Centrica signs £13bn Norway supply deal
Monday 21 November 2011
British Gas owner Centrica signed a supply deal today that will secure sufficient gas to meet around 5% of the UK's annual demand.
The 10-year, £13 billion agreement with Norway's Statoil involves the supply of 50 billion cubic metres of gas to the UK from 2015.
Centrica said the deal highlighted the importance of the UK's relationship with Norway for the country's energy security.
The move takes the value of future gas supplies secured by Centrica for the UK to more than £50 billion.
Centrica is also spending £965 million on buying oil and gas assets from Statoil in the Norwegian sector of the North Sea.
The deal will lift Centrica's production by around 25% and means it will have operating facilities in Norway for the first time.
Prime Minister David Cameron said the announcement underlined the strength and depth of the ties between the UK and Norway.
He said: "Gas plays a central role in powering our economy, and will continue to do so for decades to come.
"Today's agreement will help to ensure the continued security and competitiveness of gas supplies to Britain, from a trusted and reliable neighbour."
The Statoil supply deal, which is valued at £13 billion based on today's prices, replaces a previous 10-year deal that was signed in June 2002 and started in 2005. The new agreement is enough for 3.5 million UK households.
Centrica's shares have struggled this year amid fears that the group will struggle to recoup higher wholesale costs.
It said last week that recent warmer weather and higher retail prices had impacted on demand, causing full-year earnings to miss hopes.
Angelos Anastasiou, an analyst at Investec Securities, said the two deals with Statoil should underpin Centrica's upstream and downstream operations.
He added: "Confidence still needs to be regained in the UK supply market for full confidence in the shares to be achieved. However, we believe that the share price is now factoring in unreasonably pessimistic scenarios on the supply side."
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
iJobs Money & Business
£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...
£20000 - £25000 per annum + OTE £35000: SThree: SThree are a global FTSE 250 b...