Tuesday, October 26, 2021

Britain only has enough gas to supply five cold winter days with electricity, warns the industry boss

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Sir Jim Ratcliffe, owner of chemical company Ineos, said a prolonged winter could mean demand for gas outweighs supply, which could lead to widespread shutdowns

The UK has enough gas reserves to meet the needs of four to five winter days, or just one percent of the total available storage in Europe.

British billionaire industrialist Sir Jim Ratcliffe, owner of chemical company Ineos, has described Britain’s gas storage facilities as “pathetic”, adding that some countries on the continent have five times as much.

The Netherlands has more than nine times the UK capacity while the German capacity is 16 times larger.

Mr Ratcliffe said the UK’s poor gas storage capacity has made the country more vulnerable to rising prices and that a longer winter could mean demand for gas outweighs supply.

The industry boss said ITVs Peston on Wednesday: “I think it’s pretty hard to predict how long such a current situation will last, but I suppose if you were a bettor you would assume that it would probably last at least the winter because obviously our gas “The demand increases in winter.”

When asked if the UK might run out of gas in the coming months, Sir Jim added, “Yes, in that case you would shut down the industry.

“Economically, like after Covid, we’re in a bad place so you don’t really have to shut down the industry, and it’s not good for the UK industry if we tell all of our customers that we can’t supply them. ”

Manufacturers such as steel and chemical makers have previously warned that if energy levels remain high this winter, they may have to stop production at the plants.

It comes as UK wholesale gas prices soared to record levels last week amid a global energy crisis as economies emerge from the Covid pandemic.

Benchmark gas prices hit highs of 407 pence per therm last Wednesday – about ten times higher than a year ago and up more than 200 percent in the past month alone.

Although the UK’s energy price cap is keeping companies from passing high gas costs on to consumers immediately, companies are warning of a collapse if wholesale gas prices persist.

BP-backed Pure Planet and Colorado Energy became the youngest victims of the energy crisis yesterday. In total, a dozen British suppliers have gone bankrupt since the beginning of August because of record gas wholesale prices.

The upheaval could result in the average consumer bills increasing by well over £ 100, on top of the price hikes already waved off by the regulator.

Blaming record wholesale and UK energy prices for the collapse, Pure Planet said in a statement: “The government and Ofgem, our regulator, expect Pure Planet to sell energy at a much lower price than it currently costs.”

The two companies’ estimated 250,000 customers will be taken over by alternative suppliers as part of Ofgem’s “last resort”.

Larger companies, however, including market leader Centrica, have warned that it will be increasingly difficult for them to continue taking on customers from collapsed energy companies in the current market, which allows them to limit their customers to a maximum of £ 1,277 a year despite rising gas prices to calculate .

Under the current system, the costs can later be covered through a levy that lands on consumers’ energy bills, but the process can take from start to finish two years.

Industry circles reported I that currently between three and seven other suppliers are in danger of collapsing and could go bankrupt by the end of this week.

Labor leader Sir Keir Starmer said yesterday that his party wanted the government to “get out of hiding” and work with business on the issue. He said, “They attracted their absence. While other countries take action and act, the UK is sitting back surprisingly complacent. “

Industry groups met with British officials for the second time on Monday after last Friday’s talks unsatisfied business leaders.

However, some have accused the government of inaction as industry officials failed to reach an agreement with ministers while Prime Minister Boris Johnson is on vacation in Spain.

Stephen Elliott, chairman of the Chemical Industry Association, said Monday that members could start closing plants in weeks due to rising production costs.

“I am not saying that our members are on the brink. But what I say, and I said that on Friday too [Business Secretary] Kwasi Kwarteng, if I leave this here for another three weeks, I cannot guarantee that chemical companies will not temporarily pause or close production, ”he told the BBC.

The Ministry of Enterprise, Energy and Industrial Strategy (Beis) said ministers and officials are working with industry “to better understand and mitigate the impact of high global gas prices.”

Mr Kwarteng has made a formal offer of assistance to the UK Treasury Department on the matter, despite saying on Sunday that the government is not making bailouts.

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