By Nicholas Earl
The UK is set to finalise a major gas deal with the US after the COP27 climate change summit in Egypt this month.
Talks about a potential “energy security partnership” have reached their final stages, with the US planning to sell billions of cubic metres of liquefied natural gas to the UK over the coming year, according to The Telegraph.
An announcement could be made in the next couple of weeks.
Downing Street hopes the deal will secure around 10bn cubic metres of gas – comparable to the mega deal announced between Centrica and Equinor earlier this year.
For context, the entire European Union (EU) was promised 15bn cubic metres by the US this spring .
The developments follow continued fears over supply shortages this year amid sustained conflict in Ukraine, with National Grid warning of rolling blackouts in its worst-case scenario this winter.
UK scrambles to ease gas supply crisis
Gas remains a major part of the UK’s energy mix, despite the growing momentum behind renewables generation.
It is still used to generate about 40 per cent of the UK’s electricity and heat about 85 per cent of homes.
Soaring gas prices following booming post-pandemic demand and a Russian supply squeeze on Europe have wreaked economic havoc, with governments across the West forced to spend billions shielding consumers from the impact.
Most of the UK’s supply comes via pipes from Norway and the UK side of the North Sea – however, this is now a dwindling asset.
This has made shipments of LNG from partners such as the US and Qatar increasingly important – meeting 17 per cent of the UK’s gas needs last year.
The decision to reach a new-deal will likely be criticised by Labour, with both renewed focus on green energy during COP 27 and recent reports LNG causes ten times the emissions of conventional pipeline gas.
It also follows the Government’s decision tore-impose the moratorium on fracking, and its lack of clarity over future planning rules for domestic onshore wind and solar panels.
Prime Minister Rishi Sunak urged world leaders to “honour” their promises to tackle climate change, at the summit earlier this week.
What’s next? Norway and Qatar deals
Liz Truss, Sunak’s predecessor, and US President Joe Biden had previously held discussions over the deal.
Downing Street had reportedly been keen to announce an agreement on October 21, but the plans was scrapped when Truss resigned the day before.
However, the arrangement has continued to be pursued by UK officials in Washington, with the basic structure of the package agreed weeks ago and consistent under both Prime Ministers.
It is unclear how much of the gas – which will be sold by US companies, rather than the US government – will be in the UK energy system for this winter.
This could depend on specific terms agreed with private companies.
The US-UK agreement would also go beyond gas, and is expected to be styled as an “energy security partnership” – incorporating a drive on renewables and a pledge to work on future nuclear power projects including small modular reactors.
The UK is separately pursuing mega deals to import more LNG from Norway and Qatar, which have the potential to dwarf the US deal in terms of volume.
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