PRIVATIZED BRITISH GAS AIMING FOR ADDED NATURAL GAS IMPORTS

British Gas plc has fired the first shots in a campaign designed to win approval for added imports of gas into the U.K.

James Allcock, British Gas director of gas supplies, in outlining new contract conditions that will be offered to meet changing market conditions, said the company will seek new supplies from foreign as well as domestic sources.

A 1985 attempt by British Gas, then a state owned corporation, to buy gas from Sleipner field in the Norwegian North Sea drew a veto by the U.K. government. The government was under pressure from U.K. offshore operators who claimed imports would hinder development of domestic gas.

IMPORTED VS. DOMESTIC GAS

Allcock told the Gas Power 90 conference in London that as a privatized company operating in a deregulated market, British Gas is not obliged to put the interests of the U.K. offshore industry first.

Allcock said the choice between imported and domestic gas is a commercial matter. "Artificial restrictions on the sources from which new supplies come to Britain are clearly inappropriate," he said.

British Gas sees the spare capacity that is growing in the twin pipelines from the British-Norwegian Frigg field to St. Fergus, Scotland, as the ideal entry point for new imports from Norway when Frigg is depleted in 1994-95.

As much as 1 bcfd could be imported from Norway if the gas is available when Troll oil development goes ahead.

Allcock said British Gas has enough gas under contract to meet most of its requirements for the early 1990s, but substantial new purchases will be required for 1994 and beyond.

Attempts by British Gas to import new supplies in the mid-1990s will run into opposition from U.K. operators, particularly those with expensive gas/condensate fields targeted for development then.

NEW CONTRACT FORMS

Allcock said the traditional method under which British Gas bought the entire reserves from a gas field had served well for 25 years. But other forms of contract are needed.

Privatization of British Gas, opening of its nationwide transmission system to third party business, and the coming privatization of the U.K. electrical power industry have injected competition into the British energy market.

The government has indicated that only 90% of total new gas available for sale should be sold to British Gas. However, the company declines to buy entire field reserves and restricts itself to 90% of any new reservoir offered.

In this changed situation, offshore operators are selling gas to large industrial users and signing contracts to sell gas to new combined cycle power stations that will serve the power industry. Since last June, 40% of new U.K. gas sales went to buyers other than British Gas.

Allcock said British Gas will offer contract arrangements suitably flexible for sellers who had options to sell direct to end users, particularly to the new power generation market.