Qatargas Signs Fresh Deal with UK's Centrica

Centrica said September 5 it had entered into a new five-year supply agreement with Qatargas for the purchase of up to 2mn metric tons/yr of LNG.

Qatargas’s first contract with Centrica ran for three years from June 2011 until mid-2014. A second currently extends the arrangement for four and a half years until December 2018. This third contract will run expiry of the latter, so from January 2019 until December 2023.

The UK is increasingly becoming an attractive destination for LNG, due to the decline in North Sea production and recent growth in global LNG supply, said Centrica CEO Iain Conn, noting that his company’s “trading capabilities mean we are ideally-placed to work with LNG producers across the world, providing flexibility and a route to market …when secure market access is increasingly important.”

Photo credit: Centrica

The latest deal “underscores Qatargas’ reputation as a safe and reliable supplier” and would bolster UK energy security “for years to come,” said Qatar Petroleum president and Qatargas CEO Saad Sherida Al-Kaabi.

Centrica however is reducing its maximum offtake volume from the “up to 2.4mn mt/yr” set out in the current contract; this may be because of shrinkage of the leading UK utility's core residential market; it lost 400,000 customers in Britain year-on-year in 1H 2016.

The new contract remains a flexible supply, where “up to” means that Qatargas retains the option of delivering some or most of all the volume to higher-value markets, should it so wish. 

Mark Smedley