Centrica plc, the parent company of British Gas, today announced it has entered into a 4 ½ year LNG supply agreement with Qatargas for the purchase of up to 3 million tonnes per annum of liquefied natural gas (LNG).
The £4.4billion deal builds on Centrica’s existing agreement with Qatargas, signed in February 2011, and could provide gas to meet approximately 13% per cent of UK annual residential gas demand, enough to meet the needs of around 3 million households.
The previous contract Centrica signed with Qatargas comes to an end in June 2014. 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 to December 2018.
Centrica Chief Executive, Sam Laidlaw said:
"We are delighted that we continue to deepen our relationship with Qatargas and continue to build our LNG business by integrating our positions along the gas value chain. It is vital that the UK has a diverse range of sources of supply to meet its energy requirements. In a competitive international market, contracts like this underpin the UK's access to global LNG supplies for the benefit of customers."
Energy Minister, Michael Fallon, who was this week in Qatar, welcomed the news saying:
"Long term deals of this kind with reliable suppliers like Qatar are vital for our future energy security."
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Note for editors
- The contract will begin upon expiry of the existing contract in June 2014. Delivery would be to Centrica’s capacity at the UK Isle of Grain facility.
- The estimated £4.4billion value of the contract is based on the delivery of 3 million tonnes per annum of LNG for 4.5 years based on current NBP future prices.
- In September Centrica and Qatar Petroleum International (QPI) completed a C$1 billion agreement with Suncor Energy to acquire a package of producing oil and natural gas assets in the Western Canadian Sedimentary Basin.