Centrica, the parent company of British Gas, and Norway’s Statoil have signed a strategic agreement for the supply of 50 billion cubic metres (bcm) of gas to the UK.
The 10-year, NBP-linked gas supply contract begins in 2015 and secures sufficient gas to meet around five per cent of the UK’s total annual demand—enough for 3.5 million homes.
The UK currently imports around 50 per cent of its gas requirements.
Centrica also announced it has agreed with Statoil to acquire a package of producing and development oil and gas assets in the Norwegian sector of the North Sea for £965 million. An additional payment of up to £63 million is contingent on future production performance of the Kvitebjørn asset, Centrica said.
Centrica said the transaction increases its production by 34,000 boe per day (12 mmboe per annum), an increase of around 25 per cent, strengthening the company's energy hedge and extending its production profile. It added that the deal will build on its growing position in Norway, delivering value, increasing scale and improving the sustainability of its upstream business.
Through the deal, Centrica becomes an operator of producing assets in Norway for the first time.
Commenting on the deal, Sam Laidlaw, CEO of Centrica, said: "Centrica is at the forefront of helping to deliver UK energy security and our strategic relationship with Statoil links us to one of the world's largest gas exporters and a natural partner to the UK. Following the signing of this 10 year deal, the total value of future gas supplies secured by Centrica for the UK now stands at more than £50 billion."
He continued: "As well as being the second largest gas producer in the UK, we also have one of the fastest growing exploration and production businesses on the Norwegian continental shelf. This transaction is an important further step in building the business and deploys capital to deliver value. Much of the gas acquired through this transaction will also come to the UK market, providing further energy security for British Gas customers long into the future."
Helge Lund, president and CEO of Statoil, said: "Today's announcement is of high strategic importance. Statoil and Centrica, two of the UK's key energy players, are taking on long-term commitments in order to contribute to UK's energy security. The agreement demonstrates that natural gas is set to play an important role in the UK's long term energy mix. Natural gas has all the features needed for the UK to reach its long term energy policy goals of affordability, security of supply and CO2 emissions reduction."
