FT article tonight28 Feb 2018 19:06
https://www.ft.com/content/de6b2f96-1ca3-11e8-956a-43db76e69936 ......................................
Big freeze creates 12-year spike in UK gas price
First significant test of market since closure of
Rough storage facility
Demand for gas soared to its highest level in five years on Wednesday as freezing weather gripped the UK, prompting fears supplies could get tighter over the coming days.
Wholesale gas prices for same-day delivery soared to a 12-year high, jumping to 190p a therm on Wednesday morning, more than three times the average of 56p a therm seen so far this month.
The National Balancing Point gas market, the virtual hub that serves as the main pricing point for UK natural gas, has seen “a perfect storm”, said Oliver Burdett, commercial director at EnAppSys, an energy market monitoring specialist.
“Issues at the Norwegian Kollsnes processing plant, low gas flows from Europe due to shortages on the continent and cold weather have combined to expose a weakened gas market following the closure of Rough,” he added. At its peak, Rough could hold 3,700mcm of gas so its removal from the market has a “significant impact”.
As supplies from the North Sea decline over the longer term, Britain will become increasingly import dependent and need to compete with gas supplies, according to market analysts.
Last winter, the UK secured 38 per cent of its gas supplies from the North Sea, 42 per cent from Norway and 10 per cent from pipelines linked to continental Europe. A further 4 per cent came from shipments of liquefied natural gas dispatched by producer countries such as Qatar, with the remainder provided by storage facilities.
Security of supply in the UK has “gotten worse”, said Niall Trimble, managing director of the Energy Contract Company. Before the closure of Rough, Britain’s overall gas storage capacity accounted for roughly 6 per cent of annual demand. That has now dropped to about 2 per cent, said Mr Trimble.
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