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    Statoil and Centrica Sign £13Bn Gas Deal



Norwegian Statoil and British company Centrica plc, the parent company of British Gas, have today announced the signing of a £13 billion gas agreement for the supply of gas to the UK market.


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Natural Gas & LNG News, News By Country, Norway, United Kingdom

Statoil and Centrica Sign £13Bn Gas Deal

Norwegian Statoil and British company Centrica plc, the parent company of British Gas, have today announced the signing of a £13 billion gas agreement for the supply of gas to the UK market.

The gas deal, which will begin in 2015, will see Statoil supply a total of 50 billion cubic metres (bcm) of gas to the UK over the course of 10 years. Centrica says the deal will see Statoil provide around five per cent of total UK annual demand, enough for 3.5 million homes. The agreement follows an existing one between Statoil and Centrica, which is due to expire in 2015.

In a separate agreement, Centrica will acquire a gas and oil production and development package in the North Sea in Norway from Statoil Petroleum AS. Centrica says the deal is worth a US$1,525 million (£965 million) cash consideration. This may rise by an extra  US$100 million (£63 million), contingent on future production performance of the Kvitebjørn asset.

Centrica says that the deal will see daily production rise by 25 per cent, up by 34,000 boe per day (12 mmboe per annum).

Heads of both companies welcomed the agreements today, as did UK Prime Minister David Cameron.

"The agreement demonstrates that natural gas is set to play an important role in the UK’s long term energy mix," Statoil President and CEO Helge Lund said. "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.

"Today’s announcement is of high strategic importance as 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 also shows the competitiveness of Statoil’s natural gas portfolio on the NCS (Norwegian Continental Shelf)."

CEO of Centrica Sam Laidlaw said that the deals will increase the security of UK energy supply.

"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,"he said.

"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. 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.

"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."

Prime Minister David Cameron also said that the deal would increase gas security today.

"I warmly welcome this announcement, which underlines the strength and depth of the partnership that the UK & Norway enjoy," 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."

Statoil and Centrica also signed a Memorandum of Understanding (MOU) today to consider partnering on projects and gas exploration in Norway and the UK.