Large gas users face interrupted supplies

Large industrial gas users – already facing 50% hikes in their gas bills – also face interruptions to their supplies because of alleged market manipulation by leading shippers. Shippers supply gas to the market and thus can influence the price, and include many of the major oil companies. Transco has asked the industry regulator Ofgem […]

Large industrial gas users – already facing 50% hikes in their gas bills – also face interruptions to their supplies because of alleged market manipulation by leading shippers.

Shippers supply gas to the market and thus can influence the price, and include many of the major oil companies. Transco has asked the industry regulator Ofgem to look at allegations that some large shippers are manipulating the system by delaying contracted inputs and withholding information, to increase the spot price.

Transco, the pipeline arm of BG that operates the national transmission system, said the shippers’ behaviour was increasing the likelihood it would have to take measures to reduce demand. These would include cutting off companies whose contracts allow their supplies to be interrupted. `The threat would be to large users on interruptible contracts,’ confirmed a Transco spokesman.

Transco first raised these concerns with the regulator Ofgem more than two months ago. Eileen Marshall, deputy director-general at Ofgem, wrote to shippers on 24 May warning them that such conduct could be in breach of their supply licences.

However, the Transco spokes-man said: `It looks as if the system hasn’t got any better. We’re still concerned about the shippers’ behaviour.’

Ian Blakely, chairman of the Energy Intensive Users’ Group, said Transco’s latest request confirmed that there was a problem in the market. `It ties in with what we’ve been saying – there’s something funny going on.’

Ofgem will shortly publish a review of the daily balancing market for gas, which is expected to come up with proposals to address all these concerns. A spokesman said: `We believe the regime needs reforming – and we’re committed to that.’

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