On Tuesday wholesale gas prices soared 37% in one day, hitting £4 per therm in short-term global markets (equivalent to £1.41 per cubic metre). This is a 700% increase compared with more typical levels at the start of 2021.
Factors causing the latest surge include Russia making a 70% reduction in the amount of gas delivered to the EU via its Belarussian pipelines, plus surging global demand for LNG shipments, especially from Asia.
The output of the UK’s gas fields in the North Sea and Irish Sea is falling, partly because, according to OGUK, too few new fields have been developed. From self-sufficiency in 2004 the UK can now meet only half its own gas needs.
It means the UK is increasingly reliant on imports. In 2020 the nation consumed 74 billion m3 of gas – about 1100 m3 per person. Half had to be imported from other countries, including Norway, Qatar, Russia, Trinidad and Tobago, Egypt and Nigeria.
OGUK’s Energy Transition Outlook, to be published later this month, will warn that such reliance will increase – unless the UK invests in the new resources known to lie under its continental shelf. Without such investment UK gas output will plummet another 75% by 2030.
Deirdre Michie, chief executive of OGUK, said: “The gas resources off our own shores can boost our energy security and protect jobs. The UK industry’s own greenhouse gas emissions, generated during production from these new fields, would also be a lot lower than those generated by liquefied natural gas imports.” “The UK, and our industry are on a journey to achieve net zero emissions by 2050. We fully support this goal but 23m UK homes are still heated by gas which also generates 40% of our electricity, so we will need gas to power us through this green transition. It would be far better to get as much of that gas as possible from sources we can control rather than rely on other countries.”
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