Gas prices rocket to five year highs on power cut

UK GAS prices jumped to five-year highs yesterday, as a power cut at a North Sea gas plant over the weekend left the market undersupplied.

Intra-day gas prices traded as high as 120p per therm yesterday, as the system fell victim to undersupply.

Norway’s Ormen Lange field, which is majority owned by Shell, stopped production from Saturday morning to Sunday evening due to a loss of power from the Nyhamna gas plant in bad weather. The field – which flows gas volumes to the UK via the Langeled pipeline – is now back up and running, although production is reduced because there is insufficient power from the grid to produce as normal, a Shell spokesman said yesterday.

The energy giant said it was waiting for Statnett – the group responsible for energy transmission in Norway – to inspect the gridlines and restore normal power supplies.

Data from the National Grid yesterday showed that gas flows through the Langeled pipeline fell to below 20m cubic metres per day (mcm/d) on Saturday morning, and had only recovered to around 42mcm/d yesterday afternoon. It has the capacity for around 70mcm/d.

A spokesman from National Grid yesterday told City A.M. that the “market had reacted in the right way”, but that energy had been brought in from other sources to balance supply back again.

It is understood that the power outage will have a negligible effect on consumer pricing however, as most gas suppliers use a much longer contract – between 18 months and two years – to buy gas.

Meanwhile, a leak at an oil platform owned by Abu Dhabi-based energy firm TAQA over the weekend also weighed on gas prices.

The Cormorant Alpha platform, which supplies around 27 fields in the North Sea, and all pipelines – which export Brent crude – remained shut yesterday.

The shutdown forced Total to halt all oil and gas exports from its North Sea Alwyn Area, which comprises five fields: Alwyn North, Dunbar, Ellon, Grant and Nuggets.

Elsewhere, Italy lost supplies from Libya for a third day yesterday, after militia clashes over the weekend brought the North African country’s Mellitah gas complex to a halt.