Inside Sunak’s ‘nearly sealed’ US gas deal needed to swerve blackouts

Putin ‘playing chicken’ with gas supplies as Russian economy

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Prime Minister Rishi Sunak is said to be close to sealing a gas deal with the US as Britain attempts to shore up sufficient energy supplies for the looming winter. This could provide a huge lifeline as the UK tries to avoid a situation where lacking energy imports forces National Grid blackouts during the coldest months. Mr Sunak is expected to announce the major gas deal with the US once the COP27 climate summit in Egypt draws to a close as talks over an “energy security partnership” enter their final stages. In broader terms, this deal could end up freeing the UK from Vladimir Putin’s tight energy grip, a move many countries are trying to make amid his unlawful war in Ukraine. 

Why is this deal so important? 

The US is expected to sell Britain billions of cubic metres of liquefied natural gas (LNG) over the coming year. If this deal comes to fruition, it will release some of the energy-related pressure with Russia, after Putin warned he will “freeze” Europe and bring supplies to a grinding halt.

His threat came as the EU mulled over slapping price caps on Russian energy imports. While Britain only got four percent of its gas directly from Russia last year, it does indirectly purchase Russian gas from European countries like Belgium and the Netherlands, although the large bulk of its gas does come from Norway. 

Back at home National Grid has announced its plan of action in a “worse case scenario” if the UK was to run short of energy supplies. This involves pre-scheduled blackouts that would take place across evenings in January and February. However bosses have reiterated that the country is nowhere near this situation at the moment. 

Programme Yarrow, a Government blueprint which shows how the UK could deal with such a power outage has also surfaced, indicating officials are ready for a potential power crisis if energy rations ran extremely low.

But this new US gas deal could indicate a light at the end of the tunnel – and throw such scenarios further away from being a reality.  According to a report by the Telegraph, it is understood that former Prime Minister Liz Truss and US President Joe Biden had already discussed details of the potential agreement.

It was even hoped that the package would be announced on October 21, Downing Street insiders claim, but the plan was reportedly abandoned when Ms Truss, Britian’s shortest-ever serving Prime Minister, stepped down as leader after a chaotic few weeks in charge. 

Now Mr Sunak is in charge and it’s thought discussions have resumed – with the formation of a deal underway. Washington DC-based officials from the UK under Mr Sunak’s leadership have reportedly been pressing for a deal as winter looms. 

And while it is hoped that the deal, which is expected to see billions of cubic metres of LNG end up in the UK’s hands, it is still unclear how much of that gas, which will be sold by US companies, as opposed to the Government, will end up in the UK energy network. 

However, according to the sources the Telegraph reportedly spoke to, the UK is hoping at least 10 billion cubic metres of LNG will arrive on UK shores.

This comes as wholesale gas prices have skyrocketed in over the last year as Russia’s war in Ukraine sparked supply issues, while Putin’s slashing of exports to Europe made matters worse. 

This has forced Britain to rethink its energy strategy as it scrambles to slash its dependence on volatile European gas markets and Russian supplies. Part of this involves exploiting its own domestic reserves, which the Conservative Government is hoping to take advantage of. For instance, it is hoping to issue at least 100 licenses for oil and gas drilling in the North Sea in a bid to boost domestic production and scupper the UK’s reliance on foreign imports. 

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This plan has been met with disapproval from climate protestors who have said that there should be no new oil or gas drilling due to the fact the extraction of fossil fuels is a highly polluting activity.

Instead, they argue clean renewable energy sources should make up the bulk of the energy mix, although it is recognised that the transition from fossil fuels to renewables cannot happen overnight. This is why some experts say gas must function as a transition fuel as the world makes the switch to green energy. 

However, it is still expected that the deal will not be announced until after the climate summit as the Prime Minister tries to signal his commitment to the cause.Speaking at the climate summit in Sharm El-Sheikh on Monday, Mr Sunak said: The world came together in Glasgow with one last chance to create a plan that would limit global temperature rises to 1.5 degrees.

“The question today is: can we summon the collective will to deliver on those promises? I believe we can. By honouring the pledges we made in Glasgow, we can turn our struggle against climate change into a global mission for new jobs and clean growth.”

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