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UK LNG Supply

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Centrica, UK’s biggest household energy supplier envisages signing a long-term LNG import deal with U.S. companies.

The current 3 year LNG deal with Qatargas coming to and end within the next 12 months,

the UK must find replacement sources to meet its increasing import demand as global price variations and new gas discoveries are favouring carrying the gas to Asia instead of Europe.

Centrica is negotiating with many American LNG firms including Cheniere Energy and Freeport LNG on an agreement that would represent the first ever long-term LNG deal with guaranteed supplies for the UK. Gas prices in the UK are three times higher compared to those in the U.S. at $10 per million British thermal units (mmBtu). The UK domestic gas production is declining and the country is becoming heavily dependent on pipeline imports from Norway and random LNG shipments from Qatar, making prices volatile when supplies drop.

The current framework with Qatargas is a £2bn deal for 2.4m tonnes of LNG over three years, rather than 4m tonnes for 20 years that would have been preferred.

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.


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