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UK to rely more on Norwegian natural gas in future on coal phase-out: ministers

London (Platts)--10 Feb 2017 821 am EST/1321 GMT


* Norwegian flows to UK already at record highs in 2017
* UK interest in Norway's gas 'set to grow': ministers
* Also plans for electricity interconnector


The UK will be more dependent on Norwegian gas imports in the future given the UK's move to phase out coal-fired power generation, the ministers of the two countries said Friday.

In a joint statement following a meeting in Oslo, the UK energy minister Jesse Norman and his Norwegian counterpart Terje Soviknes stressed the close relationship between the two countries in the energy sphere.

"British interest in Norwegian gas is set to grow as the UK looks to phase out power generation from unabated coal in the transition to a lower carbon energy mix," they said.

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"Norway is the UK's most important energy supplier, particularly as an external supplier of gas," they added.

Norwegian exports via pipeline to the UK hit a record high in January, according to data from Platts Analytics' Eclipse Energy.

UK receipts at St. Fergus and Easington combined stood at a record 4.05 Bcm in January, up from 3.77 Bcm in December last year and over 1 Bcm higher than 2.93 Bcm in January 2016.

The UK has received much more Norwegian gas so far this winter as a combination of higher domestic demand and weaker LNG and storage availability has boosted the UK wholesale gas price compared with its Continental European equivalents.

The UK received a total of 14.36 Bcm during the first four months of the Winter 2016/17 delivery period, up 31% year on year.


POWER INTERCONNECTOR


The UK and Norway also plan to build a 1.4 GW electricity interconnector to link the countries' two power markets from 2022.

"Electricity interconnection represents an additional feature in our energy partnership," the ministers said.

"A stable and market based framework for the interconnector development is important to both countries."

Norway's Statnett and the UK's National Grid have moved to the construction phase of the Eur1.5 billion-2 billion ($1.59-2.13 billion) interconnector which is expected to be completed by the end of 2021.

Statnett has said that the UK can send power to Norway at times of high wind-generated electricity, while Norway can export power to the UK when there is little wind.

--Stuart Elliott, stuart.elliott@spglobal.com
--Edited by Maurice Geller, maurice.geller@spglobal.com

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