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Forties pipeline shutdown leaves UK in the cold

UK gas supplies have been hit by the recent shutdown of Ineos’ Forties pipeline following the discovery of a hairline crack, an explosion at the Baumgarten gas hub in Austria that is the main entry point for Russian gas into Europe, and reduced output from the Norwegian sector of the North Sea where Statoil facilities have experienced a power outage. The Forties pipeline carries some 40% of the UK’s North Sea oil and gas production and its closure saw the price of Brent rise to just over $65/b – its highest level since May 2015 – and wholesale gas prices rising some 50% to their highest level in six years.

Some motorist organisations have warned that these price increases may filter through to the consumer, predicting a possible 3 pence/litre rise in the price of fuel by Christmas.

The UK has become increasingly dependent on imported gas as North Sea supplies have dwindled. The situation has been compounded by the closure earlier this year of the ageing Rough facility off the Yorkshire coast, which provided around 70% of the UK’s gas storage. According to some analysts, this combination of factors has led to a 40% rise in the market price of gas this winter.

In a bid to help alleviate the situation, the UK is reported to have agreed a deal with Russian producer Novatek to bring Yamal gas to the Isle of Grain import terminal via a specially built ice-breaking tanker by the end of this month (December).

News Item details


Journal title: Petroleum Review

Countries: UK -

Subjects: Gas markets, Oil markets, Policy and Governance, Oil and gas, Oil supply, Oil prices, Business management, Gas prices

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