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UK: Growing concern over gas imports

Oil is an emotive subject.

Countries are accused of starting wars because of it, and when turned into petroleum or diesel it powers the great internal combustion engine.

From convertibles cruising down Hollywood Boulevard, to Allied tanks rumbling into Iraq, or an ambulance racing across west London, oil literally drives the world.

Yet it is also hated as a serial polluter; both as major cause of greenhouse gases, and the occasional headline-grabbing oil spill.

Natural gas by contrast seems much more boring, it's the stuff that fuels your boiler or heats your frying pan.

As long as you don't get a leak you take it for granted.

Even the bills are reasonable enough.

Gas imports

Yet today gas has never been more vital to the UK's energy needs, and never more of a possible future strategic and political concern.

UK GAS SUPPLY NETWORK

Since the discovery of reserves in the North Sea in the 1960s, the UK has been self-sufficient for natural gas.

At one time we had so much of the stuff, we could even export some to Europe through a giant pipeline that runs all the way between Bacton in Norfolk and Zeebrugge in Belgium.

Yet until 1990 gas was never really used for electricity generation, for the simple reason that UK coal had always been even cheaper.

This situation changed as Britain's coal mining industry declined, leading to the creation of a large number of gas-fired power stations in the 1990s.

Strategic concerns

Now gas is the UK's main source of electricity generation, with 39% of the market, compared to a share of less than 1% in 1990, according to official industry figures.

The UK is now the world's third largest consumer of natural gas, after the US and Russia.

Which brings us to the current reality. Britain is now running out of its own supplies of natural gas.

The North Sea reserves are drying up (some estimate by 2011), meaning we are going to have to start importing more and more of the stuff.

And while plans are in hand to increase import facilities - such as the creation of additional pipelines, and new port facilities to import gas in liquid form - some key strategic uncertainties remain, such as exactly which countries we can get the gas from.

The main exporters of natural gas to the EU are Norway, Russia and Algeria.

Smoothing conditions

And while Norway is obviously friendly, both Russia, and especially Algeria, could be prone to political instability in the future.

With this in mind, gas and oil trade body UK Offshore Operators Association (UKOOA) has urged the Government to make all efforts to secure long term gas supplies.

"Clearly the political policies of these nations and developing relationships between the UK and them will be increasingly important," it said.

"It is government's function to ensure that markets are opened and the necessary political, economic and legal conditions are created to ensure long term investment in supplies."

Former environment minister Michael Meacher said the growing reliance upon gas imports was yet another reason why the UK should increase investment in renewable energy sources.

Work ahead

"Even if we can grab a large amount of our remaining gas supplies, clearly they are coming to an end," he said.

"Gas may not make the headlines like oil, for the simple fact that it does not drive vehicles, but both will eventually run out, and the UK must start planning for that now."

A spokesman for the UK gas and electricity regulator Ofgem, said work was already underway to increase gas imports.

"You cannot take anything for granted in this business, but we see a number of encouraging signs that the market is already starting to do all it can to facilitate increased imports," he said.

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