Gas Prices Show UK Must Maintain North Sea Supply
Surging global gas prices show the UK must maintain its North Sea supplies.
That’s according to industry body Oil & Gas UK (OGUK), which highlighted that wholesale prices for gas have surged 250 percent since January with a 70 percent rise since August alone.
The causes are global, OGUK noted, citing decreased European gas stocks and Russia supplies, as well as strong demand for liquefied natural gas from Asia.
OGUK said the effects on the UK are “particularly strong” because it is one of the largest consumers of gas in Europe at 44 billion cubic metres per year. The industry body noted that the crisis coincides with discussions on whether to open new gas fields in the North Sea to replace those running out or becoming economically unviable to produce.
OGUK predicts that UK North Sea output will roughly halve by 2027 unless new fields are opened and said if that happens, the UK will be even more reliant on imports than now.
“This price surge shows how we continue to need UK gas,” OGUK Energy Policy Manager Willy Webster said in an organisation statement.
“Letting production fall faster than we can reduce demand risks leaving us increasingly dependent on other countries, and at the mercy of global events over which we have no control,” Mr Webster added in the statement.
“While the UK continues to use oil and gas, we should make the most of the resources in our control while working for a low-carbon future,” he continued.
Last week, in a statement to parliament on the UK gas market, the UK Secretary of State for Business, Energy and Industrial Strategy, Kwasi Kwarteng, outlined that the UK benefits from having a diverse range of gas supply sources and said the country has “more than sufficient capacity” to meet demand.
“We do not expect supply emergencies to occur this winter,” Mr Kwarteng told parliament on the 20th September.
More than 22 million households in the UK are connected to the gas grid, the UK government highlighted in a recently published gas supply explainer. According to the government, in 2020, 38 percent of the UK’s gas demand was used for domestic heating, 29 percent for electricity generation and 11 percent for industrial and commercial use.
Source: Rigzone