Under the terms of the deal, Statoil has to supply gas for ten years to SSE’s Peterhead gas power plant.

The deliveries are expected to start in the final quarter of 2012, producing an annual volume of 0.5 billion cubic metres of natural gas, the company said.

The Peterhead power station located in Aberdeenshire consumes 1.5 billion cubic metres of gas in a year, producing enough electricity for 2 million households.

Statoil’s senior vice president for natural gas, Rune Bjoernson said that natural gas should play a key role in generating power for long term in UK as the cost of gas is competitive and an abundant resource and leaves a low carbon footprint.

The company holds a 16-18% share in the UK gas market.

Natural gas from the Norwegian continental shelf is delivered through the Vesterled, Langeled and FLAGS pipelines, reports Reuters.