Can long-term gas deals still attract investors? Lessons from the Equinor–Centrica agreement and Europe’s energy strategy

Why did the Equinor–Centrica gas deal make waves among investors?

The recent signing of a £20 billion, 10-year gas supply agreement between Equinor ASA (NYSE: EQNR) and Centrica plc (LSE: CNA) has reignited investor interest in long-term fossil fuel contracts—despite mounting pressure to accelerate the energy transition. Under the deal, Equinor will supply five billion cubic meters of natural gas annually to the United Kingdom beginning October 1, 2025. The contract will cover nearly 10 percent of Britain’s gas demand, with pricing structured around current market rates to ensure revenue predictability for both parties while retaining flexibility.

This agreement landed at a time when energy security remains a dominant concern for European policymakers and institutional investors. Volatile spot markets, geopolitical risks, and inconsistent LNG availability have forced a reassessment of long-term pipeline deals. Equinor’s CEO Anders Opedal described the deal as a “reliable bridge” supporting both decarbonisation and grid stability—an assessment that has resonated across buy-side desks seeking defensible infrastructure exposure in the energy sector.

How have markets and institutions responded post-announcement?

Following the announcement, shares of Equinor traded in the $24.30–$24.60 range, reflecting continued confidence in its integrated energy strategy and stable cash flow outlook. Centrica plc (LSE: CNA) saw its stock edge upward to the 161–165 GBp band, with institutional investors appreciating the long-term supply security and the hedging it provides against future price spikes.

Some analysts noted that Centrica’s long-term import commitment is strategically aligned with the UK’s post-Brexit energy security goals. They viewed the market-reflective pricing model as a risk-managed approach that avoids locking in potentially punitive legacy terms. Investor flows tilted modestly positive in the days following the deal, especially among infrastructure-focused and climate-transition funds that seek hybrid exposure to legacy assets with transition pathways.

What do ESG investors make of long-term gas deals today?

Investor sentiment around long-term gas contracts remains complex—especially within ESG frameworks. Critics argue that doubling down on fossil fuel infrastructure contradicts Paris-aligned net-zero targets. However, many asset managers now view “transition-aligned” gas infrastructure as a pragmatic necessity in the current geopolitical and technical environment.

Equinor’s diversified strategy, which includes large-scale investments in offshore wind (Dogger Bank, Hywind Scotland), carbon capture (Net Zero Teesside, Northern Lights), and green hydrogen (H2H Saltend), is seen as providing an effective offset against its upstream gas business. This has allowed the company to remain in the portfolios of leading ESG funds, particularly in Europe, where asset-level disclosure and transition-readiness have become more important than blanket fossil-fuel exclusions.

The European Union’s evolving taxonomy—which classifies certain forms of gas as transitional investments under strict conditions—has also softened institutional resistance. Equinor has positioned this agreement not as a bet on gas permanence, but as a financing tool for a multi-decade energy transition in which molecules and electrons must co-exist.

How does this deal compare with other European long-term contracts?

The structure and scale of the Equinor–Centrica deal places it among the most consequential long-term gas agreements in Western Europe in the past five years. Unlike optional LNG spot-based supply deals, this agreement ensures both volume certainty and geopolitical alignment, with Norway viewed as a low-risk energy partner. It also supports European ambitions to reduce dependence on global LNG spot markets, which have proven volatile and susceptible to price wars and weather-driven shocks.

Other long-term supply deals, such as QatarEnergy’s multi-decade contracts with Shell and TotalEnergies, mirror this strategy at a global scale but carry higher delivery risks due to longer shipping routes and exposure to chokepoints like the Suez Canal. Meanwhile, ENI’s deals in North Africa have faced recurring political disruptions, adding to the appeal of Northern European bilateral frameworks like Equinor–Centrica.

According to analysts, this deal reflects a growing trend: a return to long-horizon, pipeline-based energy contracts as tools for national resilience—not just commercial transactions.

What financial signals underline the appeal of long-term gas contracts?

Equinor’s Q1 FY25 results showcased the earnings resilience that such contracts bring. The company reported EBIT of over $8 billion, with upstream gas trading delivering a significant share. Locked-in volume contracts like the Centrica deal are expected to underpin up to 40 percent of Equinor’s European gas sales through 2035, providing reliable forward cash flows. Some analysts note that this allows Equinor to self-finance much of its green capex without excessive balance sheet stress.

From Centrica’s perspective, the deal reduces exposure to spot market volatility, a key issue during the 2022–2023 energy crisis. By committing to a baseload contract with Equinor, Centrica gains more control over pricing, risk management, and seasonal demand balancing, especially as it expands gas storage at Rough and develops hydrogen-ready infrastructure at Aldbrough.

For investors, the key takeaway is that long-term gas contracts—if structured with pricing flexibility and strategic alignment—remain attractive tools for stable cash flow, sovereign alignment, and infrastructure planning in a transitioning economy.

What risks do investors still worry about?

Despite their immediate utility, long-term gas agreements carry nontrivial risks. Chief among them is demand erosion. As Europe builds out hydrogen capacity and accelerates electrification, institutional investors worry that gas infrastructure might face stranded asset risk in the 2030s. This makes embedded flexibility within contracts crucial.

There is also growing scrutiny over methane leakage, lifecycle emissions, and the potential impact of regulatory frameworks such as the EU Methane Strategy and UK carbon border taxes. Should new legislation impose additional costs or emissions limits on imported gas, such long-term contracts could face margin compression.

Geopolitics remains a concern, though Equinor’s jurisdiction in Norway is considered one of the safest in global energy trade. Even so, investors are closely watching developments in the Barents Sea and Arctic supply routes as energy competition intensifies in the North Atlantic.

Future outlook: What’s next in Europe’s energy contract evolution?

The Equinor–Centrica deal is likely to be a bellwether for how energy majors and governments structure future fossil-linked contracts in the age of transition. Analysts expect more pipeline-based, regionally aligned gas deals in Europe—especially those that serve as transition instruments toward low-carbon systems.

There is also rising interest in dual-use contracts, where infrastructure for natural gas today can be repurposed for hydrogen or CO₂ transport tomorrow. Both Centrica and Equinor have explicitly referenced hydrogen readiness in their infrastructure buildouts. The Humber Hydrogen Pipeline and Aldbrough Hydrogen Storage project, co-developed by the two firms, illustrate this philosophy in action.

In the longer term, the European energy market may bifurcate into premium, flexible green contracts—backed by hydrogen, wind, and solar—and regulated, firm legacy supply deals that provide security of supply. Investors will need to weigh not just emissions profiles, but also the resilience and regulatory alignment of each asset.

In that context, the Equinor–Centrica contract offers not just gas—but a glimpse into the infrastructure shape of Europe’s energy future.