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Home>news>Chemical News>UK natural gas market looks 'balanced' for upcoming winter, 2019: industry

UK natural gas market looks 'balanced' for upcoming winter, 2019: industry

May 16 2018 share:

The UK gas market appears to be in good shape to cope with the upcoming winter and through 2019, industry officials said Tuesday.

* 'Lessons learned' from March gas deficit warning: National Grid

* 'No compelling reason to scream at the moment': Centrica

* Market set to be better supplied with new LNG coming online

The UK was severely tested at the end of the last winter when a cold snap caused transmission system operator National Grid to issue a "gas deficit warning" for the first time since 2010 and prices to soar.

As the UK settles into a post-Rough storage future, it is increasingly reliant on imports from Norway, the Continent via the interconnectors and LNG.

"The winter doesn't look that different from last year," director of group fundamentals at UK utility Centrica Nazim Osmancik said at the Flame conference in Amsterdam.

"We're looking at a much more balanced picture for Winter 18 and 2019," Osmancik said, especially given the expectation of more global LNG supply coming online in the coming months.

Strategy development manager at National Grid Justin Goonesinghe echoed Osmancik's view.

"We are taking lessons learned from the challenging periods last winter," Goonesinghe said. "But the supply-demand picture is not massively different."

He said that National Grid had learned at a lot from the cold weather that hit the UK at the start of March, the so-called "Beast from the East" weather system.

"What we saw was some challenging conditions to operate the system," he said, adding that National Grid itself used its own gas it had in store as well as trading to buy gas at up to GBP5/th.

"But our assessment was that the market worked -- there were no interruptions," he said.

Osmancik agreed, saying the UK market "coped."

"We have the infrastructure in place, and there is no compelling reason to scream at the moment," he said.

BETTER INFORMATION ON FUNDAMENTALS

Goonesinghe said that looking ahead, National Grid needed to find "better" supply-demand information over the course of tight days such as March 1.

"We need to also do some work on modeling for unexpected losses," he said.

Longer term, the UK is set to benefit from more LNG on the global market. "We'll have a looser supply picture as LNG comes to market in 2019/2020, and there should be some free cargoes available that will land to ease the situation," Osmancik said.

He also said that while the market worked during the late winter cold spell, the UK could benefit from more storage.

"There is nothing more secure than having more storage, but it costs," he said.

Energy policy manager at industry group Oil & Gas UK, William Webster, added that domestic gas production in the UK was currently robust.

He said production was likely to remain "steady at current levels" for the near future.

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