Centrica Share News (CNA)

Tue, 12th Jun 2012 10:23

LONDON, June 12 (Reuters) - British spot gas prices spiked

30 percent higher to 75.5 pence a therm late on Monday night as

the grid operator took steps to deal with acute gas shortages.

'The system buy price at close to midnight last night was

75.5 pence as National Grid was forced to buy gas to balance the

system,' a UK gas trader said.

'Unfortunately given the time of night, there was little

they could do besides turning down injections into storage,' he

added.

By Tuesday morning within-day gas had dipped back to more

normal levels at 58 pence, up just 0.50 pence and well below

highs achieved overnight.

As the energy system operator, National Grid must take

action to balance demand and supply as extremely low pipeline

pressures can lead to a collapse in the transmission network.

A sharp cut in Norwegian deliveries overnight caused demand

to far exceed supplies of gas.

Norway's Karsto gas processing plant, which is operated by

Statoil, was down on Tuesday morning by 40 million

cubic metres (mcm) per day due to maintenance, gas system

operator Gassco said.

The output was reduced due to the maintenance in unspecified

fields supplying gas to the gas processing plant, and the

reduction was expected to last until June 14 at 0600 CET (0400

GMT), Gassco added on its web site.

The UK gas market was undersupplied by 21 million cubic

meters/day of gas on Tuesday morning, supporting within-day gas

prices.

But the impact of supply losses on prices were limited to

the spot contract. The planned closure of the Britain-Belgium

Interconnector starting on Wednesday until June 18 will trap

supplies in the UK market.

The gas link to mainland Europe typically acts as a safety

valve allowing Britain to export excess supplies of gas.

Gas for Wednesday delivery fell half a penny to 56.2 pence

in expectation of the pipeline outage.

Traders expect the UK to restrict exports to Europe ahead of

schedule given the supply shortfall. The pipe was exporting 27

mcm/day earlier in the trading day, enough to ease shortfalls if

gas was held back in the UK, they said.

Injections into storage are also expected to ease during the

day to boost supplies.

The benchmark winter 2012 gas contract was little changed at

65.25 pence.



(Reporting by Oleg Vukmanovic; Editing by Alison Birrane)

((Oleg.Vukmanovic@thomsonreuters.com)(44 207 542 0014)(Reuters

Messaging:)(oleg.vukmanovic.thomsonreuters.com@reuters.net))



((GAS-Please click on the following for information about UK and Belgian prices, field maintenance and field start-ups.

UK natural gas prices

Belgian natural gas prices

North Sea field start-ups

North Sea field maintenance

POWER

UK: baseload prices, outages

report

FRANCE: baseload prices, peak

market report, Powernext,

Spectron baseload, off peak

, peak

nuclear outages: report, offline

percentage, offline capacity (MW)



GERMANY: baseload prices, peak

outages, report

SWITZERLAND: outages, reservoir levels

NORDIC: report

EU CARBON PRICES SPEEDGUIDE:

Keywords: MARKETS BRITAIN GAS/POWER

(Xtra clients: Click on http://topnews.session.rservices.com to see Top News pages in multimedia Web format.)) )

COPYRIGHT
Copyright Thomson Reuters 2012. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.