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."
- 2 How the language you speak changes your view of the world
- 4 Italian police 'reveal' what Jesus looked like as a young boy
'Fire at every person you see': Israeli soldiers reveal they were ordered to shoot to kill in Gaza – even if the targets may have been civilians
Italian police 'reveal' what Jesus looked like as a young boy
Who should I vote for? The Independent quiz matches best political party for undecided voters ahead of the general election
First-time buyers in London 'need to earn at least £77,000'
General Election 2015: Photographic history of Bullingdon Club tracked down - including new picture of David Cameron in his finery
In defence of liberal democracy
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
iJobs Money & Business
£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...
£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...
£215 per day: Ashdown Group: Junior Project Manager (website, web application ...
£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...