Equinor to Supply Natural Gas to Centrica

British utility firm Centrica and Norwegian energy company Equinor have announced a £27.08 billion agreement to deliver natural gas to the UK and the new deal will see Centrica take delivery of 5 billion cubic meters (BCM) of gas per year to 2035.

The expansive ten-year deal continues a long-term relationship with Equinor that dates back to 2005 bringing gas from Norway to the UK. In 2024, the UK imported almost two-thirds (66.2%) of its gas demand, with 50.2% of the total imports coming from Norway, though supply was down by 7.9% compared to 2023.

In fact, the UK has relied on Norwegian gas imports to meet an increasing volume of domestic demand since the onset of the energy crisis following Russia’s invasion of Ukraine since 2022 and underlines the strategic importance of the Norwegian relationship to UK energy and price security.

The contract between Equinor and Centrica also allows for natural gas sales to be replaced with hydrogen in the future, providing further support to the UK’s hydrogen economy.

Following the energy crisis in 2022, Centrica reopened the “Rough” gas storage facility in the North Sea to bolster the UK gas supplies. But in April, the energy company stopped refilling the gas facility after warning that it was making a financial loss.

Centrica is seeking to re-develop the “Rough” facility by investing $2.71 billion if it secures a cap-and-floor agreement to stabilise the price of hydrogen so that it can store hydrogen, a low-carbon fuel that can be combusted without producing carbon, as well as natural gas.

Transition Fuel                        

Centrica’s Group Chief Executive Chris O’Shea said that Equinor has been a valued partner and this landmark agreement underscores the vital role that natural gas plays as a transition fuel as the UK navigates towards a low carbon energy future.

According to him, the enduring partnership between Centrica and Equinor exemplifies the strong and strategic relationship between the UK and Norway and he was immensely proud that they have agreed this deal.

He said that over the last few years, they have seen first-hand how important energy security was and the deal with Equinor not only ensures the UK’s energy security has improved but also paves the way for a burgeoning hydrogen market.

“The deal represents a significant investment in the UK’s future, showing that Centrica will make bold investments that drive forward the energy transition while delivering value for our shareholders. We will continue to focus on further improving energy security by working with the UK Government to ensure the right levels of gas storage are in place to complement this landmark gas importation agreement,” he added.

Equinor’s president and CEO Anders Opedal said that for nearly 50 years, they have supported the UK’s energy security with reliable gas supplies. In addition, they have advanced offshore wind and pioneered decarbonisation solutions.

“We are pleased to strengthen the energy partnership further through a new gas sales agreement with our longstanding customer and partner Centrica,” Opedal added.