The UK energy regulator clashed with the offshore industry yesterday by announcing plans to make the gas market more transparent in the wake of repeated claims that North Sea operators are profiteering from high prices.
The move came as BG group, which makes about a third of its money from the North Sea, said that profits had more than doubled in the first quarter of the year to £563m.
Ofgem said it had decided to respond to consumer concerns about the functioning of the gas market by publishing detailed information about supplies from the North Sea and elsewhere. Prices hit a record level last month, partly as a result of the shutdown of Centrica's Rough gas storage facility.
Alastair Buchanan, the chief executive of Ofgem, said the decision had not been taken lightly but felt greater transparency was necessary. "Customers, many of whom are amongst the largest UK companies, have told us that their experience this winter shows there is still a need for more information on gas supplies to help them understand and respond to gas price movements on the day. Information is the lifeblood of an effective market and better information will help reduce uncertainty."
But the UK Offshore Operators Association attacked the move, saying it could lead to greater price volatility, not less, while hurting UK gas producers by giving the market instant access to commercially sensitive information, such as supply failures at big North Sea fields. "We think that those who lobbied for the modification, believing it would secure more competitively priced gas, will be bitterly disappointed," said a UKOOA spokesman. "It will expose commercial positions when fields run into production difficulties and therefore risks creating even greater price volatility."
BG, which supplies about 6 per cent of the UK gas market, defended its North Sea profits, saying it had gone out of its way to increase supplies when the market was tight. Frank Chapman, BG's chief executive, added that it was investing £575m over the next two years on North Sea exploration.
Mr Chapman also played down Bolivia's decision to nationalise its oil and gas industry and even said it could provide the basis for BG to invest in the country provided the balance between risk and returns was attractive enough.Reuse content