CMA opens review of Rough gas storage obligations

The Competition and Markets Authority (CMA) is to review the requirement on Centrica Storage Ltd’s (CSL) Rough gas storage facility to sell a certain capacity of storage capacity at the start of each storage year with a view to lowering the obligation.

The review follows a consultation held by the CMA last month at the request of CSL and parent company Centrica who asked the CMA to vary the obligations on Rough to allow for “Rough’s changing physical capabilities” to ensure it is not obligated to sell more than it can physically deliver.

Current obligations require operator CSL to offer for sale a specific amount of capacity before the start of each storage year and limit the amount that can be supplied to Centrica.

But CSL told the CMA that Rough’s performance is more likely to vary in the future as it is an aging asset, and there is an increasing chance it may not meet its capacity obligations.

Its request was triggered by the reduction of Rough’s physical capabilities following an issue affecting maximum operating pressure of the Rough Wells.

CSL is currently undertaking testing and verification works lasting until at least the summer 2016 injecting season to determine whether the current pressure limit can be lifted.

Centrica and CSL today welcomed the CMA’s announcement.

Rough is a gas storage field in the North Sea is an important part of the UK’s gas storage infrastructure and capacity used to store gas in the summer and deliver it in winter when gas demands are high.

The Rough obligations were first set out in 2002 following Centrica’s acquisition of Rough, with subsequent amendments following Competition Commission reviews in 2006 and 2011.

The CMA said it anticipates the review will be completed in the first half of 2016.

The panel of decision-makers in the review are Martin Cave, Roger Finbow and Marisa Cassoni.