Daily Telegraph: Ofgem turns up heat on suppliers: “Ofgem has effectively cleared BP, Shell and other North Sea operators of profiteering by witholding gas supplies.”: Tuesday 6 December 2005

By Roland Gribben (Filed: 06/12/2005)

BP and Sonatrach were warned last night they could lose exclusive contracts to use a liquid gas terminal on the Thames because they had failed to deliver supplies to the market.

Ofgem, the electricity and gas regulator, declared it would use powers to effectively move into the driving seat and open the terminal to rival suppliers.

The Isle of Grain complex has been developed to handle imports of liquid natural gas to help boost energy supplies and ease worries about winter shortages.

Only one shipment has been handled so far at the National Grid owned terminal despite the attraction of high UK prices.

Spain has been accused of cornering supplies destined for the UK, while BP and Sonatrach have faced criticism over their "sluggishness" in fulfilling contracts.

Ofgem has told them bluntly that it will use its powers to open the terminal to rival suppliers unless their performance improves.

The companies have responded by telling the regulator that the facility will be fully utilised over the next two weeks and that the plant will be operating at full capacity for the rest of the winter.

The pressure from Ofgem follows unease about the security of winter supplies following the sharp jump in gas prices triggered by the cold snap and a faster than expected rundown in North Sea production.

Against the background of some softening in prices, Ofgem yesterday attempted to provide reassurance that its intervention is producing positive results.

The regulator said that National Grid's forecast about North Sea gas production remains robust, while cautioning that "genuine production problems" were reducing supplies.

The European Commission has also assured Ofgem that it will investigate British concerns about market "rigging" that has limited gas supplies from the continent arriving through the North Sea pipeline.

Major energy users said the Ofgem moves underlined the weaknesses in the Isle of Grain operating regime and questioned the forecasts about offshore production.

Ofgem has effectively cleared BP, Shell and other North Sea operators of profiteering by witholding gas supplies.

Click here for ShellNews.net HOME PAGE