Construction of gas storage facilities delayed
November 28, 2008 at 1:46 pm
We are all aware of the financial problems faced by Britain at the moment. Numerous schemes that will help to minimise the damage caused by the instability of the global economy have been discussed over recent weeks. It has become clear that the UK will need to expand gas storage facilities if it is to minimise the impact of the unreliable global energy markets. However, it was revealed last week that two projects imperative to this expansion have been severely delayed.
A plan to develop an important storage facility, ruled over by Portland Gas, has been delayed as a result of financial problems. The scheme was going to be completed in 2011 but it is now unlikely to be finished before the middle of 2012. As the company announced this disappointing news, its shares crashed by almost forty per cent.
The chief executive of Portland Gas, Andrew Hindle, believes that the 2011 target has been “all but closed off” by the financial crisis. Hindle believes that halting the current project will be in the best interests of all those who hold shares in the company.
The second company which has been affected by the crisis is Encore Oil. Its North Sea project may have to be redesigned after the scheme was shown to have become more complicated than initially expected.
This news is the last thing that British consumers need. The country simply needs more stored gas in order for suppliers to smooth out variations in prices. More storage facilities will allow companies to purchase and store gas during times when prices are relatively low.
6 million householders in credit to gas suppliers
November 19, 2008 at 2:41 am
At a time when many of us in the UK are feeling the financial pinch, you would think that if someone owed us £80 we would ask politely if we could have it back as soon as possible. This may well be the case when it’s Sam next door or Susie down the road who owes us money but when it’s a gas supplier in question, it seems that we adopt rather a different view.
Recent research from moneysupermarket.com has shown that six million of us are in credit with our gas company to the tune of around £79 on average. With gas prices having risen by a staggering 47% this year alone, you would think that we would be quick to reclaim the money. After all, it may be just £79 per household but, multiply that by six million, and it is easy to see how the gas companies are sitting on hundreds of millions of pounds of consumers’ money.
On the other hand, almost two million households are in debt to their gas supplier with the average amount owed being £126. However, setting off the £224 million owed against the £449 million credit, results in a net figure of £225 million available to the gas companies, which in reality belongs to the consumers.
Most surprising of all, however, is the fact that 79% of people who are currently owed money say they will not be claiming it back. Scott Byrom of moneysupermarket.com advises all homeowners to review their direct debit every six months and says that if they are in credit to their suppliers, they should claim their money back and adjust their monthly payments accordingly.
Fuel bills – going up or down?
November 13, 2008 at 9:42 am
Many people have received letters from their energy providers alerting them to the “global” increase in oil prices, which has left no alternative but to increase the cost of fuel bills. Price rises for energy customers were planned in August when oil prices began to increase. However, just as customers are being told that their bills are being pushed higher, oil prices have started to go down again.
Britain’s ‘big six’ energy companies have all raised their prices this year, meaning household energy bills have increased in cost by 38% in 2008. However, with falling oil prices, the companies will be able to buy gas wholesale at cheaper prices again. It will be interesting to see whether prices will decrease as readily as they were increased.
In theory, oil prices are very closely linked to the costs charged by energy suppliers. Britain’s energy companies do not purchase the full amount of gas needed to supply their customers. Instead, they generate some power of their own in gas-fired stations. As oil prices come down, the knock-on effect should see the introduction of lower gas prices and lower electricity prices for British customers.
However, since the price of oil started to fall, some companies have pointed out that their supply costs are kept at a high rate by the gas that they do not generate themselves (the gas bought on the markets). Furthermore, the companies are all bound by contracts drawn up earlier this year when prices were higher. They will have to buy gas at these prices until the contracts run out. Therefore, the current low prices do not necessarily reflect the costs that they are facing in reality.
The energy regulator, OFGEM, reported last month that the limited amount of storage capacity for gas in Britain forces companies into long-term contracts, even when prices are high. The companies are then unable to respond quickly to the wholesale market prices.
As the colder weather arrives in Britain, many consumers have started to take action about their increasing bills. In St Matthews, Leicester, council tenants recently took to the streets to protest against increased fuel bills. Furthermore, more and more people across the country are choosing to burn wood to provide a cheaper way of heating their homes and water.
Gasunie’s projects remain “on track”
November 6, 2008 at 2:09 am
Gasunie has announced that its joint venture to provide Europe with gas from Russia via a pipeline built across the Baltic Sea is still on course to be completed despite the global financial crisis. The Dutch company has revealed that the banking crisis has led to increased costs but the CEO was keen to reiterate that “we are entirely on track”.
Marcel Kramer spoke to the media in London following a conference in the city and he obviously remains confident that financial problems will not bring an end to the Nord Stream pipeline project. Gasunie’s CEO believes that he has good reason to remain upbeat about the project’s future. He revealed that the company has already met with shareholders to discuss “the entire situation” and the schedule was deemed to be on course despite the global financial uncertainty.
The Nord Stream pipeline project is not Gasunie’s only concern at the moment. The company is planning on constructing a liquefied natural gas terminal in the Netherlands. Last year, Gasunie, along its partner in this project, Vopak, revealed that a large percentage of the 800 million euro cost of the gas terminal would come from external finance. Although the costs have gone up since then, Kramer was quick to point out that credit is still readily available for infrastructure projects which are not inherently risky.
Ultimately, the confident CEO of Gasunie believes that whilst being “part of a global financial market” is causing some concern at the moment, the sector remains “robust” and will not succumb easily to adverse financial conditions.
