According to the industry association Oil & Gas UK, gas prices are continuing to rise due to a global shortage. The UK should concentrate on maintaining its own production from North Sea.
Wholesale gas prices rose by 37% earlier this week, to £4 ($5.44) /therm in short-term global market (or $1.92/cu.m). This represents a 700% increase over the average levels at the beginning of 2021.
Russia’s decision by reducing gas supplies to the EU via its Belarussian pipes by 70% and the high global demand for LNG, especially in Asia, are two reasons.
OGUK noted that the UK’s North Sea and East Irish Sea fields continue to produce less than they used to, and there are not enough new fields being developed. Today, the UK’s gas supply is only half what it was in 2004 when it was self-sufficient.
The association reported that Britain used 74 billion cubic meters of gas in 2020. Half of this was imported from countries such as Norway, Qatar and Russia.
OGUK’s Energy Transition Outlook, due to be released later this month by OGUK, will warn that reliance on external sources will rise unless the UK invests in its gas resources. The UK’s gas output is expected to drop by 75% by 2030 if there are no new commitments.
Deirdre Michie, chief executive, stated that the UK and its industry are on a path to net-zero emissions by 2050.
We fully support this goal. However, 23 million homes in the UK are still heated by natural gas, which generates 40% of our electricity. So we will still need gas to fuel this transition. It would be better to get as much gas from sources that we control than to rely on foreign countries.
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