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Tuesday, Apr 01, 2025

Centrica's Gas Storage Concerns Unfounded, UK Supply Remains Secure

Centrica's Gas Storage Concerns Unfounded, UK Supply Remains Secure

UK Network Operator Assures Adequate Gas Supply Amid Concerns Over Storage Levels
The UK is poised to meet its gas demands this winter, according to the network operator, despite warnings from Centrica, owner of British Gas, regarding "concerningly low" storage levels.

Centrica, which manages the nation's largest gas storage facility, recently cautioned that the UK had "less than a week of gas demand in store" amid unusually cold weather.

However, National Gas, which oversees the UK gas network, has assured that Britain sources its gas from "a diverse range of sources" and maintains that storage levels "remain healthy."

Energy analysts have highlighted that even if storage runs low, the UK can increase imports from Europe or other global suppliers.

Currently, Centrica reports that national gas storage facilities are approximately half-full.

According to the company, "plunging temperatures and high demand for gas-fired power stations have reduced UK winter gas storage to concerningly low levels." Furthermore, Centrica noted that "stubbornly high" gas prices have hindered efforts to replenish storage efficiently.

With the UK experiencing freezing conditions, impacting nighttime temperatures in certain areas, the importance of gas as a heating source becomes evident.

In 2023, around 74% of households in England and Wales reported gas central heating as their sole heating method, based on data from the Office for National Statistics.

National Gas, which operates nearly 5,000 miles of the UK's gas transmission system, stated that "the overall picture across Great Britain's eight main gas storage sites remains healthy, with average levels just over 60% across the board," and assured readiness to meet winter demand.

Energy consultant Craig Lowrey from Cornwall Insight underscored that the UK has several gas pipelines from Europe and also imports liquefied natural gas (LNG).

With household energy prices capped until March's end, any shortages are unlikely to impact consumer bills, though commercial customers might face fluctuations if wholesale prices rise.

Nonetheless, meteorological forecasts suggest milder weather from Tuesday onward, which could stabilize any potential price spikes.

Currently, wholesale gas prices remain lower than earlier in the year.

Jack Sharples, a senior research fellow at the Oxford Institute for Energy Studies, emphasized no imminent risk to the UK's physical gas supply this winter.

In addition to LNG, the UK receives gas from North Sea fields, with pipelines connecting it to Norway, the Netherlands, and Belgium.

The government has echoed confidence in ample natural gas supplies for the winter season.

The cold weather conditions, alongside the cessation of Russian gas pipeline supplies through Ukraine, have put gas inventory levels under pressure.

Although the UK historically holds limited gas storage capacity, significant improvements have been made in recent years.

Approximately half of this capacity is located at Centrica's Rough facility off East Yorkshire, which was closed in 2017 but partly reopened in October 2022, following the energy crisis instigated by Russia's invasion of Ukraine.

The UK also houses LNG storage across three terminals and smaller facilities nationwide.

In the event of further gas requirements, traders would have the option to access EU reserves, provided competitive pricing is met.

Centrica is contemplating a £2 billion investment in expanding the Rough facility to boost storage capacity for natural gas and, eventually, hydrogen, as the UK transitions to cleaner energy sources.

The company has been advocating for governmental acknowledgment of hydrogen's role in the UK's future energy portfolio to ensure support for its investment plans.
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