Robin Pagnamenta, Energy Editor
Half of the gas used by British families to heat their homes this winter will be imported from overseas, the highest proportion on record, as production from the North Sea continues its steep decline, National Grid said last night.
In its annual Winter Outlook, on the state of Britain’s energy supplies, National Grid said production of the fuel from the UK sector of the North Sea would be 6 per cent lower this year than in 2008-09. That will leave Britain having to import 50 per cent of its gas supplies from countries such as Norway, Qatar, Trinidad and Algeria, a sharp rise from 27 per cent in 2007.
A spokesman for Centrica, owner of British Gas, said the UK’s ageing gas fields — many first tapped in the 1970s and 1980s — were no longer able to keep pace with domestic demand. “On the current trajectory we will have to import three quarters of our gas by 2015,” he said. Britain was still a net exporter of gas as recently as 2003 and was forced to import about 5 per cent of supplies in 2004 for the first time.
National Grid, the operator of Britain’s national gas and electricity network, said the decline would mean Britain had to import far more by ship as liquefied natural gas (LNG) this winter. The group forecast that about 40 million cubic metres of LNG would need to be imported to Britain every day this winter — representing about 10 per cent of peak winter demand.
That would be a fourfold increase from 10 million cubic meters a year ago. Further imports will be made via pipelines from Norway and Holland. The depletion of the North Sea’s gas reserves comes as the UK is becoming more reliant on the fuel for power generation. Almost 35 per cent of UK electricity now comes from gas-fired power stations, up from less than 5 per cent in 1990. But energy analysts said this growing reliance on imported LNG is set to compound volatility in UK gas prices, which could hurt consumers.
Nick Campbell, energy trader at Inenco, said that there were signs of growing speculative activity by hedge funds in the UK gas market because of the narrowing price differential between US and UK LNG cargoes. “The premium between the UK and US gas market has tightened recently and this means potential competition in the Atlantic Basin could increase for LNG cargos. The US hedge funds will potentially use this differential to gain by playing one market against the other.”
This increase in speculative activity is reflected in the number of UK gas contracts being traded on the Inter Continental Exchange (ICE). The number of traded UK gas contracts on ICE has increased from an average of 73,401 each month a year ago to 126,000 a month so far this year.
National Grid also said that daily gas prices this summer had been less than half those of 2008, averaging 26p per therm against 60p per therm then.
Comments
We now have an excess of fresh capital that is not linked to any debt ready to be commited to the gas makets to make them even more liquid
We have excess gas being bought in from Oman, literally as much as they can ship we can use. And all of the gas we use for the next 10 years has been bought in advance this was done to guarantee the financing for the new multi million pound gas termainal in South Wales that has just been completed
There is also a direct pipeline from Scandinavia, suppling any gas we need. Both contracted in advance and whole sale as buy on the spot market.
So why does your article talk about constrains in the gas industry.. Every gas therm is contracted years in advance via Oman and we have a pipeline to make up any difference form Scandinavia, een this pipelines gas will be mainly contracted years in advance as this was needed again for its financing
SUMMING UP: Gas is cheap now because there is not much useage or sales out side of the longterm wholesale contracts that have been signed years into the future.
And in truth if we actually limit what we take from the North Sea it will get more expensive and so it will be more profitable to the producers who bring it out even slower.
Compound this over the years and for the next say 10 years we will have cheap gas and not much demand to buy outside of the whole sale contracts so keeping prices lower.. But as the contracts expire that will be in a different era and a different generations problem, but then there will always be banks to finance it. And different ststems like neclear will have been built by the French comnpanies that are now searching government grants and such to bring down there costs of making them in the next 10 years.. do not forget solar and wind farm over the next 10 years , this will be in place and efficient, then even on second generation re-builds
My view is what we have today is actual
We need new nuclear and new coal-fired power stations now.
The CO2 alarmists can wait a few years for their anti-capitalist agenda dressed in green to make our lives miserable.
mismanagement and waste!
We need new nuclear and new coal-fired power stations now.
The CO2 alarmists can wait a few years for their anti-capitalist agenda dressed in green to make our lives miserable.
As the pound declines this will keep the cost up of all goods imported. Gas and oil being 2 that are hitting us all.