UK to cut gas supplies to EU if Russian gas crisis intensifies - FT

29 Jun 2022

Quantum Commodity Intelligence - The UK will cut off gas supplies to mainland Europe if it is hit by severe shortages under emergency plans by the UK government and energy firms, which could exacerbate a gas crisis on the continent, reported the Financial Times Wednesday.
With European nations facing the prospect of Russia halting gas exports, at least on an intermittent basis, the UK's plan to shut off pipelines to the Netherlands and Belgium risks undermining a push for international cooperation on energy.
A cut-off of so-called interconnector pipelines would be among the early measures under the UK's emergency gas plan, which the National Grid could trigger if supplies fall short in the coming months, said the FT.
European gas companies have appealed to the UK to work with the EU and warned shutting off interconnectors could backfire if prolonged shortages occur, with the UK reliant on European imports at times of high demand.
"I would definitely recommend they [the UK] reconsider stopping the interconnection [in the event of a crisis]," said Bart Jan Hoevers, president of the European Network of Transmission System Operators for Gas, a powerful group whose members include Italy's Snam and Fluxys of Belgium.
"Because while it is beneficial for the continent in the summer it is also beneficial for the UK in the winter."

The UK will stress-test its emergency gas shortage plan in September. National Grid said the plan was tested annually, adding that the latest exercise would "reflect the circumstances" as Russia curtails gas exports to Europe.
The pipelines would be cut as part of a four-step emergency plan if there was a severe shortage of supplies that led to a loss of pressure on the gas system.
Other emergency measures include shutting off supplies to large industrial users and appealing to households to scale back consumption.

Germany and the Netherlands this month triggered their own emergency plans, restarting coal plants and urging industry to cut gas usage after Russia cut gas exports.
Since March, two undersea pipelines connecting Britain with Belgium and the Netherlands have been working at maximum capacity, exporting 75mn cubic metres a day of gas to the continent as Europe rushes to build a storage buffer against further Russian cuts.
UK natural gas prices were up around 12% on Wednesday, with the Aug22 NBP (National Balancing Point) contract trading at 256 pence per therm (p/th).

However, prices for winter-delivery contracts were only marginally higher on the day as short-term fundamentals continue to drive prices.

Natural gas analysts have flagged concerns over the closure of the UK Rough storage facility by operator Centrica in 2017, leaving the country without the ability to build sufficient winter inventory and leaving the UK at the mercy of the spot market.

Meanwhile, Benchmark Dutch TTF futures have gained over 70% since mid-June, reacting to shortfalls from both Russia and the US.

The Aug22 contract was up around 7% Wednesday, trading just shy of €140/MWh.