Gas for the UK

January 15, 1999, 10:00 CET

Sales deals worth about NOK 400 million have been agreed with UK customers by the Norwegian Gas Negotiating Committee (GFU).

Ranked as the first Norwegian gas to be sold spot in the British market, these deliveries began last November and will run until March.

They are piped through the UK-Belgian Interconnector, which runs from Zeebrugge to Bacton in England and opened on 1 October. The line was built to carry British gas to continental Europe.

Since this facility began operating, however, UK gas prices have remained high. This prompted the flow through the Interconnector to be reversed as early as 9 December, a development not anticipated by players in the gas sector.

Britain represents an interesting market for Statoil and the other Norwegian gas exporters. Norway's share of UK gas sales reached 28 per cent in 1987 but had declined to one per cent in 1997. The spot deals this winter will double Norwegian gas deliveries to Britain.

"We want to expand in this market, and saw new opportunities with the Interconnector," reports Georg Karl Gundersen in Natural Gas Marketing and Supply, who chairs the GFU. Statoil, Norsk Hydro and Saga Petroleum are permanent members of this body.

The Norwegian winter sales of gas have created value for the sellers without the need for new investment.

"We've taken advantage of our positions by exploiting spare production and transport capacity," explains Jan K Karlsen, marketing manager for gas sales to the UK.

"About 20 different deals have been struck, and these draw on overall production opportunities and 'gas expertise' at all stages in the value chain."

He emphasises that the gas sellers are very satisfied commercially with their winter sales to the UK.

Since no direct physical link currently exists between the Norwegian gas delivery system and the British market, these sales have attracted attention - particularly in the UK.

Although the Norwegian Zeepipe trunkline and the Interconnector both land in Zeebrugge, their receiving stations are not directly connected.

A collaboration with Belgian distributor Distrigas is one reason why the deliveries are possible, explains Bernt W Pettersen, marketing manager for gas sales to Belgium.

"We utilise a Distrigas link further inside Belgium in order to move gas from Zeepipe to the Interconnector," he reports.

The UK-Belgian line has an annual capacity of 20 billion cubic metres from Britain to Europe and 8.5 billion cubic metres in the opposite direction.

British Gas owns 35 per cent of the Interconnector, Conoco, Gazprom, BP Amoco and Elf have 10 per cent each, and Amerada Hess, National Power, Ruhrgas, Snam and Distrigas hold five per cent apiece.