Wednesday, 6 February 2013

Fears for higher household bills as UK exports gas cheaper than import price


Britain is exporting gas at a lower price than it is importing the fuel, prompting fears that household bills are being inflated.

A Guardian analysis of gas flow in and out of the the UK has found that gas is frequently being piped out of Britain despite fetching a lower price abroad. It also shows that gas shipped in from Qatar regularly costs more than the gas leaving the UK.

Ofgem, the energy watchdog, suggests that UK energy security is being undermined by this distortion in the market.

The analysis, conducted jointly with Greenpeace, examined the gas interconnector running between the UK and Belgium. It is a major part of the UK's gas infrastructure, with the capacity to supply a fifth of the UK's gas in winter. However, on more than two-fifths of the days between December 2011 and October 2012, gas flowed the "wrong" way – it was exported to the continent despite the wholesale price being higher in the UK. Over the period, the UK exported 15 times more gas through the interconnector than it imported.

The market distortion was worst in the coldest months, when the demand for gas is greatest: from December to February, so-called "flows against price difference" (FAPD) took place on three out of four days. Analysis on monthly government data from Revenue and Customs showed that from October to December 2011, the UK imported large volumes of Qatari gas despite it being up to 5% more expensive than gas exported to the continent.

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