Monday, 25 March 2013

LNG to the UK's rescue this week?

Some positive news on UK gas supply from Reuters today:

The first of a trio of tanker loads of super-cooled gas from the world's largest LNG exporter docked at the Isle of Grain terminal near London on Sunday, with a second due in Wales on Monday and a third on Friday, tracking data on Reuters shows.

The Qatari tankers could supply a total of around 430 million cubic metres (mcm) of gas to Britain over the next week, compared with daily gas demand of around 370 mcm, while another tanker has set sail from Trinidad on Saturday after UK gas prices leapt on Friday when a key supply link from Belgium shut unexpectedly for 8 hours.
Lng tanker

Of course, the key is that it's only because wholesale gas prices have been so high in the past few weeks that it's arriving:
But it may take sustained high UK wholesale gas prices to lure many more gas tankers away from consistently higher paying buyers in Asia to the UK.
I expect this will enable the UK to scrape through this week's cold weather, and no doubt the government will declare that the market has 'worked'. I imagine many customers will question how well it is 'working' though when their inflated gas bills arrive later this year...

We'll need to keep prices high to keep the LNG arriving and the import pipelines flowing, as the weather is expected to stay colder than average for a few weeks yet. And there's that Norwegian shutdown looming next Monday as well...

Fundamentally we are now in an international bidding war, and we either pay up or the lights go out next winter. Of course, we could always try using less energy, but that doesn't seem to be a very high priority for the government right now...


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