Wholesale Gas Prices Rise To Highest Level Since 2009
Unrest in the Middle East and North Africa has resulted in UK winter natural gas wholesale prices rising to their highest levels since June 2009.
Unrest in the Middle East and North Africa is giving cause for concern over security of supplies meaning fuel prices are also increasing.
Suppliers always buy in advance and gas for next winter which includes the six months from October has increased by around 0.6 pence to 66.7 pence a therm. Meanwhile gas for summer delivery has increased by 0.6% to 56.7 pence a therm.
It therefore looks like energy suppliers will increase business gas and domestic gas prices next winter – just as energy use goes up.
Gas exports to Italy from Libya were stopped on 22 Feb and as a result of the troubles in the country the majority of Libya’s oil production has been shut down. It means countries which previously relied on Libya for their gas are now getting it from other sources including Russia.
However, concerns continue to mount as demonstrations have now taken place and continue to take place in countries such as Oman, Algeria and Yemen. This means continuing uncertainty about future oil and gas production in these areas, all of which is pushing up both oil and gas prices.
Meanwhile gas for immediate delivery has increased by 0.5 pence to 57.5 pence a therm. However, despite the fact that gas generates around 50% of the UK’s electricity, if prices increase, suppliers are more likely to switch to coal fired power stations for their electricity. While it may be good for the consumer and the supplier because it’s a cheaper option it’s not so good for the environment and emissions targets.
Elsewhere, the French energy giant Total SA is set to buy a 12% share of the Russian natural gas producer, Novatek. Novatek is the biggest independent natural gas producer in Russia and Total will become Novatek’s main partner in the Yamal natural gas project in the Russian Artcic. Total will pay Novatek $4 billion for the shares.