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4 Jun 2010

Global gas & LNG markets and Great Britain’s security of supply

Gas security of supply is a significant issue that faces governments, industry participants and consumers.

Significant investments in pipeline and LNG import capacity, had taken place in GB between 2003 and 2009.  However, some concerns remained that GB may not have adequate security of supply to mitigate supply disruptions, particularly in light of increasingly diverse sources of gas.

In 2010, the UK’s Department for Energy and Climate Change (DECC) commissioned Pöyry to examine the key factors affecting the development of the global gas and LNG markets and to assess the circumstances under which market developments might put LNG supplies to GB at risk. 

Our often quoted analysis suggested that the gas supply was robust even to a combination of a 1-in-20 winter (i.e. extremely high demand), and the loss of two LNG terminals.  The minor amount of demand-side reduction that would be needed could be provided by fuel switching by gas-fired power stations and some industrial customers to gas oil.  Gas prices were affected in the stress-test situations, but in general remained below the level at which demand side response would be required.

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Contact information

John Williams
Senior Principal, Pöyry Management Consulting