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UK supplies hit as gas giants cash in on crisis
Robert Lea09.01.09
European power giants have been cashing in on this week's Russian energy crisis by syphoning off UK gas supplies at a profit.
Fears have been privately raised that the UK gas supply market — which hits every business and every household in the country — has been left open to undue influence by European firms including Russian state giant Gazprom, which may leave Britain short of gas.
Questions have been asked by energy executives after it emerged that despite this week being the longest period of sustained cold weather in the UK this century, the interconnector supply pipeline between Norfolk and Belgium has moved to export mode.
That, say insiders, is counter-intuitive even if the continent has been thrown into crisis because major supply lines from Russia through Ukraine have been turned off in recent days.
“There have been very high levels of UK demand because of the very cold weather. UK gas production in the North Sea has been at full tilt yet there have been very big outflows to the continent,” said an industry executive.
“The question is why? The interconnector is pretty crucial to UK gas supply when energy demand is high. But what we have seen is outflows to Europe because Britain — apart from the Netherlands — is the only developed liquid trading market in Europe where suppliers can buy gas from elsewhere.”
That has put the spotlight on who decides which way the interconnector flows — and the answer is a whole raft of European power firms. The flow of the interconnector is decided by the 15 gas trading companies or shippers who hold capacity for the pipeline.
Of those, 11 are continental firms including the German giants E.On and RWE, the French firms EDF, Gaz de France and Total as well as Gazprom. In addition, E.On is the second largest shareholder in the firm that owns the interconnector with a 25% stake, while Gazprom holds 10% of the shares.
By directing supplies from the UK to the continent shippers have been getting a double benefit. Not only have they been able to buy cheaper UK gas to sell on the continent where spot prices have soared on fears of Russian import shortfalls, but European firms have been able to ensure their supply commitments are being honoured.
Sean Waring, managing director of the interconnector, said pipeline flows are determined by shippers, but if UK gas reserves are in danger the National Grid can use emergency powers to switch off the interconnector.
The outflows from Britain down the interconnector have been significant.
Normal cold weather UK demand is around 360 million cubic metres a day. But demand this week has hit 440mcm. Around 25mcm has been leaving the UK every day via the interconnector .
Reader views (10)
The lack of foresight on these matters is a startling surprise which is not so surprising anymore. The question now is: IS THAT THESE GOVERNMENT PLANNERS ARE SO STUPID DUE TO THE RETINANCE OF A COLLAPSE IDEOLOGICAL ERA WHICH IT SELF WAS MADNESS!!?? Their common sense seems to be gone because they have rejected reality for some form of vice. Is it that they are trying to develop and run the EU through some form of stupid vice? The French seems to be the most prepared and realistic about these eventualities. The United States a few decades ago did warn the EU about over dependency on Russian gas and the Russians are now very keen on cornering the EU on the gas market. So what is the answer?
- Calbert, London
I am appalled just like the others that after last year winter's disaster with the Russians screwing us all over this was not foreseen! This government is a disaster and every day I live in disbelief how they are nationally and internationally fools.
- Jacqueline, Hampstead, London
So our inept government continues to allow us all to be screwed and screwed again!
- Sos, Oxfordshire
the level of ignorance here is staggering...1. the UK Govt earns tax on exported gas. 2. the UK has long been the world's largest creditor - we own proportionatley more of the world than anyone else, but I don't see emails from 'David, London' moaning about that.3. Has UK domestic supply been insufficient - no, so why worry about export earnings.
- Peter Bench, London
As long as we have enough diversity officers and street football coordinators they I feel all warm inside. Well Labour for getting your priority's right.
- Roger, Surrey
Another Miliband, and another government failure.
All current ministers and PM suffer from unconscious incompetence. They think they are doing us a favor.
May they be gone from our sight very soon!
- Mike, Berks
It was only a few days ago that the UK Energy Minister was assuring us that '..we would not be affected by the Russia/Ukraine dispute..'. Now we know differently, and once again Browns Government has been caught lying to the public.
- Paul, Birmingham UK
So the selling off our national utilities to foreign companies who are supported and encouraged by their Governments is coming home to roost. Both political parties have been guilty of not safe guarding our national interests. Well done Gordy / Maggie.
- David, London
Mmmm is this going to happen every winter here?! Should the government not wake up I thought this was already so last year.
- Steveo, London
Why has the government bungled AGAIN?! Surely after this same happened last winter one could have assumed UK government to have planned alternative gas????
- Georgie, Islington, London
