Iberdrola signs LNG supply deal with BP

MADRID: Spanish energy group Iberdrola said on Wednesday it has signed a 10-year contract to supply 0.5 billion cubic metres a year of liquefied natural gas to BP from 2012.

Iberdrola, Spain's biggest power utility, said that it planned to deliver the gas in six tankers per year to Spanish LNG terminals.

An industry source said the deal was worth some $3 billion.

"The company is extending through this deal its options to optimise its gas provisioning portfolio, faced with the drop in consumption in Spain," it said.

Spain is the world's eighth-largest natural gas importer, and the third-largest of LNG, but demand has declined since 2008 due to slow or negative economic growth and greater competition from renewable energy in generating electricity.

Iberdrola said BP planned to use the deal to substitute for its present imports to Spain and divert gas to other countries.

The Spanish firm already has long-term deals to buy LNG from Italy's ENI, Algeria's Sonatrach, Nigeria LNG and Norway's Statoil

Copyright Reuters, 2011