British Gas owner Centrica has signed a 10-year deal worth more than £20billion with Norway's Equinor to secure gas supplies.
While the UK aims to reduce its reliance on gas to help meet climate targets, around 70% of its homes are still heated using the fossil fuel while gas-fired power plants account for around a quarter of the country's electricity supply.
The agreement, which begins on October 1, will see Equinor deliver five billion cubic metres (bcm) of gas annually until 2035, representing about 10% of Britain's gas demand and enough to supply approximately five million homes, Centrica CEO Chris O'Shea said.
The deal replaces a previous 10-year supply contract between the companies running from 2015 to 2025.
Mr O'Shea added: “Over the last few years, we’ve seen first hand how important energy security is. Today’s deal not only ensures the UK’s energy security has improved but also paves the way for a burgeoning hydrogen market.
“The deal represents a significant investment in the UK’s future, showing that Centrica will make bold investments that drive forward the energy transition while delivering value for our shareholders.
"We will continue to focus on further improving energy security by working with the UK Government to ensure the right levels of gas storage are in place to complement this landmark gas importation agreement.”
Anders Opedal, chief executive of Equinor, formerly known as Statoil, said: “For nearly 50 years, we have supported the UK’s energy security with reliable gas supplies. We are pleased to strengthen the energy partnership further through a new gas sales agreement with our longstanding customer and partner Centrica.”