Centrica and Total reach agreement on gas supply contract

Centrica has today announced the successful renegotiation of a second 'take or pay' gas contract with Total Oil Marine.

In return for a compensation payment from Centrica, prices will be reduced to market levels on around 500 million therms of gas.

Centrica announced in December last year that it had renegotiated a substantial portion of its high priced gas purchase commitments, reducing overall contract exposure to a manageable level.

In aggregate Centrica has now reduced price and volume commitments on around 49 billion therms since December 1996.

Jake Ulrich, Managing Director of Centrica's energy management group, said: "This deal with Total signals a new era of contract renegotiation where there are benefits to both sides in bringing contracts up to date and in line with the current market.

"While the major transactions of the last year have left us with a manageable remaining exposure, there are still commercially driven opportunities for us and our suppliers."

Total Oil Marine's managing director, Lucien Lallier, said: "We are very pleased with this deal which will help one of our most important customers. We hope it will allow Centrica to continue buying gas from Total Oil Marine for many years to come."