Centrica, the owner of British Gas, today spent £4.4 billion on new energy supplies from the Qataris that will provide 13% of the UK’s gas needs.
The four-and-a-half-year agreement with Qatargas sees Centrica buy up to three million tonnes of liquefied natural gas (LNG) a year, building on a £2 billion deal with Qatargas that was signed in February 2011 and runs out next year.
The latest contract sees Centrica buy in gas from Qatar to supply three million UK households. Britain’s biggest energy supplier has opted to sign foreign deals, including a £10 billion agreement to buy gas from the US that was signed in March, rather than invest in new power generators in the UK.
However, the first gas shipments of that US deal are not due until September 2018, and the industry has warned of shortages.
Energy Minister Michael Fallon flew to Qatar for meetings with the Arab state’s energy and finance ministers on Monday, after last winter’s extended cold snap led to warnings that this country’s gas supplies were close to running out.
Fallon said: “Long-term deals of this kind with reliable suppliers like Qatar are vital for our future energy security.”
The gas will be delivered to the Isle of Grain facility in Kent. Almost a fifth of the UK’s gas imports already come from Qatar, with more than half originating from overseas. The total is expected to hit 75% by 2030.
Centrica pulled out of plans to build Britain’s first nuclear plants in a generation earlier this year, with a consortium led by French rival EDF and two Chinese firms instead working on Hinkley Point in Somerset. The energy giant also said that it was facing increasing global competition from emerging economies to buy up LNG supplies, as well as dealing with declining North Sea production.
Chief executive Sam Laidlaw, said it was “vital that the UK has a diverse range of sources of supply to meet its energy requirements.”
Britain became a net gas importer for the first time in 2004 and currently depends on gas supplies via pipelines from Norway and elsewhere in mainland Europe.
Centrica shares fell 6.6p to 351.4p.
