Alliance, which also competes with British Gas in its own right, said potential sales for the two companies from the five-year agreement were pounds 75m.
Sir James McKinnon, former director-general of gas supply, will act as adviser to Calor's natural gas business. Sir James said the combination of Calor's well-known name and assured natural gas supplies from Alliance would prove a powerful force in the market.
Initially, Calor will supply smaller businesses but it hopes to enter the domestic market after the British Gas monopoly ends in 1996. Howard Robinson, chief executive of Calor, said: 'This is a major strategic move for Calor. It is our wish to establish a significant share of the overall market, which is currently valued at some pounds 8bn a year.'
He said the turnover from natural gas could easily become as large as that from its existing businesses. Calor, which has restructured over the past two years with the loss of 1,500 jobs, more than doubled net profits in the first half to pounds 17.5m on a turnover of pounds 153m.
Under the terms of the agreement, Calor will market the gas while Alliance will arrange for the supplies to be sent via British Gas pipelines according to the daily needs of Calor's customers.
Alliance, which already supplies 19,000 customers in the UK, said there would also be full competition between the two in selling to end- users. Alliance has a turnover of pounds 150m a year in the supply of gas to customers using more than 2,500 therms. It aims to become a big supplier of domestic gas.Reuse content