The gas sales agreement covers supplies during the 1st 2 years of operation at Elgood and Southwark, which are on track to start flowing gas next year as part of the 1st phase of IOG's development plan in the south North Sea.
It also provides for gas from the Nailsworth and Elland fields, due to be exploited under a 2nd phase.
Gas will be sold on a day-ahead daily nomination basis at a price linked to the National Balancing Point (the UK traded gas benchmark).
A separate gas sales agreement with BP Gas Marketing Limited was signed on 24 February 2014 for Blythe, the other Phase 1 field.
Andrew Hockey, CEO of IOG, commented:
- We were pleased at the strong interest in offtake rights for our gas, which helped to secure attractive terms for IOG
- As we will be delivering all of our gas into the Bacton terminal complex, an important UK gas hub relatively close to major demand centres, we expect to benefit from favourable pricing
- We look forward to developing a good working relationship with Gazprom Marketing & Trading over the coming years
- In that context we also note the significant strengthening of the UK gas market over 2021 to date as we progress towards gas production, expected in Q4 this year
While Gazprom does not directly supply any Russian gas to the UK market, it has a sizeable marketing and trading operation in the country.