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UK gas prices surge on supply fears UK gas prices surge on supply fears
(35 minutes later)
The price of wholesale gas surged to a record high on Friday after the unexpected closure of one of three import pipelines.The price of wholesale gas surged to a record high on Friday after the unexpected closure of one of three import pipelines.
A technical fault at the UK-Belgian interconnector, one of the UK's biggest import pipelines, forced the shutdown.A technical fault at the UK-Belgian interconnector, one of the UK's biggest import pipelines, forced the shutdown.
The price of gas for same-day delivery jumped as much as 50% to 150 pence a therm.The price of gas for same-day delivery jumped as much as 50% to 150 pence a therm.
It comes amid a prolonged cold snap which has already sparked fears that the UK will run out of stored gas.It comes amid a prolonged cold snap which has already sparked fears that the UK will run out of stored gas.
"I don't think the price has ever been higher. It's certainly super spike territory," a gas trader at a utility told Reuters. "The worrying thing is it can probably go higher.""I don't think the price has ever been higher. It's certainly super spike territory," a gas trader at a utility told Reuters. "The worrying thing is it can probably go higher."
A statement from Interconnector UK (IUK) said it had diagnosed the problem, which occurred at about 07:00 GMT, as being a failure of the water pump and hoped it would be solved by the end of the day.
"IUK places the highest emphasis on safety and gas supply and is taking immediate action to correct the issue. We are working hard to establish full capacity, but it is unlikely to be available before late afternoon," the company said. It is giving regular updates throughout the day.
Meanwhile, some reports suggested that the unusual cold weather could lead to the UK running out of gas within days, but the government denied this.Meanwhile, some reports suggested that the unusual cold weather could lead to the UK running out of gas within days, but the government denied this.
"Protracted cold weather increases demand, but the UK gas market is responsive and our gas needs are continuing to be met," said a spokeswoman from the Department of Energy and Climate Change."Protracted cold weather increases demand, but the UK gas market is responsive and our gas needs are continuing to be met," said a spokeswoman from the Department of Energy and Climate Change.
"Gas storage would never be the sole source of gas meeting our needs, so it is misleading to talk purely about how many days' supply is in storage."Gas storage would never be the sole source of gas meeting our needs, so it is misleading to talk purely about how many days' supply is in storage.
"We are in close contact with National Grid, who are able to step into the market to source gas and increase incentives on gas suppliers if they think there is a risk of a supply shortfall, " she added."We are in close contact with National Grid, who are able to step into the market to source gas and increase incentives on gas suppliers if they think there is a risk of a supply shortfall, " she added.
The National Grid said that normal demand in March was about 270 million cubic metres, while Friday's forecast for demand was 320 million cubic metres. A spokesperson said the market was "responding positively" to the increase in demand.
Turn down or turn off?
However, energy analyst Joe Conlan from Inenco warned that customers might be asked to rein in their gas use.
"At present from our analysis, we cannot see a way the system could balance today as it is currently eight million cubic metres short, with no other storage able to be drawn on at present," he said.
"This may mean that large customers and consumers will be asked to turn down or turn off before the end of the day. More information will be issued if this is to happen."
On Thursday, the boss of the energy firm SSE, Ian Marchant, warned that there was "a very real risk of the lights going out" in Britain, because the government was significantly underestimating the scale of the capacity crunch facing the country.On Thursday, the boss of the energy firm SSE, Ian Marchant, warned that there was "a very real risk of the lights going out" in Britain, because the government was significantly underestimating the scale of the capacity crunch facing the country.
That call was echoed by Ignacio Galan, Chairman of Iberdrola and Scottish Power. He said that while the Energy Bill was going in the right direction, "greater clarity of detail is needed if investment in new power stations is to be speeded up,"