By Paul Homewood
All of the UK’s major parties want to put an end to North Sea oil and gas. So how is that working out?
The UK is on track to import an unprecedented amount of liquified natural gas this month amid a scramble for supplies as fears grow over a Russian invasion of Ukraine.
Monthly imports of gas shipped in from around the world are likely to eclipse former records by Wednesday and could finish the month 19pc higher than any previous one, experts believe.
Most of the gas is coming from the US, but there have also been shipments from Qatar and Nigeria.
The UK has increasingly turned to the highly competitive global LNG market in recent months amid a global shortage in gas supplies which have helped drive a six-fold rally in price.
Russia has been accused of adding to the problem by withholding extra pipeline supplies to Europe. A Russian attack on Ukraine could disrupt supplies further as it is a key transit country.
Adam Lewis, a partner at energy trading company Hartree Solutions, said: “With these higher imports and seasonal normal European weather conditions, the UK looks more comfortable than it did several weeks ago.
“Yet we remain exposed to colder conditions or a worsening of the situation in Ukraine, risks the market is trying to price into its energy prices.”
The UK gets most of its gas from pipes connected to the North Sea, Norway and Europe. Around 20pc arrives in the form of LNG shipped in from around the world.
More shipments from the US started to head to the UK and Europe in December last year, as soaring wholesale gas prices meant the region was a more lucrative market than Asia.
Tom Marzec-Manser, an analyst at the market intelligence group Icis, said the UK is on track to beat the previous monthly record for LNG imports – 2.1 million tonnes (mt) – by Wednesday, and could end up importing 2.5mt by the end of the month based on Icis LNG ship-tracking data.
S&P Global Platts Analytics echoed the forecast of a record, saying that nine shipments are expected before the end of the month.
Mr Marzec-Manser said 1.4mt of the UK’s imports this month have come from the US. That is well ahead of the previous monthly record of 800,000 tonnes of LNG coming to the UK from the US, in December 2020.
Those supplies have helped to soften gas prices which have been high for months owing to a global shortage as the world came out of lockdown.
Russia denies any manipulation, stressing it has met all contractual obligations. Last year it sent 29 shipments of LNG to the UK, up from 22 in 2020.
Wholesale gas prices in Britain climbed 17pc on Monday as tensions over Ukraine grew.
Christopher Ward, senior energy broker at Britannia Global Markets, said: “With tensions on Ukraine’s border with Russia continuing to ratchet up, both in terms of military presence and rhetoric, energy supply uncertainty in the UK and Europe does not look like easing soon.
“The combination of US sanctions, coupled with Russia’s seeming willingness to use gas flows into Europe as a bargaining tool, could continue to drive energy markets higher.”
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January 27, 2022 at 01:51AM