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National Grid in race to bolster gas reserves

Network bosses put out a tender for supplies amid fears stocks in Europe will not be sold back into UK

By Rachel Millard

NATIONAL Grid is rushing to increase gas reserves ahead of winter, amid concerns Britain will not be able to import enough from Europe as Russia’s war on Ukraine roils markets.

Bosses have put out a tender for extra gas to help manage any short-term disruption, as cuts to Russian supplies to the Continent raise concerns about energy shortages in the cold weather.

Craig James, head of national control at National Grid, told industry that to “secure the network across a series of fault potentials or supply conditions, there’s a requirement to take out extra operating margins of gas”.

He noted strong ongoing demand for gas exports from Britain to Europe and added, “we also think there is a lower likelihood of interconnector flows from continental Europe to the UK across the winter”. Interconnectors are subsea pipes or cables that can supply gas and electricity from the Continent at times of peak demand.

Mr James’ comments are an ominous sign for the winter ahead, given Britain typically needs to import some gas from Europe over winter to help meet its needs for heating and power stations.

Britain has exported a record amount of gas to Europe since Russia’s invasion of Ukraine began, effectively acting as a “gas bridge” for supplies from the US and other countries to the Continent.

During winter Britain can normally attract gas back from mainland Europe through higher prices, but there is no guarantee that will happen this year if supplies are stretched elsewhere.

This week, National Grid is set to publish forecasts for both electricity and gas supplies over winter. They are expected to be “more robust” than preliminary forecasts, which triggered concerns about over-reliance on electricity imports from the Continent. “I think we need to be realistic,” said one industry source.

Suppliers, generators and network owners are understood to be testing their processes to see how they would cope if gas supplies fell short. “It’s all being taken very seriously,” said another industry figure.

National Grid’s critical stress tests mimicking a gas supply crisis were delayed following the death of Queen Elizabeth II, but started last week and are set to run into this week. Separately, businesses are being offered payments to agree to cut or shift energy usage to help manage supplies.

Soaring prices in Britain have pushed households and businesses’ energy bills up threefold or more, forcing the Government to step in and subsidise bills at an estimated cost to taxpayers of £60bn over the next six months.

Despite the supply cuts, Europe has managed to fill its gas storage sites to more than 80pc after cutting usage. However, damage to the Nord Stream pipelines built to bring gas from Russia to Europe destroyed hopes Nord Stream 1 could be brought back into service, and triggered suspicions of Russian sabotage. The Daily Telegraph revealed last week that Britain has launched an urgent security review of North Sea energy pipelines amid fears that other energy infrastructure could be vulnerable.

Speaking to an industry forum late last month, Mr James said National Grid was “not forecasting any particular shortage over the winter” but felt the need to review margins given the “change in supply patterns”.

Britain gets most of its gas supplies from Norway, the North Sea and shipments of liquefied natural gas from around the world, as well as some via the pipelines to continental Europe.

Most of this is traded directly between producers and users. How- ever, National Grid also secures some supplies in advance to help manage short-term disruption.

This can include gas in underground storage or at liquefied natural gas terminals, or asking gas-fired power stations to cut their usage.

It typically gets this in place well ahead of winter. It currently has about 870 gigawatt-hours booked for 2022-23, but has decided to try to secure a further 75 gigawatt-hours. The tender is set to close on tomorrow. National Grid declined to comment.

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