Centrica’s Conn warns government on gas supply

The UK government “needs to think about” the UK’s security of gas supply as it becomes increasingly dependent on imports, the chief executive of Centrica has warned.

In his first major interview since taking the top spot at the UK gas giant, Ian Conn told the Daily Mail that the UK’s reliance on gas imports means that the country could face problems if pipeline faults occur.

Compared to other high gas using countries the UK has relatively little storage capacity at 4.3 billion cubic meters, of which Centrica is responsible for 70 per cent through a subsidiary business.

In March 2013 after a long and cold winter the UK all but depleted its gas storage reserves. A fault on a gas pipeline to Belgium then forced market prices 50 per cent higher to all-time record levels for short-term contracts.

For this winter, Centrica’s aging Rough gas storage facility has been reduced to 75 per cent of its usual capacity.

Conn said the company is “absolutely” thinking about the need for more capacity, and that this is something the Government needs to think about too.

“I believe there’s a case to be considered that makes sure the UK has adequate storage because we are an island and because we’re becoming increasingly dependent on imports. It’s an important part of what we do,” he told the newspaper.

In August this year David Cox, managing director of trade group the Gas Forum, told Utility Week that without government subsidy gas storage projects would remain “dead in the water”.

If project developers could convince the government to sponsor strategic storage, which would be kept for emergencies and to deal with major problems of supply, they would “effectively get a government subsidy”, he said.

“The government has got to believe that more storage is needed in the market. Then it would change its strategy of not subsidising new, strategic storage. If it were to do that, and start putting money into new storage projects, that would obviously change the dynamic,” he said.