British energy company SSE has signed a long term gas supply deal with Norwegian oil and gas producer Statoil to source about third of its required gas.
Starting from October, the deal extends for a five year period.
The original deal signed in October 2014, includes supply 0.5 billion standard cubic metres per year (bcm/y) of gas for six years.
Under the revised agreement, Statoil will increase the supply from 0.5 billion standard cubic metres per year (bcm/y) to ca. 2.5 bcm/y.
Additionally, Statoil also has a deal to supply 0.5 bcm/y of gas to SSE for St. Fergus terminal for the period of October 2012 to October 2022. The contract for this was signed in October 2011.
Statoil Marketing and Trading senior vice president Tor Martin Anfinnsen said: "Being the second largest supplier of gas and electricity in the UK, SSE is a significant player in a market that is very important to Statoil.
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By GlobalData"The agreement takes our already established relations to the next level. The agreement with SSE is another confirmation of Statoil’s position as a long term reliable supplier of gas to the UK."
Statoil also has a deal with UK utility Centrica, according to which, it will supply up to 7.3 bcm/y of gas for a 10 year period, starting from this year till 2025.
UK needs around 70 bcm of natural gas in a year to meet its heating and power requirements.
The Norwegian firm’s long term agreements with SSE and Centrica will account for nearly 15% of UK’s gas requirements.
Statoil’s gas supplies will be sufficient enough to meet the annual needs of around 8.5 million UK households.
SSE Energy Portfolio Management managing director Jim Smith said: "Maintaining a diverse and balanced portfolio of contracts and assets, both long and short term, enables SSE to meet the energy needs of its customers.
"The significant expansion of our agreement with Statoil is consistent with this strategy, securing a significant volume of gas from a reliable producer with physical links to the UK."
Image: SSE Energy Portfolio Management managing director Jim Smith with Statoil Marketing and Trading senior vice president Tor Martin Anfinnsen (left to right). Photo: courtesy of SSE.
