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Supply, demand and storage issues in the UK gas market

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Supply, demand and storage issues With declining North Sea gas production, the UK is now a net importer of gas, receiving supplies from an increasingly diverse set of countries. It is estimated that by 2016, 80% of gas consumed in the UK will have to be imported. Traditionally, the UK has relied heavily on the flexibility of its own offshore supplies in order to balance supply and demand, supplemented by offshore gas storage, some peak shaving LNG terminals (which supplement the normal amounts of gas delivered to customers during peak-use periods) and a very limited amount of salt cavity storage. 

To ensure the UK has satisfactory long-term gas supply capacities in place, now may be the time for Government to reassess, and gain consensus on, the gas industry’s contingency plans and the fundamentals of the future shape of the UK gas supply system.  If private sector storage schemes do not come forward on a sufficient scale, then Government may need to provide greater fiscal or other incentives to attract the necessary investment into strategic storage. Consideration should also be given to adjusting the regulatory system to make sure that sufficient commercial and strategic storage and LNG import capacity is made available to serve the needs of the growing UK gas market. Without strategic storage, the UK’s gas supply system will remain vulnerable to problems at a major gas terminal and to supply problems with major gas fields or pipelines.

For further information, download our publication Supply, demand and storage issues in the UK gas market (PDF, 3720 KB).

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