The UK is in talks with Norway to secure a natural gas contract of potentially 20 years in a bid to stave off the risk of winter blackouts, a person familiar with the matter said.
Ministers are discussing a price with their Norwegian counterparts, according to the person, who asked not to be named discussing sensitive matters. The business department didn’t immediately respond to a request for comment.
Because of the length of contract under discussion, there’s a risk that locking in long-term gas contracts now might leave the UK exposed to high costs in years to come. Current volatility means producers could demand higher prices to guarantee strong profits as it’s unclear how much money they could make by selling on the spot market in the future instead.
Forced buyers are never going to get the best price regardless of how amicable the relationship is between Norway and the UK. However, if that is the only way to ensure security of supply over the coming couple of years, it may be a price worth paying.Click HERE to subscribe to Fuller Treacy Money Back to top