U.K. Winter Natural-Gas Prices Climb as Brent Crude Oil Jumps By Ben Farey Aug. 21 (Bloomberg) -- U.K. wholesale natural gas for delivery this winter advanced as Brent crude oil jumped more than $6 a barrel. Gas for the six months through March 2009 increased 2 percent to 102.50 pence a therm as of 5:28 p.m. local time, according to Spectron Group Ltd. That's equal to $19.22 a million British thermal units. A therm is 100,000 Btus. The contract earlier climbed to a record 109 pence after StatoilHydro ASA said it may halt gas exports from a North Sea field until spring. The price subsequently dropped 0.5 percent as BP Plc said its North Sea Bruce field resumed output, boosting supplies. The U.K. price is more than double the cost of U.S. gas. Brent crude for October settlement rose $6.36, or 5.6 percent, to $120.72 a barrel on London's ICE Futures Europe exchange. Higher oil costs can push up some mainland European gas contracts, which affect the U.K. price because the country is connected to the continent by pipeline. ``We plan to ramp up to normal production levels at Bruce over the next few days,'' Joanne McDonald, BP's spokeswoman in Aberdeen, Scotland, said today in a telephone interview. The resumption of output at the field, which was shut for maintenance June 21, had been delayed after a remote-controlled hydraulic device became stuck in a pipeline. Kvitebjoern Halt StatoilHydro said yesterday Norway's Kvitebjoern deposit may not produce gas this winter while repairs to a leaking pipeline are carried out. The field, which holds Norway's eighth-largest gas reserves, sends the fuel to the Kollsnes processing plant on the country's west coast, from where it's sent to the U.K., Germany, France and Belgium. Gas prices doubled in the past year after U.K. North Sea production fell 9.5 percent, leading Britain's six biggest energy suppliers to raise customer prices. Scottish & Southern Energy Plc and E.ON AG's U.K. unit, Britain's second- and third-biggest energy suppliers, today said climbing wholesale costs forced them to further increase U.K. household prices for gas and electricity. Scottish & Southern will raise gas prices 29.2 percent and power rates 19.2 percent from Aug. 25. E.ON will charge 26 percent more for gas and 16 percent extra for power, it said. That's equivalent to 253 pounds ($473) more a year for the Scottish company and 226 pounds more for Dusseldorf-based E.ON. Recession Concern Soaring energy bills have curbed consumer spending in the U.K., raising concern that the economy will fall into a recession. The British Chamber of Commerce said this week Britain's gross domestic product will either stagnate or contract in the next two or three quarters. Gassco AS, operator of Norway's offshore pipeline system, said the Vesterled link into the U.K. opened following three weeks of maintenance. The Kollsnes plant in Norway has also returned from planned maintenance. ``All the work is done,'' Kjell Varlo Larsen, Gassco's spokesman in Norway, said by telephone today. Kollsnes normally processes gas from Kvitebjoern. The 340-kilometer (211-mile) Vesterled pipeline can transport as much as 36 million cubic meters of gas a day from Norwegian North Sea deposits, including StatoilHydro's Heimdal and Oseberg fields. The link arrives in the U.K. at Total SA's St. Fergus terminal in northeast Scotland. Gas flows at the terminal rose 45 percent to a rate of about 27 million cubic meters a day at 5:09 p.m., according to data from National Grid Plc. About 320 million cubic meters of the fuel will remain in the U.K.'s pipeline network at 6 a.m. tomorrow, 1 million cubic meters fewer than at the start of today, National Grid data show. About 7.3 million cubic meters of gas has been injected into Scottish & Southern Energy's new Aldbrough gas-storage site in the past eight days, according to National Grid. That may boost winter supplies. Scottish & Southern wouldn't immediately comment. Same-day gas rose 0.9 percent to 57.75 pence a therm at 5:04 p.m., according to ICAP Plc. To contact the reporter on this story: Ben Farey in London atbfarey@bloomberg.net
Friday, 22 August 2008
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