UK Business and Energy Secretary Kwasi Kwarteng will have more talks with the energy regulator and industry on the impact of soaring natural gas prices on households and businesses amid warnings of further supplier failures.
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S&P Global Platts assessed the price of UK day-ahead gas at 165 pence/therm Sept. 17, up 176% since the start of the year.
The spike has seen four small energy suppliers go bust, fertilizer company CF Industries suspend production at its Billingham and Ince plants and UK steelmakers halt production during peak electricity demand hours.
"The UK's gas system continues to operate reliably and we do not anticipate any increased risk of supply emergencies this winter," Kwarteng said in a statement on Sept. 18 following eight hours of calls with industry officials.
The business secretary will meet with energy regulator Ofgem Sept. 19 to discuss industry concerns "in more detail," and on Sept. 20 "he will convene a roundtable with industry to plan a way forward," the Department for Business, Energy and Industrial Strategy said.
On wider impacts, Kwarteng said the UK had a diverse electricity mix, "which is one of the reasons why we have one of the most reliable electricity systems in the world."
Gas-fired generation met 43% of UK power demand in September to date, during a period of unusually low wind resource.
UK day-ahead power prices averaged GBP266.21/MWh in the month to Sept. 17, versus a year to date average of GBP60.22/MWh, Platts pricing data showed.
Kwarteng said he was contacting other ministers across government to manage the wider implications of the gas price crisis.
The UK's largest single source of gas is domestic production, and the majority of imports comes from reliable suppliers such as Norway, he said.
However, "our exposure to volatile global gas prices underscores the importance of our plan to build a strong, home-grown renewable energy sector to further reduce our reliance on fossil fuels," he said.
Platts Analytics remains bullish on European gas prices going into the winter season starting Oct. 1, analyst James Huckstepp said.
"We see these record high prices as justified and necessary to incentivize balancing this winter," he said.
Oil/liquids optimization will be necessary to balance global gas markets this winter, with gas prices trading at a record premium over their oil equivalents, he said.
"We see this occurring in three areas: upstream oil-to-gas switching; industrial gas-to-liquids switching, particularly in refining; and power sector gas-to-oil switching, which has already started in Asia but is now being seen in Europe," he said.