Saturday, December 24, 2005

Government's experiment with Gas Supplies encounters key test

As part of the Government's experiment with Energy Security to see what happens when they "leave it to the market" a further key test component looks like being brought to bear.

Apart from the rather low levels of gas coming in from the North Sea and the hence inadequate storage that we have we are also importing gas from Belguim (and actually Norway as part of Beach) and via Liquid Natural Gas.

The weather forecasts that give a cold spell just after Boxing Day also give cold weather in Europe. This brings greater urgency into the question as to which way the interconnector will flow.

No-one seems to fully understand the gas markets and the interrelationships between Continental Europe and the UK. We know that the Spaniards operate effective penalty clauses to ensure that they get gas.

By Friday we will know what happens in those situations and whether to press the panic button in the first week of January.


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