UK and US 'set to strike major new gas deal'

The agreement would see Britain buying billions of cubic metres of liquefied natural gas from the US over the coming year

Rishi Sunak is expected to announce the deal shortly after Cop27. Reuters
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Britain’s prime minister Rishi Sunak is expected to announce a major new gas deal with the US to ease the impact of the energy crisis.

Talks are in their final stages about the plan, which would entail the US selling the UK billions of cubic metres of liquefied natural gas over the coming year, according to reports.

An announcement is expected after the Cop27 summit in Sharm El Sheikh, Egypt.

Energy prices have soared following Russia’s invasion of Ukraine, squeezing supplies. And there have been warnings of three-hour rolling blackouts in the depths of winter if European gas exports are cut.

Gas is an important element of the UK’s energy mix, and is used to heat about 85 per cent of homes and to generate 40 per cent of the country’s electricity.

The UK gets most of its gas from Europe, namely Norway and the UK side of the North Sea.

Last year, about 17 per cent of the UK’s gas came from Qatar, the US and Russia. Russian imports have dropped this year.

Details of the deal with the US are expected to be made public in the next week or two, according to The Telegraph.

Former prime minister Liz Truss, who discussed the deal with US President Joe Biden, had been poised to make an announcement around the time of her resignation.

UK officials in the US have continued to pursue an agreement, with the “basic structure” remaining consistent under Prime Minister Rishi Sunak.

It is believed the US will sell the UK about 10 billion cubic metres of gas over the next year — two thirds of the 15 billion cubic metres volume the EU was promised by the US this spring.

But “wrangling” over the final figure continues, The Telegraph reported, saying the gas will be sold by US companies rather than the government.

The “energy security partnership,” as it will be called, will also incorporate a drive on renewables, as well as a pledge to work together to develop future nuclear power projects.

The Telegraph cited a source as saying the deal would be promoted as a “goodwill gesture” from the US to the UK.

The UK is also reportedly pursuing deals with Norway and Qatar.

Germany is said to be keen to talk to the UK about establishing a “solidarity pact” that would allow the countries to bail each other out during bouts of extreme cold weather.

An agreement could be beneficial for both countries, according to officials.

“With its long coastline, the UK has a geographic advantage when it comes to infrastructure for importing liquid natural gas [LNG],” Klaus Müller, the head of Germany's federal network agency for utilities, told The Guardian.

“But the experience of the last few weeks has also shown us that the size of the gas network also matters. The larger the network, the easier to adjust temporary deficits.”

Updated: November 08, 2022, 9:15 AM