UK and Belgium in talks to pump up winter gas supplies

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The Independent Online

Energy minister Malcolm Wicks, National Grid and the industry's regulator Ofgem are to hold a summit with their Belgian counterparts tomorrow to try to ensure that gas continues to flow to the UK this winter.

The UK relies on the Interconnector, a pipeline between the two countries, for most of its gas imports. But only about half the pipeline was filled with gas for most of last winter. This under-capacity helped push prices up to record levels.

Because most of the UK's electricity comes from gas power stations, high wholesale gas prices are passed on to industry and to householders in their utility bills.

Tomorrow's meeting is the first such summit in six years, and is aimed a making sure access for gas shippers to the Interconnector is not restricted.

Gas prices, which were over 80p per therm earlier this year, have since fallen by a quarter, but are still among Europe's highest. This means that if there was an open market for energy in Europe, gas from the Continent would be flooding into the UK to be sold at a premium.

But some industry groups in the UK see the spare capacity of the Interconnector as proof that the European energy market is anti-competitive. Earlier this year, the European Competition Commissioner, Neelie Kroes, announced an investigation into whether Europe's largest energy companies were in effect hoarding supplies.

Interconnector Ltd, which operates the pipeline, is a private company owned by, among others, BG, the German energy giant E.ON and Russia's state-controlled Gazprom. It blames the under-usage on a lack of pipelines to transport gas from Russia through Germany and to the Interconnector in Belgium.

Currently, around two-thirds of the pipeline's capacity is being used to import gas from the Continent. New pipelines being built across Europe over the next few years will increase the supply to the UK but prices are likely to remain high this winter.

A spokesman for Interconnector Ltd said: "We are not expecting to flow at levels of 100 per cent this winter because of the continuing lack of capacity."

Also this week, Mr Wicks will co-chair the second meeting of the Business Energy Forum along with Richard Lambert, director-general of the CBI.

The forum was set up last year to look at issues such as why there are so few gas storage facilities in the UK, as well as the operation of the Interconnector.