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Ministers chase mega-deal for gas from Norway amid supply scramble

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North Sea oil firm NEO Energy has this evening announced that it has bought fellow explorer Zennor Petroleum for $625m (£450m).
The North Sea oil and gas sector is in a reduced state, making it prime ofr M&A activity - but there are few takers

Ministers are still chasing a mega-deal with Norwegian energy giant Equinor as the UK races to stave off blackouts this winter and shore up its gas supply.

The Government is haggling over the price with Chancellor Kwasi Kwarteng raising concerns over the cost of the deal, according to Thec Sun.

Prime Minister Liz Truss is pushing to secure a multi-billion pound 20-year deal to try and secure the country’s energy needs.

However, any new deal would require extra borrowing, which could further spook markets already rattled by Prime Minister Liz Truss’ tax-cutting and heavy spending agenda.

Truss confirmed last week that Downing Street is weighing up fresh multi-year deals arrangements to reduce its reliance on imports from authoritarian regimes.

The Prime Minister said she wanted to make “we’ve got a good price” but that “energy security is vitally important.”

She said: “We never want to be in a position again where we’re dependent on authoritarian regimes for our energy. That’s why we’re in the situation we are now.”

Chancellor Kwasi Kwarteng is still urging caution over the cost of the deal amid historically high gas prices.

If markets settle to conventional levels, even a discount on current rates could still see the UK over-paying by a huge amount over decades.

Wholesale costs have quadrupled this year, climbing to all-time highs this summer amid a Russian squeeze on supplies following its invasion of Ukraine.

Business Secretary Jacob Rees-Mogg is still negotiating with Equinor over the cost of the deal.

Earlier this year, Centrica reached a mega deal with Equinor to buy 10bn cubic meters of gas over the next three years.

The country already meets 42 per cent of the UK’s oil and gas demand, exporting £36.4bn worth of gas to the UK last year.

Meanwhile, the National Grid published its winter outlook last week – with its worst-case scenarios predicting three-hour blackouts in January, while its base-case scenarios forecast healthy margins between supply and demand.