Centrica plc, the parent company of British Gas, today announced it has entered into an agreement for a unique three year contract with Qatargas to deliver 2.4 million tonnes per annum of liquefied natural gas (LNG) to the UK Isle of Grain facility.
The deal will provide enough gas to meet approximately 10 per cent of UK annual residential gas demand, enough to meet the needs of around 2.5 million households.
This deal will create a unique strategic relationship with the world's number one LNG exporter. With increasing global competition from emerging economies for LNG, and declining North Sea production, this transaction secures important gas supplies for Centrica and the UK for the next three years.
Qatar, which has the world's third largest gas reserves, is set to become an increasingly important source of gas supply for the UK. In 2010 Qatar supplied the UK with 15 per cent of its total gas demand. By 2025 LNG is expected to account for around 50 per cent of UK total supply.
Centrica Chief Executive, Sam Laidlaw, accompanying Prime Minister, David Cameron with other British CEOs on a trade delegation to Qatar, outlined the important role Qatar will play in supplying liquefied natural gas into the UK.
He 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.
"The relationship between Qatar, the world's leading LNG exporter, and the UK connects supplier and consumer nations. Securing gas supplies benefits our customers, underpins our business and provides an important component of the UK's long term energy security."
Commenting on the deal Prime Minister, David Cameron, said: "I welcome today's announcement by Centrica and Qatargas. This important agreement is good for Britain; good for our energy security, good for jobs, and good for economic growth."
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Note for editors
The agreement is subject to finalisation of contract terms. First gas is expected to be delivered under the contract in June 2011.
The estimated £2bn value of the contract is based on the delivery of 2.4 million tonnes of LNG for three years against the average current market price.