Gas Industry

Trade and Industry written question – answered on 29th November 2006.

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Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley 29th November 2006

To ask the Secretary of State for Trade and Industry if he will assess the effects on UK gas prices of the storage practices of overseas gas companies which import gas into the UK; and if he will make a statement.

Photo of Malcolm Wicks Malcolm Wicks Minister of State, Department of Trade and Industry 29th November 2006

holding answer 23 November 2006

Subject to their regulatory obligations, it is up to gas suppliers how they balance their supply-demand position. The European Commission has undertaken a sectoral inquiry, which has identified access to long-term downstream contracts, capacity on pipelines and gas storage as priorities for individual competition investigations. The Commission aims to reach conclusions by January 2007, and will then pursue infringement of EU competition law as appropriate.

It is not practical to provide the particular estimates that the hon. Member requests, because that would require detailed market assessments against a hypothetical model of how the continental and GB gas storage markets might operate. However, Ofgem recently estimated that around an extra 1 billion could have been added to the cost of GB wholesale gas in winter 2005-06 as a result of gas flows from the Bacton-Zeebrugge Interconnector failing to respond to the relative UK and Continental gas prices. This can be found at:

http://www.ofgem.gov.uk/ofgem/press/fact-sheets.jsp.

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