* Centrica to buy 3 mln tonnes of LNG per year
* Amounts to 13 pct of UK annual residential demand
* Deal comes at time of political rows over utility tariffs
By Oleg Vukmanovic
LONDON, Nov 6 Centrica has signed a 4.4
billion pound ($7 billion) deal with Qatar to import liquefied
natural gas (LNG) over 4 1/2 years as Britain's import
dependence reaches record levels and consumers face ever rising
Centrica, which owns Britain's biggest household energy
supplier British Gas, is to buy 3 million tonnes of LNG per
year, or the equivalent of about 13 percent of Britain's annual
residential gas demand, it said in a statement on Wednesday.
The deal will help Britain secure its energy needs as
domestic North Sea supplies dwindle, but at the same time expose
the country to growing import dependence.
The deal extends a 2-billion pound, three-year LNG supply
agreement between Centrica and Qatargas, the world's biggest
producer of shipped gas, for 2.4 million tonnes/year, which was
struck in 2011 and expires in July 2014.
The extension deal, which runs until the end of 2018, is
more expensive than the initial agreement, reflecting rising
global prices for the fuel, led by a surge in Asian demand.
British gas prices currently trade at around $10 per million
British thermal units (mmBtu) versus prices in Asia, the world's
top LNG importer continent, at $17.50/mmBtu.
Britain depends increasingly on Qatar to make up for falling
domestic resources but has so far failed to receive a supply
guarantee from the Gulf producer, allowing Qatar to divert
cargoes away from Britain to the highest-priced market.
A Centrica spokesman said that over half of the LNG supply
contracted for from Qatar in the 2011 deal had been delivered so
"It is vital that the UK has a diverse range of sources of
supply to meet its energy requirements," Centrica's Chief
Executive Sam Laidlaw said in a statement.
The size of most British household energy bills is
determined by the price of wholesale gas and electricity prices.
Recent announcements by utilities of steep tariff increases have
pushed the topic to the top of the political agenda.
Britain, whose dependency on foreign gas reached record
levels in Q1 2013, depends on gas via pipelines from Norway, its
biggest supplier, and from mainland European countries such as
the Netherlands and Russian gas imported through Belgium.
Output from Britain's North Sea gas fields peaked at the
turn of the century and has declined sharply since.
"Long term deals of this kind with reliable suppliers like
Qatar are vital for our future energy security," UK Energy
Minister Michael Fallon said.
The price paid for the gas until the end of 2018 will depend
on how UK NBP gas market prices develop and, unlike some Qatari
sales deals to Asia, it will not be tied to oil prices.
So far this year, 93 percent of Britain's LNG imports have
come from Qatar even though Qatari deliveries have slowed
sharply, with 38 percent fewer cargoes arriving in Britain
compared with the same period last year.
"The signing of this agreement represents our further
commitment to have Centrica as a partner for the UK market which
continues to be one of the most important LNG markets in
Europe," Qatargas' Chief Executive Officer Khalid Bin Khalifa Al
Thani said in a statement.
Centrica deepened ties with Qatar earlier this year when it
agreed a joint venture to buy Suncor Energy's natural gas
business in Canada for $986.73 million.