As the United States grows increasingly reliant on natural gas imports, the UK is seeking to double its imports of US gas as well. The UK government has recently reached an agreement with the US for a new pipeline, designed to allow gas imports from the US to be delivered in a much more efficient manner than at present. This will allow for large amounts of cheaper gas, which will benefit US suppliers.
With increasing demand from China and India driving up prices in recent years, British companies have had to reduce their reliance on expensive foreign gas while they seek out more sustainable sources such as wind and solar power. The deal opens the possibility that some of the UK's dwindling natural gas reserves could be used to supply British industry if it can be imported cheaply enough. The state-owned company Centrica has agreed to buy a 25% stake in a US exploration and production company, allowing it access to new areas for shale gas drilling. Centrica's chief executive, Sam Laidlaw, stated that the deal would "enhance our ability" to become a major player in the US market.
The deal comes as Centrica is looking to reduce its high cash flow exposure to the UK energy market. The move means that it will be able to buy gas at $3 per million BTU in the US, while it must pay $10 per million BTU in the UK. Due to this price difference, Laidlaw has stated that Centrica's focus is shifting away from the UK market and towards Europe and North America.
Centrica has signed a joint venture with American energy company Apache Corp. In return for a 25% investment in Apache's business operations, Centrica will have access to new shale gas reserves across some 32 locations in Ohio, Texas, Louisiana, and North Dakota.
The purchase of one of the largest stakes in an American energy company is part of a larger strategy by British officials to diversify away from reliance on Russian and Middle Eastern energy sources. As instability in these regions becomes more apparent, the UK is preparing to turn to the United States as a major supply source.
The UK is not alone in its desire for new natural gas sources. With prices expected to remain low for years as domestic production increases, several countries are turning away from coal and becoming much more open to natural gas imports from US energy firms.
To conclude, it is vital to say that, the UK government has reached an agreement with the US for a new pipeline, designed to allow gas imports from the US. The deal opens the possibility that some of the UK's dwindling natural gas reserves could be used to supply British industry if it can be imported cheaply enough.
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