BP to supply gas to Germany, Statoil to Ireland

Two new gas contracts, involving supply of U.K. gas to Germany via Belgium and Norwegian gas to Ireland via the U.K., show the growing integration of Europe's gas distribution grids.

Both contracts support economics of northern European pipelines planned or under construction (see World Pipeline Construction report, p. 34).

German contract

BP Exploration Operating Co. Ltd. has signed a 15-year agreement worth more than $1 billion with Germany's Ruhrgas AG for supply of a total 15 billion cu m gas beginning Oct. 1, 1998.

The gas will be produced in BP's U.K. North Sea fields and sent to Germany via the Interconnector pipeline, currently under construction between U.K.'s Bacton terminal and Zeebrugge, Belgium.

BP is a shareholder in the group developing the Interconnector, which will have capacity to deliver 20 billion cu m/year of gas from Britain to continental European customers.

Two other shareholders, Conoco (U.K.) Ltd. and British Gas plc, have contracts to supply Germany's Wintershall AG with a total 3 billion cu m/year of gas from U.K. (OGJ, Nov. 25, 1996, p. 34).

Transmission from Zeebrugge to the Belgian/German border will be undertaken by Distrigaz SA, which has allocated 12-15 billion Belgian francs ($360-450 million) to build pipelines to take Interconnector gas to four points on its borders with France, Netherlands, and Germany (see related story, p. 40).

Distrigaz plans to begin work in the spring, with completion slated for Oct. 1, 1998, when first gas is expected to flow through the Interconnector.

Rodney Chase, BP Exploration chief executive, said, "This is a landmark gas supply deal for BP, as it represents our first sale into continental Europe from the U.K. and our first use of the capacity we own in the Interconnector."

In addition to the contract with BP, Ruhrgas also extended existing gas supply contracts with Phillips Petroleum Co. Norway and Gasunie of the Netherlands.

Ruhrgas has agreed to buy a further 20 billion cu m of gas from Ekofisk field off Norway, currently being redeveloped by Phillips. This will take its gas supply deal up to the field's licensed closure date in 2028.

The deal with Phillips makes Norway the largest supplier of gas to Ruhrgas, ahead of Russia. Ruhrgas already has a contract to take a total 60 billion cu m of gas by 2029 from owners of Norway's giant Troll field (OGJ, Oct. 7, 1996, p. 43).

From Gasunie, the German distributor has agreed to buy a further 90 billion cu m of gas, which extends existing contracts for Dutch gas by 6 years to 2022.

Irish contract

Norway's Den norske stats oljeselskap AS (Statoil), Total Norge AS, and Norsk Hydro AS have agreed to supply 264 million cu m of gas to Ireland's Bord Gais Eireann.

The gas will be produced in Froey field off Norway and sent to Ireland via the existing Frigg line to St. Fergus, Scotland, and from the U.K. grid in Scotland to Ireland via a newly built line.

This contract reveals a relaxation of U.K.'s position on gas imports through Frigg.

Norway has been campaigning for years to increase its gas imports to U.K. through Frigg, but the U.K. government has resisted.

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