Qatar wins $7bn LNG deal with UK's Centrica

Centrica, the parent company of British Gas, on Wednesday announced it has entered into a £4.4bn ($7.08bn) LNG supply agreement with Qatargas for the purchase of up to 3 million tonnes per annum of liquefied natural gas (LNG).

The four-and-a-half year deal builds on Centrica’s existing agreement with Qatargas, signed in February 2011, and could provide gas to meet approximately 13 percent of UK annual residential gas demand, enough to meet the needs of around 3 million households.

The previous contract Centrica signed with Qatargas comes to an end in June 2014.

With increasing global competition from emerging economies for LNG, and declining North Sea production, this transaction secures important gas supplies for Centrica and the UK to December 2018.

Centrica chief executive, Sam Laidlaw, said: "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. 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."

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."

Britain, which became a net gas importer for the first time in 2004, depends on gas via pipelines from Norway, its biggest supplier, and from mainland Europe countries such as the Netherlands and Belgium.

The country's North Sea reserves saw a peak in output at the turn of the century and have seen sharp declines ever since, boosting dependence on LNG suppliers such as Qatar.

So far this year, 93 percent of Britain's LNG imports have come from Qatar. Qatari gas has so far this year made up 19 percent of Britain's total gas imports.

The volume of Qatari LNG arrivals in Britain has slowed down, with 38 percent fewer cargoes arriving in Britain so far this year compared with the same period last year.