(Bloomberg) -- The UK is on the cusp of securing a natural-gas contract with Norway for as long as 20 years in a bid to stave off the risk of winter blackouts, people familiar with the matter said.
A deal is expected to be secured next week, though ministers are still locked in negotiations with their Norwegian counterparts on price, the amount of gas and the length of the contract, according to one of the people, who asked not to be named discussing sensitive matters.
Because of the length of contract under discussion, there’s a risk that locking in long-term arrangements now might leave the UK paying above-market prices in years to come since the current volatility gives producers considerable leverage. The business department didn’t immediately respond to a request for comment.
The government is anxious to avoid the embarrassing spectacle of power failures over the winter after the energy regulator Ofgem on Monday warned there’s a “significant risk” of gas shortages this winter that could see some power stations switched off. Russia has squeezed gas flows to Europe in retaliation for sanctions imposed by the West following Moscow’s invasion of Ukraine. That’s curbed global gas supply and increased competition for the fuel.
Prime Minister Liz Truss earlier hinted at the talks, telling Sky News that “we are looking at long-term energy contracts with other countries,” while adding “I have not signed any deal.” The Times said the government is also holding negotiations with Qatar.
Earlier, Business, Energy and Industrial Strategy Secretary Jacob Rees-Mogg told a fringe meeting at the Conservative Party conference in Birmingham that he’d just been talking to a “friendly country” about energy supplies.
The UK is also in discussions with US liquefied natural gas producers for supply contracts as long as 20 years, Bloomberg reported last month. The government’s energy task force that’s leading negotiations on new gas deals is headed by Madelaine McTernan, a former M&A banker who headed the UK’s vaccine group that procured Covid shots during the pandemic.
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