Dynegy seeks pipeline sale to survive

DYNEGY, the US energy trader with major gas storage operations in Britain, warned it may have to file for bankruptcy protection. The Houston-based company, whose executives also refused last night to swear by the truthfulness of the group's accounts, said the sale of its Northern Natural Gas pipeline network was crucial to staving off bankruptcy.

The company, also facing allegations by a former executive that he was fired for refusing to cook the books, is planning to sell the operations to legendary investment guru Warren Buffett's Berkshire Hathaway for $1.88bn (£1.2bn).

Dynegy's troubles are being watched by UK energy companies including Centrica, which store gas at its storage site under the North Sea. Under existing contracts, Dynegy assumes ownership of the gas it stores for customers, but Dynegy Storage has pledged to implement legal measures guaranteeing that if the division became insolvent, customers would get priority over creditors for the gas being stored there.

The site, known as Rough, is a disused gasfield of a size capable of holding enough gas to supply the whole of Britain for 13 days. The agreement will not cover a smaller storage site in Hornsea.

Dynegy was one of a number of distressed companies which failed to meet last night's deadline in the US for company executives to swear by their financial figures. Interim chief executive Dan Dienstbier and chief financal officer Louis Dorey said they could not make the pledge due to a pending restatement of its previous profits.