Russian gas major Gazprom has signed a deal to supply gas to Denmark’s DONG with deliveries due to begin in 2011 via the North European Gas Pipeline from Russia to Germany’s Baltic coast.
DONG Energy is committed to annually buying within 20 years 1 bcm of gas, with contract provisions stipulating a potential increase in gas supply.
As part of the deal DONG Energy will supply gas to Gazprom Marketing and Trading, a UK subsidiary of Gazprom. This gas will be marketed in the UK starting from 2007 with 600 MMcm/y pumped by the Langeled gas pipeline designed to link the Norwegian Ormen Lange gas field with the UK.
With gas setting the marginal price of power in the UK, the move is significant given current market speculation that Gazprom may make a takeover bid for the UK’s gas and power player Centrica.
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