ONDON, June 9 (Reuters) – UK gas prices eased on Wednesday ahead of expected liquefied national gas (LNG) deliveries to the UK over the coming weekend, reducing concerns that power and gas shortages could begin to squeeze the system.

The 148,000 cubic metres Al Aamriya LNG tanker from Qatar was expected to arrive at Britain’s Isle of Grain terminal on June 11, and the 145,700 cubic metres Bluesky LNG ship from Trinidad was due to arrive at Dragon terminal on June 13, according to port authorities and AIS live data.

UK gas prices for Thursday delivery were down 0.35 pence per therm on the day, to 42.75 pence Wednesday at 0910 GMT, and prices for July were half a pence to 42.65 pence. <0#NBPGAS-SPC> <0#/UKBASE-SPC>

“The LNG spot deliveries to the UK have calmed the market down after yesterday’s worries over North Sea supplies pushed prices up,” a Norwegian trader said.

Prices on Tuesday rose sharply following reports of several North Sea outages and as Qatari liquefied natural gas (LNG) producers started summer maintenance programmes, squeezing supply. [ID: nLDE65722F]

But the scheduled LNG deliveries failed to pull prices down further as Britain’s gas supply remained tight over the North Sea outages, and because natural gas flows from the Isle of Grain terminal will be interrupted during June despite LNG arrivals due to pipeline inspections, according to National Grid (NG.L: Quote). [ID: nLDE65712T]

The weakening gas prices, along with mild temperatures, also saw UK power prices ease, with baseload (0000-2400) delivery for Wednesday down half a pound on the previous close to 43.00 pounds per megawatt-hour, according to brokers Spectron. July base delivery was also down, shedding a quarter of a pound to 43.66/MWh.

The lower prices in the UK meant that Britain was exporting 425 MW of power to France through its interconnector between 0700 and 0800 CET (0500-0600 GMT), according to the European network of transmission system operators for electricity (entsoe).

For live UK power plant output data click here: <0#UKBM-PLANT> (Reporting by Henning Gloystein)

By Ben Farey

May 25 (Bloomberg) — U.K. natural gas prices for winter reached a six-month high relative to U.S. contracts, as pipeline and field shutdowns in Norway cut exports to Britain.

The difference between the U.K. contract for the six months starting in October and the average price of gas for the same period in New York rose to $2.30 per million British thermal units yesterday, the widest since Nov. 11, from this year’s low of 39 cents on March 19. U.K. gas has gained 9 percent this month to the equivalent of $7.14 per million Btu as U.S. prices fell 2.3 percent to $5.07.

“There are many more positive fundamentals in the U.K. market,” Oswald Clint, an analyst at Sanford C. Bernstein & Co. in London, said in a phone interview. “As you get further along the forward curve, prices reflect those fundamentals.”

Output halts at fields and export plants in Norway, the U.K.’s biggest foreign supplier, and rising use in power generation are boosting prices. Britain is increasingly turning to imports to counter falling production from depleted fields in the North and Irish Seas. U.S. gas is falling on increased supply.

Underpinning the price rise is a “scary” decline of North Sea production, Clint said. U.K. North Sea output in the three months through February was 15 percent lower than the same period a year ago, according to data from the Department for Energy and Climate Change. In December, British gas imports exceeded production for the first time since North Sea gas flows began in 1967.

Norwegian Halts

Norway shut some its biggest offshore fields, including Troll, causing prices in the U.K. to jump to as high as 62 pence a therm in January. That’s equal to $8.81 a million Btu.

Exports from the Kollsnes and Kaarstoe plants were reduced this month after electrical and compressor malfunctions cut exports to the U.K. and European mainland markets.

Stockpiles are at the lowest level in Britain in at least five years after the coldest winter in more than three decades depleted inventories. The country is replacing coal in power generation and now uses gas to make about half of its electricity.

North Sea maintenance is scheduled to reduce pipeline import capacity in the week beginning June 2 to the second lowest level this year, according to National Grid Plc data. The Langeled link from Norway is expected to shut this week. The BP Plc-operated CATS pipeline will reduce imports next month for work starting June 6, coinciding with regular repairs and refurbishment at BG Group Plc’s Armada field and other North Sea platforms.

