Norway to supply gas to U.K. power plant

The Norwegian operators' Gas Negotiating Committee (GFU) and U.K. gas marketer Alliance Gas Ltd. have signed an agreement to deliver gas from Norway to the U.K. Under the agreement, Alliance-wholly owned by Norwegian state petroleum firm Statoil AS-will receive 0.55 billion cu m/year of gas from Norway over 15 years beginning in summer 2001 to supply a proposed gas-fired power plant at Scunthorpe, U.K.

June 22, 1998

3 min read

The Norwegian operators' Gas Negotiating Committee (GFU) and U.K. gas marketer Alliance Gas Ltd. have signed an agreement to deliver gas from Norway to the U.K.

Under the agreement, Alliance-wholly owned by Norwegian state petroleum firm Statoil AS-will receive 0.55 billion cu m/year of gas from Norway over 15 years beginning in summer 2001 to supply a proposed gas-fired power plant at Scunthorpe, U.K.

The gas will be delivered through the Frigg pipeline system to the St. Fergus terminal, near Aberdeen. Last year, after years of stalling, the U.K. agreed that Norwegian gas from fields other than Frigg could be delivered through the pipeline (OGJ, May 5, 1997, p. 58).

Norsk Hydro AS, which led the negotiations to supply Alliance on behalf of GFU, said the agreement is an important step towards increasing gas sales from the Norwegian continental shelf to the U.K. This is the first time a company other than Statoil has led Norwegian gas talks.

The Norwegians see the Frigg pipeline, which has increasing spare capacity as Frigg area fields near depletion, as the main route for further gas supplies from other Norwegian fields to the U.K.

A Hydro official told OGJ that negotiations are under way between GFU and other potential U.K. customers for sale of gas from Norway.

"The U.K. is the closest customer Norway has," said the official. "We had a large share of the U.K. gas market-25-30% during Frigg's early days-but now we are down to almost zero.

"We see it as a good strategic opportunity for Norway to expand supplies, since the U.K. is a market that will need lots of gas in the coming years." Ultimately, the U.K. is being viewed as a potential route for delivery of Norwegian gas to Europe.

Much of the U.K.'s ambitions for gas sales expansion hinge on the U.K.-Belgium Interconnector pipeline, due to be operational Oct. 1. The pipeline has capacity to deliver 20 billion cu m/year of gas to Europe.

The pipeline is owned by: BG plc 40%, Conoco (U.K.) Ltd. 10%, Gazprom 10%, BP Exploration Operating Co. Ltd. 10%, Elf Exploration U.K. plc 10%, Amerada Hess Ltd. 5%, Distrigaz SA 5%, National Power plc 5%, and Ruhrgas AG 5%.

The Interconnector's capacity has not been completely taken up, but in May Statoil leased capacity to deliver up to 250 million cu m/year of gas through the pipeline over 20 years. The deal is expected to give Alliance Gas new business opportunities on the European mainland.

The Hydro official said one of the company's subsidiaries, a fertilizer plant in the Netherlands, is to receive 0.5 billion cu m/year of gas through the Interconnector, supplied by Mobil North Sea Ltd.