Centrica, the owner of British Gas, has signed a £20 billion agreement with Norway’s state energy company Equinor to secure gas supplies for the UK over the next ten years.
Under the deal, Centrica will purchase about 5 billion cubic meters of gas annually from Equinor, enough to power 5 million UK homes each year. Deliveries will begin this winter and continue until 2035, with prices set at market rates.
The agreement builds on a long-standing energy relationship between the UK and Norway, which has supplied Britain with gas for the past 50 years. In a move aligned with the UK’s net zero goals, the deal includes a clause that allows Britain to swap imported gas for zero-emissions hydrogen from Equinor’s UK-based hydrogen projects.
Equinor is working with Centrica and SSE to develop low-carbon hydrogen facilities on the north bank of the Humber. One of the key projects is a hydrogen production site at the Aldbrough gas storage facility in East Yorkshire, which could be operational by 2029.
Currently, the UK imports about two-thirds of its gas from Norway. However, national demand for gas is falling, driven by growing renewable energy production and increased electricity imports from Europe. The decline is expected to continue as the UK pushes forward with its net zero targets, reducing the role of gas in heating and power generation.
Centrica CEO Chris O’Shea called the agreement a “landmark deal” and said it highlights the continuing importance of gas for energy security as the UK transitions to a low-carbon future. He also said the deal sets the stage for expanding the hydrogen market.
This latest contract is smaller than a previous deal in 2015, in which Centrica agreed to buy 7.3 billion cubic meters of gas per year from Equinor—about 10% of UK demand at the time. A top-up agreement was later signed after Russia’s invasion of Ukraine disrupted European gas supplies, increasing Centrica’s annual gas imports to over 10 billion cubic meters, or roughly 12% of UK demand.
The UK’s Climate Change Committee (CCC) projects a sharp decline in gas use as the country moves toward a net zero economy by 2050. Gas currently accounts for about 720 terawatt hours (TWh), or 40% of the UK’s energy use. This must fall to 168TWh—or less than 15%—by mid-century to meet climate targets.
Today, around 70% of homes in the UK are heated with gas boilers, and gas-fired power stations generate about a quarter of the country’s electricity. The government aims to install up to 600,000 electric heat pumps annually and limit gas plant use to 5% of the time in the 2030s—key steps in reducing gas reliance.
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