Ofgem 'prepared for all scenarios' after leaked letter suggests UK could face a gas shortage

Could the UK face a gas shortage this winter? Rhys Williams reports

Regulator Ofgem has said they are "prepared for all scenarios" after a leaked letter suggested the UK could face a gas shortage. In the letter obtained by The Times, the regulator said due to Russia's war with Ukraine, there is a possibility the UK could enter a "gas supply emergency".

Great Britain produces a lot of its own gas, but the majority is still imported. It has pipeline connections to Norway, which supplies a large amount of the country’s gas.

In the letter Ofgem said: "Due to the war in Ukraine and gas shortages in Europe, there is a significant risk that gas shortages could occur during the winter 2022/23 in Great Britain.

“As a result, there is a possibility that GB could enter into a gas supply emergency.”

However in response to the letter, Ofgem have said Britain is in "a good position" and they are "putting in place sensible contingency measure[s]".An Ofgem spokesperson said: “This winter is likely to be more challenging than previous ones due to the Russian disruption of gas supplies to Europe.  

“Britain is in a good position with little direct import of gas from Russia; our own domestic gas production; reliable supplies from Norway; and the second-largest port capacity in Europe to import liquified gas.  

"Nevertheless, we need to be prepared for all scenarios this winter.

"As a result, Ofgem is putting in place sensible contingency measures with National Grid ESO and GSO as well as the government to ensure that the UK energy system is fully prepared for this winter.”

Want a quick and expert briefing on the biggest news stories? Listen to our latest podcasts to find out What You Need To Know.

Britain imported very little Russian gas before the war, but will still be affected by the shortages likely to be faced in Europe.

During the winter Britain normally imports gas from storage sites in mainland Europe due to it having very little storage of it's own.

But now European countries are likely to need this gas themselves after losing the supply from Russia.

More than eight in 10 UK households use gas to heat their homes and more than 40% of the electricity generated in Britain over the last year came from gas-powered plants.

If a potential supply emergency gets bad enough this winter, these power plants, and other big gas users, might be cut off temporarily, Ofgem said.

Tom Haddon, a senior consultant at Arcadis, said shortages are “viable”; however, he argued that they are “so unlikely that it still sits in the red herring paddock”.

He said the government’s promise to top up payments for people’s energy bills regardless of what price the market sets, will mean suppliers bring their liquid natural gas (LNG) to British ports.

“Government has signalled to LNG markets it will allow utilities to pay any price for imports, by enacting Energy Bills Support,” he wrote.

Mr Haddon added: “Now, the bit missing is that super peak demand (cold, dark evening) where we would expect the gas to start flowing from Netherlands-based storage into the UK.”

He said the LNG capacity in the UK “still covers us, just”, but warned of massive price spikes.