The UK could face gas supply shocks and spiking prices as the oil rout accelerates the decline of North Sea reserves, former energy minister Charles Hendry has warned. The Privy Council member said that the UK’s increasing dependence on imported gas meant that without investment in gas storage, the UK could become increasingly exposed to supply interruptions. The government is banking on the booming liquefied natural gas (LNG) market to play a greater role in the UK’s range of gas supply options. LNG is gas converted into liquid for easier transportation. The UK currently relies on the North Sea for around 35pc of its gas supply, with 25pc imported from Norway and 10-15pc each from LNG deliveries and storage tanks. The rest is sourced from pipelines to neigbouring markets. Ed Cox, gas market expert at Icis, said that in the short term Europe’s gas demand growth would not be enough to absorb the huge increase in global LNG as the US begins to export its shale reserves this year. But the UK will still be exposed to potentially volatile pricing from 2025 when global demand begins to catch up with the strong supply.
Telegraph 12th Feb 2016 read more »