French owners of gas pipeline deny price-rigging

An owner of the Interconnector pipeline that brings gas to the UK from continental Europe has rejected suggestions that British prices have shot up because gas is being held back.

Ofgem, the UK national energy regulator, has initiated an "urgent" inquiry into why the pipeline to the UK was not running at full capacity despite the fact that much higher prices for gas are available in the UK.

But Suez, the French energy giant that owns a 16 per cent stake in the Interconnector, yesterday said the problem was simply due to a lack of gas available to send through the pipeline, which runs from Zeebrugge to Backton in Norfolk.

Suez said gas was contracted out under long-term deals, leaving limited amounts on the spot market to meet unexpected needs. Alain Janssens, the head of the Distrigas arm of Suez, which runs its distribution operations, said: "I think the market has worked. We are not sitting on natural gas. You cannot expect those who are not sitting on gas [to supply]. It's basically simple."

Ofgem reiterated its concerns yesterday, which are being investigated by the European Commission. An Ofgem spokesman said: "We've got high prices and we'd have expected more gas to be flowing. It doesn't make sense." Ofgem does not have access to the relevant Continental data, such as how much gas is available. When it asked Brussels to investigate in November, it said Interconnector was running at only 60 to 75 per cent capacity "despite very high prices" in the UK.

Mr Janssens said yesterday: "We cannot cut supplies to our customers because there is an unexpected shortage in the UK. We are doing all we can but you cannot expect gas to just be created by high prices."

Some industry analysts said that Interconnector has been operating at times this winter at not far off half empty, which has pushed up wholesale prices.