The Government’s ban on building more gas-fired power stations threatens to halt small oil developments in the North Sea.
The UK Offshore Operators Association (UKOOA), which represents the North Sea oil companies, said this was because sales of the associated gas had become critical to the economics of many such marginal projects.
‘With oil prices so low, it’s important to get a good price for the gas,’ said a spokeswoman.
UKOOA aims to publish a detailed analysis of the impact of the power stations ban on North Sea developments next month. Professor Alexander Kemp of Aberdeen University is carrying out the study.
The research will form part of UKOOA’s formal response this month to reforms of the energy market including the moratorium on gas-fired plants announced by the Government on 8 October.
Further downward pressure on UK gas prices is expected from continental Europe, where the low oil prices since the start of the year will soon feed through to the big index-linked gas supply contracts and offer other Europeans the chance to sell into the UK through the interconnector.
Robert Priddle, executive director of the International Energy Agency, this week called on the Government to lift the restrictions on gas-fired power plants.
He was speaking at the publication of an IEA review of UK energy policies, which broadly supports the Government’s approach, but said there was ‘no justification for giving preferential treatment to domestically produced coal’.