Shale Gas

U.S. gas has fallen on rising domestic supply from shale deposits, where rock formations are fractured and injected with water, sand and chemicals to release trapped reserves. The International Energy Agency said last year increasing output of unconventional fuel in the U.S. and Canada could lead to an “acute glut” of gas worldwide in the next few years.

The U.S. and U.K. compete for cargoes of liquefied natural gas, which is gas chilled to liquid form for shipment to destinations not connected by pipelines. A premium of $1 should be enough to draw LNG tankers away from the U.S., according to Frank Harris, head of global LNG at Edinburgh-based Wood Mackenzie Consultants Ltd. With the U.K. winter contract at a premium of more than $2 a million Btu over the U.S., tankers may head to the Isle of Grain terminal east of London instead of Lake Charles in Louisiana this winter.

Brent Versus WTI

In other markets, the premium for London-traded Brent crude to West Texas Intermediate in New York has narrowed from a 15- month high. Brent traded on the ICE Futures Europe exchange today costs about $1 a barrel more than WTI. On May 13, the premium settled at $5.71, the widest since Feb. 17 last year, in part because of record inventories at the U.S. delivery hub in Cushing, Oklahoma.

Oil for July delivery on the New York Mercantile Exchange fell $2.43 to $67.78 a barrel, while Brent for July settlement declined $2.30 to $68.87 a barrel at 11:01 a.m. London time. In the past three years, the U.S. grade exceeded the benchmark European crude two-thirds of the time.

–Editors: Rob Verdonck, Raj Rajendran

British Gas will come under renewed pressure to cut its prices after parent company Centrica indicated it is on course to surpass last year’s record profits.

The residential supply arm is benefiting from cheap wholesale energy prices and higher consumption by households from the bitterly cold weather at the beginning of the year.

Centrica was giving a trading update covering the first six months of its financial year before it reports results for the period in July.

Price comparison site uswitch.com said that British Gas is now likely to cut tariffs before then. The other “Big Six” energy suppliers typically wait for British Gas to cut bills before they do so themselves. Tom Lyon, energy expert at uswitch.com, said: “If British Gas is going to announce high profits in July, I would not be surprised if they passed on price decreases before then so they can talk about it at the results.”

But he cautioned that the cuts were unlikely to be large, partly because companies need to bolster their balance sheets to invest about £200bn to revamp Britain’s ageing energy infrastructure and meet tough environmental targets.

Centrica said that households used 7% more gas in the first three months of the year because of the cold snap. It also said that British Gas had attracted an extra 200,000 residential customers this year in Britain to a total of 15.9 million, which also boosted profits. British Gas cut its gas prices by 7% in February, making it the cheapest gas and electricity supplier.

For the first six months last year, British Gas made an operating profit of £299m, up 80% against the same period in 2008. Centrica said that the business “is expected to perform strongly in 2010 with profits heavily weighted towards the first half” and indicated that profits would be higher than last year. British Gas has also saved £200m as a result of a restructuring, with analysts at Charles Stanley forecasting another £100m was due. Analysts are forecasting a group profit of £2.1bn for the year, against £1.9bn last year. Profits for its gas production arm, and its power stations are likely to be lower because the recession has resulted in lower energy demand and lower prices.

After buying North Sea gas producer Venture Production, as well as a 20% stake in nuclear generator British Energy, British Gas is now less reliant on volatile wholesale energy markets for the electricity and gas it needs to supply its customers. Now, only about 40% of the energy supplied is bought in, compared to 80% four years ago.

Both the Conservative and the Labour parties claimed in the election campaign that they would introduce more competition in the energy market without specifying how. The existing big six firms are responsible for the vast majority of the gas and electricity supplied in the UK, making it impossible for a sizeable competitor to enter the market. Because the companies are also vertically integrated, which means they supply most of their customers using their own gas and power stations, or their upstream business, they are guaranteed to make a profit: when energy prices are high, their upstream business makes a profit. When the opposite happens, as is the case with Centrica and British Gas, the supply arm benefits.

guardian.co.uk, Monday 10 May 2010 18.30 BST

Energy prices are coming down at last, so how can you make sure you feel the benefit? Rebecca Atkinson reports.

2010 could be the year of energy bill cuts as pressure mounts on suppliers to pass on lower wholesale costs to customers. The ‘big six’ suppliers have all taken heed and cut bills.

