic around it. The diversification of that actually really helps us manage the three legs of that business really well. Arturo, in terms of LNG, what's your perspective?
Cassim.
I mean, I'm gonna build into the same comment. I mean, when I compare to peers in LNG, I would say that we're somehow unique. I mean, the main difference is that most people have historically built on their businesses based on volume, and most of them fail. I mean, we have done something different that is building that based on flexibility. I think that we are well ahead any other companies on that approach. Now we have, I mean, I have colleagues that come to me kind of heading some other companies and saying, "Oh, how have you done this? What is your view?" Now, I mean, we're comfortable to share that we have done that based on flexibility because we are well ahead.
We have our portfolio that is flexible, and we have new contracts that are coming that are flexible. I think we are, I mean, it's difficult to compare us with someone else. I think we are kind of, we have always found niche opportunities, flexible opportunities, and that's been our goal compared to other companies. I think most likely in the future, we will see more companies like us or trying to be like us, but I don't think that I could just name one company now that is similar to us.
Thanks, Arturo.
Very interesting. I appreciate that. Chris, do you have?
Thanks, guys.
... time for a quick follow-up, or are we at the end?
It'll have to be very quick. I'm gonna get in trouble here, but if it's very quick, and as long as you're not asking for a profit forecast.
I was just gonna ask you from your point of view, you have the tricky job of then thinking all this cash flow that's coming from the trading activities. How do you think about that when you're back at the utility level thinking about your dividend policy?
I don't think of it that way. I think of the group, you know, obviously we manage our businesses. Our businesses have clear goals and aims, and objectives. I think what we're doing a lot better in Centrica over the past few years is, there's a lot more collaboration across the businesses. They work a lot more closely together. We set the group up to be a balanced portfolio. We like the, you know, the three pillars of, think of the three-legged stool. We like to keep that in balance. In some years, some parts will do better than other years, other parts will do better. That's. All right. I mean, the challenge, and Russell laid this out in July when we talk about strategy and our capital framework.
The challenge is, how do we give people a new session? How do we give people more comfort and more understanding of what the business is? More comfort that quite a lot, although we are in a volatile business, there is an element of repeatability to our earnings. There's, you know, we try and bring the risk down as much as possible to stabilize the earnings. There's always gonna be volatility in there. We just have to be cognizant of that when we set our dividend policy. Hopefully, we've shown by, you know, by the GBP 550 million, I think, capital return, that when we have excess capital, we return that to the shareholders. That again got to be looked at through the cycle.
It's not about we looking to have a formula. We say at the end of June, oh, we have some excess capital. Right, let's have a buyback. It's around saying, "Well, what are the plans? What are the financing rights? How do we think how the shareholders the rights have had for the past few years? Where does the dividend policy come out?" It's all. It's everything that we do is really a collection of conversations, and we look at it in the round. I'm delighted to have such strong performance last year. You know, it won't be as strong this year, I don't think. Other parts of the business this year will be stronger than they were last year.
That's just the nature of having this, a diversified business but focused on energy, so. Okay. Very good. Thank you, Chris. All right. Thanks, Sam. Thank you.
This concludes our question and answer session. I would like to turn the conference back over to Chris O'Shea for any closing remarks.
Thank you very much, Maclean. Thanks everybody for joining. Hopefully, you've found this session useful today, and you come to appreciate a bit more about the quality that we've got in LNG and just how we make money in this business. It's a core part of EM&T, which is a core part of the group. It's a business that I am very happy that we've got, and really proud of the team and the work that they've done over the past 10 years or so to build something that was a bit of a glint in somebody's eye into a material profit generator for the group and another foundation from which we can grow.
I think that that's probably the last event we've got until the results, which are towards the end of July. Look forward to seeing you all, in two months. Thank you very much.