U.K. TO GET MORE NORWEGIAN NORTH SEA GAS

Britain's biggest electrical power generator, National Power, has signed a 15 year contract to buy natural gas from the Norwegian North Sea.

The deal will force the British government to confirm its free market principles and allow the first new gas imports into the U.K. since the Frigg field gas purchase contract was signed in the mid-1970s.

It also will put pressure on Norway to define its policy on new offshore gas development projects to ensure that enough supplies are available to allow added gas exports to Britain and other potential customers in continental Europe.

The contract with National Power is a breakthrough for the Norwegian gas negotiations committee after the setback it received from the British government's veto of a large gas import contract based on Sleipner field in the 1980s.

The committee, made up of Den norske stats oljelskap AS, Norsk Hydro AS, and Saga Petroleum AS, acts as agent for Norwegian gas producers.

WHAT COULD HAPPEN

Deliveries to National Power through the existing Norwegian Frigg gas pipeline to St. Fergus, Scotland, are to begin in 1995-96 and build to a peak average of 212 MMcfd in 1997.

National Power will use the Norwegian gas to generate about 1,300 megawatts of electricity. Several other U.K. power generators are also negotiating for Norwegian gas imports, although talks are not at an advanced stage.

However, British Gas plc has detailed talks under way for about 480 MMcfd of Norwegian gas imports to start in the second half of the decade.

Imports through the Frigg gas pipeline are subject to a treaty between Britain and Norway. Amendments to the treaty will be needed before the National Power contract can proceed.

Before any amendments can be made, the British government is likely to want assurances that exports from the U.K. North Sea to the European continent can move through the Norwegian pipeline system.

Frigg, in the final stages of depletion, has two pipeline links with St. Fergus: one British owned, which also carries gas from U.K. fields along the route, and a Norwegian owned line currently used exclusively for Frigg gas. The British government may seek access for British gas to the Norwegian line.

The Norwegians hope changes to the treaty will clear the way for other export contracts without the need for a treaty amendment each time.

The Norwegian gas negotiating committee has not specified which fields will meet the National Power contract. Supplies could come from satellites in the Frigg area.

But if a call is made on giant Troll field, a new pipeline will be required between Frigg and Troll.

The Norwegian government will be required to make decisions on how future demand will be met. A number of small fields could be linked into current lines or approval given for much larger developments such as the second phase of Troll field or West Sleipner.

The alternative to new gas development in the Norwegian North Sea will be construction of a pipeline to link that infrastructure to Haltenbanken, off mid-Norway, where there are ample gas reserves but no immediate outlet.

Saga, operator for the 3.8 tcf Midgard field, is preparing to present a development plan to the government. The plan would make gas available from the area by 1996 through a 420 mile pipeline with an initial capacity of 1 bcfd.