Centrica Secures Ten Year Gas Deal with Equinor for UK Energy Stability

The owner of British Gas, Centrica, has signed a £20 billion agreement with Norwegian energy company Equinor to guarantee long-term gas supplies for the United Kingdom. This contract, spanning ten years from October 2025 to 2035, will provide five billion cubic metres of gas annually. This volume accounts for 10 per cent of the UK’s overall gas demand and has the capacity to power five million households.

The agreement comes at a critical time as the country continues to rely heavily on fossil fuels, even amidst ambitious governmental targets to decarbonise Britain’s electricity system by 95 per cent by 2030. Gas-fired power plants currently generate about a quarter of the country’s electricity, while 70 per cent of homes nationwide are still heated by gas. By maintaining secure energy imports, this deal also replaces the existing contract between the two firms, which has been in place since 2015 and is set to expire this year.

The chief executive of Centrica, Chris O’Shea, highlighted the ongoing importance of the UK’s energy partnership with its European allies, particularly Norway, which currently supplies half of Britain’s imported gas. He emphasised that this deal represents a crucial step forward in the nation’s energy security strategy. Britain’s North Sea production has sharply declined since its late-1990s peak, with the government recently ceasing the issuance of new oil and gas licences to meet climate initiatives. This makes secure imports like those from Norway even more critical for stability and competitive pricing.

The war in Ukraine has significantly disrupted global energy markets due to sanctions on Russia, once a key supplier of gas to Europe. Norway stepped up to increase supplies to the European market following these events. O’Shea praised the robust relationship with Equinor, noting its strategic importance and the investment Centrica continues to make in safeguarding UK energy supply. He also underlined how the deal sets the groundwork for potential future transitions to hydrogen energy, should this market take off.

The agreement lays out a clear pathway for innovation, with an option to pivot from traditional natural gas to hydrogen. Unlike natural gas, hydrogen emits zero carbon dioxide when burned, hinting at an eventual alignment with the UK’s sustainability goals. Equinor’s CEO, Anders Opedal, noted the longstanding partnership between the company and the UK, reflecting on decades of reliable energy support. He expressed pride in reinforcing this relationship with a deal that not only ensures current energy needs are met but also aligns with future green energy ambitions.

Centrica has positioned this deal as part of its larger commitment to the UK’s energy future, placing focus not only on immediate supplies but also on creating infrastructure that can adapt to emerging technologies. O’Shea stated that Centrica is dedicated to making bold investments that secure energy availability while maintaining value for shareholders, indicating plans for further collaboration with the UK government to expand gas storage capabilities.