Britain Seeks Qatari Gas

November 4, 2013

Britain will this week attempt to secure new long-term deals to import Qatari gas to the UK and drum up a possible £10bn of investment by the Gulf state in UK infrastructure, The Daily Telegraph reported on November 2.

Energy minister Michael Fallon will visit Qatar – which supplies about 15pc of Britain's gas – for meetings with its energy, industry and finance ministers on November 4.

"We are looking for more long-term gas supply contracts with Qatar – they have proved a very reliable partner," Mr Fallon told The Sunday Telegraph. "It's very important we strengthen our relationship with them."

Imports of liquefied natural gas (LNG) – gas cooled to minus 162 degrees for transport by tanker – are crucial to the UK as North Sea reserves dwindle.

"Already over half our gas comes from abroad and by 2030, it'll be three-quarters," Mr Fallon said. LNG accounted for 28pc of the UK's gas imports last year, 98pc of those from Qatar.

Mr Fallon's visit, the first by an energy minister to Qatar in two years, comes as Centrica looks to extend a £2bn LNG import deal with Qatar, signed in 2011 and expiring next year. The contract supplies enough gas to heat 2.5m homes.

One potential sticking point for more LNG deals is whether the price of the cargoes will be linked to the UK gas price or to the international oil price. Centrica's deal was seen as unusual in being indexed to UK market prices, but Qatar is likely to favour more lucrative oil-linked contracts, which it uses when selling to the gas-hungry markets of the Far East.

"There is this argument about the price they sell to Asia and they sell to us," Mr Fallon acknowledged.

Centrica had originally sought a 20-year, £30bn deal that could have handed Qatar a seat on the British Gas owner's board.

Mr Fallon's talks with Qatar this week will also focus heavily on plans for it to invest up to £10bn in UK infrastructure projects.

"They are looking to invest more in Britain in infrastructure, so that's going to be on the agenda," he said.

Copyright: The Daily Telegraph, 2013