UK’s Centrica Signs £20 Billion Deal for Norwegian Gas Supplies

(Bloomberg) -- The UK is set to secure imports of Norwegian gas to fuel its economy with a deal that will deepen supply ties with the Nordic nation for the next decade.

Centrica Plc, the owner of British Gas, signed a £20 billion ($27.1 billion) agreement with Norway’s Equinor ASA to buy 5 billion cubic meters of gas per year until 2035 — enough for 5 million British homes — the companies announced. The deal will kick-in after another agreement signed in summer 2022 expires later this year, and allows for natural gas sales to be replaced with hydrogen in the future.

“It means that we will have far more confidence that the boilers will be on and the lights will be on,” Centrica Chief Executive Officer Chris O’Shea said in an interview in London on Thursday. “This provides a lot of energy security.”

For the UK, the long-term agreement signals gas is set to remain an essential part its energy mix and chimes with warnings it could miss out on clean power goals by 2030. It also highlights the need to secure energy supplies for when renewables aren’t readily available.

Centrica has long been tied to Equinor, but the relationship strengthened after the full-scale invasion of Ukraine, when the UK, like many other buyers in Europe, shunned Russian fuels. 

In 2024, Britain imported almost two-thirds of its gas, with half of that amount coming from Norway, according to government data. The heavy reliance leaves the market vulnerable to unexpected disruptions, such as when a pipeline fault in Norway last summer curbed flows into the key terminal of Easington.

Norwegian Prime Minister Jonas Gahr Store hosted UK Prime Minister Keir Starmer at the end of last year, with the two countries seeking to bolster cooperation on clean energy projects such as carbon capture and storage and offshore wind. Energy Secretary Ed Miliband was in Oslo in May to sign a green industrial partnership.

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