Charles Hendry, who served as Minister of State for energy between 2010 and 2012, has hit out at complacency over the decline of North Sea gas production and the UK’s increasing dependence upon imported gas from Russia and the Middle East.
In 2012, disrupted supply from Russia to Ukraine had a knock-on effect on gas supplies in Western Europe that left the UK exposed. At that time, the UK could still rely on North Sea gas to make up the shortfall. But with exploration and production in steep decline as low prices have resulted in capital flight, Britain cannot rely on the North Sea in future.
One solution raised by Hendry is for the UK government to invest in much greater gas storage capacity in order to lower the risk of disrupted supply:
“The risk of course is that it takes five years to build gas storage… So if you want to see them built on the time scale that is necessary, then you need to see more investment come through more quickly.”
However, Hendry says that the Department of Energy and Climate Change are unlikely to provide the subsidies that would be needed because the current low prices and over-supply mean that private companies couldn’t economically develop the additional capacity.