Statoil to help meet Britain’s gas needs

British energy company Centrica on Monday announced a North Sea agreement with Norway's Statoil to help protect Britain's gas security over a 10-year period starting in 2015.

Statoil to help meet Britain's gas needs
Photo: Øyvind Hagen / Statoil. Kvitebjørn platform

The deal, which replaces a previous decade-long agreement, is worth £13.0 billion ($20.3 billion) at current gas prices.

Centrica also unveiled a cash deal to buy North Sea assets run by Statoil for £1.0 billion, boosting the British group's oil and gas output by 25 percent.

Centrica and Statoil additionally signed a memorandum of understanding to consider working together on gas-focused exploration opportunities in Norway and Britain, according to a joint statement.

Under the supply agreement hailed by Prime Minister David Cameron as a deal that would help to protect Britain's energy security, Centrica will feed the country with 50 billion cubic metres of gas in the ten years to 2025.

"Today's agreement will help to ensure the continued security and competitiveness of gas supplies to Britain, from a trusted and reliable neighbour," Cameron said in the statement issued by Centrica.

The deal will provide enough gas to meet about five percent of Britain's total annual demand, or to supply 3.5 million homes.

Statoil president Helge Lund said the supply deal "demonstrates that natural gas is set to play an important role in the UK's long term energy mix.

"Natural gas has all the features needed for the UK to reach its long term energy policy goals of affordability, security of supply and CO2 emissions reduction," he noted.

Centrica, which owns British Gas, added that the main producing asset it was acquiring from Statoil was Kvitebjørn, which is located 170 kilometres northwest of Stavanger.

"The transaction increases Centrica's production by 34,000 barrels of oil equivalent per day, an increase of around 25 percent," Centrica said in the statement.

"Centrica also becomes an operator of producing assets in Norway for the first time," it added.

Centrica chief executive Sam Laidlaw said the asset deal "is an important further step in building the business and deploys capital to deliver value.        

"Much of the gas acquired through this transaction will also come to the UK market, providing further energy security for British Gas customers long into the future," he said.

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Norway and UK complete world’s longest underwater sea cable

Norway and Britain have finished laying the world's longest subsea power cable, which will send wind and hydro energy between the two countries, Norwegian power grid operator Statnett announced Tuesday.

Norway and UK complete world's longest underwater sea cable
Offshore wind farm. Photo by Andrey Sharpilo on Unsplash

The 720-kilometre-long (447-mile-long) North Sea Link — all but four kilometres of it underwater — links Suldal in the southwest of the Scandinavian country to Blyth, near Newcastle.

The cable will deliver British wind energy to Norway, which will send hydropower to the UK in return, with testing set to start October 1.

The project is estimated to have cost between 1.5 billion and 2.0 billion euros ($1.8-$2.4 billion).

“When the wind blows in England and wind power production is high, we in Norway will be able to buy cheap electricity from the British and leave the water in our dam reservoirs,” said Statnett’s project manager Thor Anders Nummedal.

“When there is little wind and a greater need for electricity in England, they will in turn be able to buy hydroelectric power from us,” he said in a statement.

The power capacity of the new cable is 1,400 megawatts.

The coupling of the two sections, built simultaneously from the British and Norwegian sides, took place late Monday evening.

READ MORE: Norway sees oil in its future despite IEA’s warnings 

The construction had its share of technical challenges, including the need to build a special barge to run the cable under a Norwegian lake and the drilling of a 2.3-kilometre tunnel.

“This is an important cooperation between the UK and Norway to make the most of our joint renewable energy resources,” said Nigel Williams, project director at UK operator National Grid, which, like Statnett, owns 50 percent of the project.

The cable takes the crown of the longest underwater cable from Nordlink, which was inaugurated only last month and connects Norway and Germany, measuring 623 kilometres, with 516 kilometres of it underwater.

Already connected to France, Belgium, the Netherlands and Ireland, the UK is planning further direct connections with continental countries, including a 765-kilometre link with Denmark with a 621-kilometre stretch underwater.