German utility group E.ON and Qatari producer RasGas have signed a three-year flexible deal to deliver up to 2 billion cubic meters of LNG over the term of the deal from Qatar to the UK's Isle of Grain LNG import terminal, where E.ON has long-term capacity rights, according to a RasGas statement.
No pricing details were given.
Hamad Rashid Al Mohannadi, CEO of RasGas, said: "RasGas has four long-term LNG contracts in Europe, and the UK is a very important market to the State of Qatar."
E.ON has 1.7 Bcm/year of regasification capacity at Grain from the third phase expansion of the 20 Bcm/year import terminal. The third phase was launched in October 2010, and E.ON's capacity rights are for 19 years.
Qatar is the UK's dominant LNG supplier, although in recent months it has been the other Qatari producer, Qatargas, delivering cargoes, to the UK's South Hook LNG terminal, where Qatargas is part-owner.
Sendout from South Hook has been averaging almost 50 million cu m/day recently, almost a quarter of UK daily gas demand.
Isle of Grain has received relatively few cargoes in recent months, and is being used far below its potential, as is the UK's other import terminal, Dragon LNG in Wales.
With prices higher in Asia and South America, LNG producers have been preferring to deliver cargoes elsewhere when possible, while utilities such as E.ON have generally been well supplied by their pipeline contracts and would unlikely be willing to pay high prices for LNG.
But the highly-liquid UK market is an easy place for a producer to sell volumes when there is a surplus.
Access to the UK market also offers the potential to capture occasional price spikes, such as during a cold winter.
