Centrica Partners with Statoil

Author: Spencer Ogden
Date posted22/Nov/2011
Author: Spencer Ogden

The parent company of British Gas, Centrica, is collaborating Statoil ASA to supply 50 billion cubic metres (bcm) of gas to the UK. The 10 year, NBP-linked gas supply contract worth a reported £13 billion begins in 2015 and will provide around five percent of the UK’s annual demand, or enough for 3.5 million homes. Britain currently imports around 50 percent of its gas requirements, underscoring the importance of the Norwegian relationship to UK energy security.

Centrica has also announced an agreement with Statoil Petroleum to acquire oil and gas assets in the Norwegian sector of the North Sea for $1.5 billion (£965 million). The utility announces the deal “will add 117 million barrels of oil equivalent (mmboe) of 2P reserves, an increase of 29 per cent1, as well as attractive development potential. It is subject to customary closing conditions.”
 The transaction increases Centrica’s production by 34,000 boe per day, nearly a 25 percent annual increase and builds on the company’s growing presence in Norway as Centrica operates producing assets in Norway for the first time.

In addition, Centrica and Statoil ASA signed a Memorandum of Understanding (MOU) to consider partnering on gas-focused exploration opportunities in Norway and the UK.

Centrica Chief Executive Officer Sam Laidlaw says his company “is at the forefront of helping to deliver UK energy security and our strategic relationship with Statoil links us to one of the world’s largest gas exporters and a natural partner to the UK. Following the signing of this 10 year deal, the total value of future gas supplies secured by Centrica for the UK now stands at more than £50 billion.”

Laidlaw also notes that in addition to being the second largest gas producer in the UK, Centrica also has “one of the fastest growing exploration and production businesses on the Norwegian continental shelf. This transaction is an important further step in building the business and deploys capital to deliver value. Much of the gas acquired through this transaction will also come to the UK market, providing further energy security for British Gas customers long into the future.”

Prime Minister David Cameron applauded the announcement, which he believes “underlines the strength and depth of the partnership that the UK & Norway enjoy. Gas plays a central role in powering our economy, and will continue to do so for decades to come. Today’s agreement will help to ensure the continued security and competitiveness of gas supplies to Britain, from a trusted and reliable neighbor.”

Helge Lund, Statoil President and CEO, adds: “Today’s announcement is of high strategic importance. Statoil and Centrica, two of the UK’s key energy players, are taking on long-term commitments in order to contribute to UK’s energy security. The agreement demonstrates that natural gas is set to play an important role in the UK’s long term energy mix. Natural gas has all the features needed for the UK to reach its long term energy policy goals of affordability, security of supply and CO2 emissions reduction.”