Labour’s 10-year gas deal is possible, but...

A 10-year fixed-term agreement on gas is possible but there is a risk the global price could actually go down over the next decade, according to international industry experts. A fixed-term power purchase agreement is central to Labour’s proposed energy plan because it gives the private investor the party plans to attract fixed parameters and guaranteed profits. The proposal came under fierce attack from the Government, which argued that such an agreement of the sort was practically impossible or was likely to be hugely expensive given that the price is expected to increase. Professor Jonathan Stern, from Oxford University’s Institute of Energy Studies, however, has confirmed that agreements of this length are not unusual. On the contrary, he argued that a 10-year period was relatively short for a new market entrant such as Malta. “Previously you would have needed a 15-to-25-year power purchase agreement back-to-back with an LNG sale and purchase contract,” Prof. Stern said, adding there were “plenty” of examples of such contracts all over the world. Prof. Stern is a senior research fellow and chairman of the Natural Gas Research Programme at Oxford and has authored and edited...