Centrica, the owner of British Gas, announced on Wednesday that it had agreed a new £4.4 billion deal with Qatar for the supply of natural gas up until 2018. The new deal only works to highlight the UK's growing dependence on imported fuels as production at the North Sea declines far faster than had been anticipated.
The deal, signed by Centrica and Qatargas, the country's gas company, will see three million tonnes of liquefied natural gas (LNG) delivered each year to a terminal in north Kent; enough to meet 13% of domestic natural gas demand.
Centrica already holds a similar deal with Qatar, which it signed in February 2011, but as already more than half of the supplies linked to that deal have been delivered, the company decided that it was time to set up a renewal.
Sam Laidlaw, the Chief Executive Officer of Centrica, told the Guardian that; "we are delighted that we continue to deepen our relationship with Qatargas and continue to build our LNG business by integrating our positions along the gas value chain.
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It is vital that the UK has a diverse range of sources of supply to meet its energy requirements. In a competitive international market, contracts like this underpin the UK's access to global LNG supplies for the benefit of customers."
As North Sea production declines the UK has become dangerously reliant on imported natural gas, creating a vulnerability that was highlighted earlier in the year when a problem with one of the main import pipelines forced a brief shutdown that almost saw the country run out of gas.
Qatar, with some of the largest natural gas deposits in the world, is constantly looking for new markets for its product. Khalid Bin Khalifa Al Thani, the CEO of Qatargas explained that "the continued economic slowdown, coupled with the impact of European energy and climate-change policies and their unintended effects on the energy markets, has seriously dampened and even reversed in some cases the growth of gas consumption that was achieved in the continent during the last decade.
There is no doubt that the European economies will start recovering in the near future and consequently gas consumption growth will return. While at the same time, European domestic gas production continues to decline."
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com More