High energy prices in Europe threaten the economy far beyond the winter and the UK is trying to secure long-term supplies of liquefied natural gas from US producers.
The government s energy supply task force is looking for proposals from LNG exporters to supply domestic buyers under deals lasting as long as 20 years, according to people familiar with the matter who asked not to be named as the talks are private. The task force is led by Madelaine McTernan, a former M&A banker who headed the UK's vaccine group that procured Covid shots early in the epidemic.
A spokesman for the Department for Business, Energy and Industrial Strategy wouldn't say anything. The talks are still in early stages and it is not clear who would pay for gas cargoes.
It is normal for governments to start talks that lead to negotiations on a commercial level, such as those between Germany and Qatar. Britain is looking into gas ahead of the coldest months and diversifying their fuel sources in the long term, as other European nations are trying to stock up on gas ahead of the coldest months. Unlike Germany, the UK doesn't rely on Russian gas, and instead taps its own output, Norwegian supplies arriving via undersea pipelines and LNG cargoes.
The competition for fuel leaves Britain exposed to a Europe-wide supply crunch. The government has proposed a plan that will cap wholesale prices for six months, costing an estimated 40 billion $45 billion. Some households and businesses are facing unaffordable utility bills this year because of record high costs.
The government s LNG requests come six months after a visit by Kwasi Kwarteng to Washington, where he held initial meetings with US developers of LNG export facilities. Kwarteng was a business secretary at the time before being named chancellor of the exchequer under current Prime Minister Liz Truss.
Fred Hutchison, president of US industry lobby group LNG Allies, said that the Truss government is engaged in the issue at the highest levels of government to lock in long-term supplies at affordable prices. The other European nations are going to step up pretty quickly. What is left in the United States is almost sold out. Following Russia's invasion of Ukraine, Britain s private sector stepped up LNG procurement. In June of this year, UK utility Centrica Plc signed a deal to buy extra gas from Norway's Equinor ASA, and last month it reached an agreement to take LNG from the US company Delfin Midstream Inc.
It is not clear what volumes the UK government is trying to procure, but officials are trying to buy LNG indexed to the US benchmark Henry Hub gas price, and deliver cargo on an ex-ship basis, where the seller must deliver the cargo to a fixed buyer and location, the people said.
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