Centrica the owners of British Gas have signed a four year agreement to purchase Liquefied Natural Gas (LNG) from Qatargas. The deal worth £4.4 billion with Qatar, one of the world’s largest exporters of Liquefied Natural Gas is an extension of current agreements.
Currently Centrica has a deal with Qatar that expires in June 2014, the new agreement signed Centrica will purchase 3million tonnes of LNG per annum till 2018. 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.”
The UK is becoming increasingly reliant on imported gas as its own North Sea reserves dwindle. Other sources of gas are from pipelines from Norway as well as the continent. This is becoming an increasing cost: the previous LNG deal was for 2.4 million tonnes per year from 2011 to 2014 was worth £2 billion. Therefore both our demand and the market price has risen.
How much gas is 3 million tonnes? Centrica said the new deal could provide gas to meet about 13 per cent of UK annual residential gas demand, enough to meet the needs of about 3m households.
Once this agreement expires in 2018 a deal signed in March this year between Centrica and the North American Cheniere Energy for the US to start exporting its’ gas to the UK for 10 years begins.