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British gas prices soar to record high

Friday, March 22 11:32:47

Britain's wholesale gas prices surged to a record high today after one of its main gas import pipelines shut down unexpectedly, exposing yet again its vulnerability to foreign supplies.

The country is already grappling with a potential gas supply crisis as a late blast of winter depletes stored reserves, coal power plants close and pending maintenance in Norway threatens to further squeeze supply.

Gas prices for within-day delivery spiked at 150 pence per therm, more than 50 percent above Thursday's closing price, following the closure of the pipeline linking Britain and Belgium that facilitates gas imports from Europe.

A water pump failure forced the shutdown of the UK-Belgium Interconnector gas pipeline at around 0700 GMT on Friday, the operator said, adding the line was unlikely to restart before late afternoon on Friday.

"Due to the failure of a water/glycol pump in the Bacton boiler house we are currently unable to flow gas. We are working to resolve the issue," Interconnector said in a market message published on Friday morning.

If the pipeline remains shut for a number of days, Britain's grid operator will be forced to trigger all emergency supply options, including reducing demand from contracted users, which will cause an even higher price spike, traders said.

Britain's National Grid said it was monitoring the situation.

"I don't think the price has ever been higher. It's certainly super spike territory," said a gas trader at a utility. "The worrying thing is it can probably go higher."

The Interconnector is one of Britain's main gas import pipelines and on Wednesday set a new record exporting 783 gigawatt-hours of gas from Belgium to Britain.

The British gas market has been under severe strain after weeks of cold weather drained gas storage levels and supply interruptions from Norway in recent weeks already highlighted the country's exposure to foreign imports. Reuters