Gas prices rocket after storage shutdown
Gas prices have rocketed up after Centrica announced the complete shutdown of the UK’s largest gas storage facility, probably until spring next year.
The National Balancing Point (NBP) price for the coming winter closed Friday at 46.65 pence per therm (p/th) – a jump of 3.2p/th on the previous close.
The Rough storage facility operated by Centrica Storage has a capacity of 2.7 to 3 billion cubic metres (bcm) – roughly two thirds of the country’s total. It is currently holding around 1.3 bcm of gas.
The facility was already undergoing a 42-day closure as the company conducted a testing program which was due to end in early August. That closure alone helped to push gas prices to near nine-month highs in the second quarter of 2016, according to price reporting firm ICIS.
Centrica has now extended the test program after it identified “potential uncertainties in the remaining untested wells”. “We estimate completion in March to April 2017,” the company said. “In the meantime because of the uncertainty as a prudent and safe operator [Centrica Storage] cannot inject or withdraw gas from Rough.”
European gas analyst for ICIS Tom Marzec-Manser said: “The NBP rocketed in price following Centrica’s decision to essentially close Rough until next spring.
“To ensure security of supply is maintained gas companies are going to have to pay a premium and will be reliant on storage on the European mainland. Technical problems have been ongoing at Rough for a while, but the market clearly did not anticipate this.”
- Ofgem chief predicts plunge in SVT customer numbers Regulator will also be publishing a new paper soon, which will remove the requirement to deal with a licensed supplier
- Cap could have ‘severe’ impact on profits, analysts warn Investec predicts a £961 yearly cap could cut profit margins
- 90 per cent of customers satisfied with switching process Energy Switch Guarantee has given customers more confidence when changing supplier, says new report