UK wholesale gas prices soared by more than 14% yesterday after a leak on a North Sea pipeline prompted fears about supplies this winter.
Norway’s oil and gas producer Statoil Hydro said it discovered the leak on a gas pipeline linking its Kvitebjoern field to an onshore processing plant.
The firm closed the pipeline, which pumps an estimated 5% of Norway’s total gas output, and warned it could remain shut until spring.
Norway is a significant source of gas supplies to the UK, which now imports around 40% of its gas due to dwindling North Sea stocks.
The announcement sent the forward price of gas for delivery to Britain this winter rocketing to 104p per therm from 90.75p at the start of the day.
This is above the record highs seen in June this year, when wholesale gas prices passed the £1-a-therm mark on the back of rising oil prices, and around double the price this time last year.
David Hunter, of energy consultancy McKinnon & Clarke, said the huge jump was a sign of nervousness of the gas and electricity markets to supply problems.
He said: “The impact on the energy market has been significant, as demonstrated by the momentous jump in gas and electricity prices.
“The amount of gas available to export from Norway to countries, including the UK, will be cut significantly and without adequate storage, the UK will be left to negotiate with Russia and the Far East for supplies or risk running low on energy.”
Households in the UK have already seen double gas and electricity bills soar this year due to the rising cost of wholesale gas and electricity.
Mr Hunt said it was too early to say whether yesterday’s wholesale price jump would be sustained.
“This is the big unknown,” he said. “The market has reacted extremely quickly at the first sign of what could be a potential supply problem this winter.”
Around 40% of electricity generated in the UK is created by burning gas.
The UK is highly exposed to supply disruptions because it lacks gas storage compared to its European neighbours.
Statoil Hydro said the shutdown would impact on the firm’s production this year, but said that gas customers were “not likely” to affected.
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