E.ON May Help Bring More Liquified Gas Into UK

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Big Six supplier E.ON may soon be helping to bring more supplies of liquified natural gas into the UK after signing a deal with the world’s biggest producer.

Qatar is the world’s biggest supplier of liquified natural gas (LNG), a gas condensed to liquid form that is one of the UK’s main domestic fuel sources. Thanks to a new deal signed by E.ON, the UK may soon begin receiving all of its LNG from the Gulf State as its own North Sea reserves continue to be depleted.

At the moment the deal is flexible, meaning Qatar is not obligated to ship LNG to the UK but can, if it wishes, divert cargoes away to more lucrative Asian destinations at any time. Not only will this increase the country’s dependence on Qatar further, but it will also fail  to secure Britain a more permanent supply of LNG for the time being.

LNG is usually transported via ocean-going tankers and fed into domestic gas grids at the country’s coastal terminals after it has been regasified. E.ON’s energy trading arm struck a deal that will see up to 2 billion cubic metres of gas being brought to the UK over the next three years from Qatar’s main producer RasGas. The agreement is E.ON’s third LNG deal with RasGas in about a year, and its second with Qatar in the last eight months.

Many of Europe’s import terminals for liquified natural gas are actually lying dormant as traders and suppliers focus their attentions on eastern markets, which generate more profits. Over the next few years, it is expected there will be a surprise surge in LNG supplies from projects in Australia, east Africa, Russia and North America, which could cover demand for the product in Asian and South American markets.

E.ON meanwhile has also secured a five-year supply deal with supplier Qatargas, which will see up to 10 bio cubic metres of LNG sent to its Netherlands market, where it also has import rights. This, along with the flexible UK deal, is part of the company’s efforts to diversify its gas sources away from main suppliers Russia and Norway, whilst also tapping into the growing LNG market.

The energy provider is the largest investor-owned energy service in the world, serving more than 26 million customers across 30 countries. It made its entrance into gas market in 2003 through its acquisition of gas supplier Ruhrgas, before its trading arm E.ON Energy Trading SE was founded in 2008.

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