UK to rule out national gas storage to secure supply

Britain will this week rule out stockpiling national reserves of gas, despite concerns about the country's lack of storage and over-reliance on foreign imports, according to industry sources.

It is understood that the Government has decided against keeping national stocks of gas, which is the practice in some European countries such as Holland. The decision will be contained in a paper examining Britian's security of gas supply.

The decision flies in the face of a recommendation from its own adviser, Malcolm Wicks MO, who published a paper last August urging the Government to consider reserving storage space in offshore gas facilities owned by energy companies for UK needs. This would stop companies diverting gas supplies to other countries in the event of a shortfall - which happened during the dispute between Russia and the Ukraine just over a year ago.

Greg Clark, the Tory shadow Energy Secretary has repeatedly warned that the UK's gas storage facilities are inadequate, calling for the Government to "ensure that we always have a prudent security margin of gas supply".

However, energy companies that own gas storage plants insisted that the market can provied all the necessary facilities, if tax incentives and lower land rental fees are provided by the Government.

A spokesman for the Department of Energy and Climate Change declined to comment, but added that it had been reluctant to sanction national storage in the past for fear of discouraging commercial investment.

The news comes as a group of influential MPs condemned the Crown Estate, the state-owned body responsible for Britain's seabed, for taking advantage of its monopoly position to charge too much rent for gas storage sites projects.

Michael Fallon, chairman of the committee, said the bdy was "not taking full account of wider public interests" in its approach to both gas storage and renewable energy projects. He called for the Goverment to review whether to Crown Estate Act of 1961, which set its remit, was still relevant.

Profits from the Crown Estate's portfolio, £227m in the last financial year, are paid to the Treasury. Roger Bright, its chief executive, said the Crown Estate takes its public interest role "very seriously", adding that the body would study the committee's recommendations carefully.

 

Source - Telegraph

Posted Date: 30th Mar 2010