FT article today8 Nov 2018 15:02
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https://www.ft.com/content/9318faec-e1e6-11e8-a6e5-792428919cee
The head of Italy’s largest gas distribution company has urged the UK to “rethink and reverse” its decision to operate its network with minimal storage capacity, warning it risks creating shortages and price spikes across the whole European continent.
Marco Alverà, chief executive of Snam — Italy’s equivalent of the National Grid — told the Financial Times that the “ Beast from the East” cold snap earlier this year had laid bare the vulnerabilities in the UK gas system.
“I would hope the UK would rethink and reverse its decisions — it’s important for the whole continent,” Mr Alverà said.
“As the UK moves from being a significant exporter of gas to a major importer, there could be a significant gas supply issue in the near future.”
His intervention comes as the UK is debating whether it has sufficient short-term gas supplies following the closure of its main storage site last year.
Centrica, the parent company of British Gas, said it closed the 40-year old Rough site because it had become too costly to maintain, cutting the UK’s storage capacity from 15 days of winter demand to just four to five days.
The Department for Business, Energy and Industrial Strategy (BEIS) has repeatedly said the UK can attract ample gas supplies through import pipelines and seaborne tankers of liquefied natural gas (LNG).
But it has been criticised for minimising the risk of prices rising, sometimes dramatically, to attract imports to the UK at times of heightened international demand.
UK wholesale day-ahead gas prices have risen 25 per cent above the level of a year ago to more than 60p a therm. During the “Beast from the East” in early March they rose as high as £2.75 per therm as National Grid issued a temporary warning that it risked running out of gas. Energy companies have raised bills multiple times this year for UK households.
Mr Alvera said the UK should look at using depleted gasfield reservoirs as storage sites to act as a supply buffer for the country, but said this may require government support if private companies could not see a way to make them profitable.
“There are significant depleted reservoirs they could utilise,” Mr Alverà said. “Production in Europe is falling quite fast so the need for imports is only going to go up. What happens in the UK affects the rest of the continent.”
Natural gas heats about 80 per cent of UK homes and is
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