Centrica in £2bn Qatar gas deal
Wednesday 23 February 2011
British Gas parent Centrica today announced a £2 billion deal with Qatar for the supply of enough gas to meet the needs of around 2.5 million UK households.
The three-year supply contract for liquefied natural gas (LNG) with Qatargas is the first deal of its kind for the UK firm.
Centrica added the agreement was an important step forward in meeting the UK's energy needs as competition for gas increases and North Sea production declines.
The deal, which was unveiled as chief executive Sam Laidlaw accompanied Prime Minister David Cameron on a trade delegation to Qatar, will provide enough gas to meet around 10% of UK residential gas demand and around 25% of households supplied by British Gas.
Centrica said it hoped the contract would be the start of a longer-term relationship with Qatar, which has the world's third largest gas reserves and already supplies the UK with 15% of its total gas demand.
It provides welcome security of supply for LNG, which is traditionally bought in the notoriously unreliable spot cargo market.
Spot - or immediate - trading is often subject to disruption as cargoes are diverted by the highest bidders.
Mr Cameron welcomed news of Centrica's Qatar contract. He said: "This important agreement is good for Britain; good for our energy security, good for jobs, and good for economic growth."
Qatargas will supply 2.4 million tonnes a year of gas to the UK's Isle of Grain facility under its contract with Centrica.
Mr Laidlaw said: "The UK is the largest gas consumer in Europe and one of the fastest growing markets for gas imports. LNG provides the UK with a bridge to major global gas reserves. This deal is of particular importance and we hope that this will be the start of a longer term working relationship."
Britain already imports 55% of its gas, which will rise to 83% by 2025, according to Centrica.
The group is reporting full-year results tomorrow, with expectations for it to reveal a 29% surge in profits.
The news is likely to stoke public anger over high energy bills after British Gas put up its prices by 7% in December.
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