Centrica, the owner of British Gas, has extended its multi-billion pound deal with Qatar to purchase gas until 2023 in an aim to help the UK increase its imports to replace dwindling domestic supplies from the North Sea.
The energy giant will buy up to two million tonnes of Liquefied Natural Gas (LNG) each year from January 2019 in a deal worth up to £2 billion, once its existing contract ends. The company first entered in to a deal with Qatargas to buy LNG in 2011, before it extended its current deal, which ends in December 2018.
“With the decline in North Sea production and the recent growth in global LNG supply, the UK is increasingly becoming an attractive destination for LNG,” Centrica said.
If all of this gas were to come to the UK, it could supply the needs of around two million homes, according to Centrica; however, the energy firm is not obligated to bring all of the LNG to the UK, and could, for example, sell volume to other countries in Europe. Over the past five years however, Centrica has imported 40 cargoes to the Britain.
The new agreement is for a lower annual volume, with the previous deals for 2.4 million tonnes and 3 million tonnes a year respectively.
Forecasts currently show that by the mid-2020’s, the UK will need to import around two-thirds of its natural gas requirements as oil North Sea fields become decommissioned. Currently, the UK imports about half of its gas needs, with LNG accounting for 31 percent of gas imports in 2015, 92 percent of which came from Qatar.
Iain Conn, Centrica chief executive, said: “The scale of our gas demand and our strong energy marketing and trading capabilities mean we are ideally placed to work with LNG producers across the world, providing flexibility and a route to market at a time when secure market access is increasingly important.”
Saad Sherida Al-Kaabi, Qatar Petroleum president and chairman of the Qatargas board, said the deal “underscores Qatargas’ reputation as a safe and reliable supplier of LNG” and “has the potential to positively contribute to the United Kingdom’s energy security for years to come”.
Source: The Telegraph