In February, British Gas cut gas bills by 7%. Just weeks later, Scottish and Southern Energy cut its gas bills by 4%, E.ON announced a 3.3% reduction to gas bills and npower decreased gas prices by 7%.

ScottishPower and EDF Energy have also cut gas bills by 8% and 4% respectively. However, concerns remain about what will happen to energy prices down the line.

Why are bills being cut?

When retail energy prices jumped across the board during 2008, energy suppliers pointed the finger of blame on the huge spike in wholesale costs.

But this situation has now been reversed. Ahead of the most recent cuts, Andrew Wright, senior partner for markets at Ofgem, told suppliers that the regulator would expect them to pass recent falls in wholesale energy costs on to consumers.

While cuts have been forthcoming, the size of these has come as a disappointment. Audrey Gallacher, energy expert at Consumer Focus, says the days of cut-throat price competition are a distant memory.

“All suppliers cut by almost identical margins within days of each other,” she says. “There are no sprinters in this race, all we have are long distance trudgers desperate to stay in the safety of the pack.”

But Graham Bartlett, managing director of E.ON’s retail business, says: “The fall in current wholesale prices is only part of the pricing story as our customers are using gas bought over a number of years at much higher prices than today.”

Are households really benefiting?

British Gas was the first major energy supplier to announce it was cutting gas bills this year – however, just a few weeks later it announced a 58% jump in its annual profits, thanks to the falling wholesale cost of gas and electricity.

But the energy giant isn’t alone in seemingly raking in the profits. An investigation by Ofgem found that the net margin for a typical standard dual fuel customer rose by £30 during the three months to February 2010.

Mike O’Connor, chief executive of watchdog Consumer Focus, says: “At a time when householders are worried about their winter energy bills, they will no doubt wonder why margins have increased for the fifth quarter in a row, while wholesale costs continue to fall.

The answer seems to be depressingly simple – energy companies are pushing up their profits by cashing in on the cold spell.”

Although Ofgem’s figures don’t take into account the latest price cuts, a quick look at energy price movements over the past two years shows the impact of rocketing wholesale energy costs in 2008 is still being felt by many households.

For example, British Gas only cut gas prices by 10% last year and 7% this year, compared with a 50% hike in 2008.

According to uSwitch.com, household energy bills are around £270 higher than two years ago.

The future of energy prices

While energy bills appear to be ‘heading south’, this is sadly only a short-term trend. A recent report by Ofgem warned that far-reaching energy market reforms are needed in order to ensure energy supplies are sustainable, and affordable, beyond the middle of this decade.

Without this investment, energy could become unaffordable. However, with an estimated £200 billion needed, it is likely some of the cost will filter through into domestic energy bills.

There are also fears that consumers may have to pick up the cost of smart meters, which every house must have within the next 10 years.

What you should do

According to energy experts, people on standard tariffs are probably better off switching regardless of pending price cuts.

“Online energy plans currently cost around £300 a year less than suppliers’ standard plans, offering households a real opportunity to take their energy bills back to pre-2008 levels,” says Thomas Lyon, energy expert at uSwitch.com.

As well as switching, there are a number of other things you can do to reduce your bill. For example, you’re likely to be charged less if you opt for paperless bills and pay by direct debit.

However, one of the best ways to cut your bill is to simply use less energy. Making your home more energy efficient is also an option, although this can be costly.

The government does offer grants to households to help them meet the cost of energy efficient home improvements.

You can find out more about these, and the government’s boiler scrappage scheme, through the Energy Saving Trust (energysavingtrust.org.uk or 0800 512 012).

New rules

Currently, energy suppliers are allowed up to 65 days to notify a customer following a decision to increase prices. If a customer is notified after the event, then suppliers must allow them to switch supplier and avoid any backdated increase.

However, the energy regulator Ofgem is now considering amending the statutory time limit. Under the proposed new rules, it may insist on energy suppliers notifying customers of price changes in advance or, alternatively, it may reduce the time limit from 65 days to 10.

Almost half a million British Gas customers could see their bills rise by as much as £374 a year as their five year, fixed rate tariffs come to an end.

Around 460,000 customers signed up to the British Gas (www.britishgas.co.uk) Price Protection 2010 tariff back in 2005, paying an average of £820 a year for their energy bills – compared to today’s standard gas and electricity bill of £1,194.

However, while other energy customers across the country have seen a number of price hikes over the past five years – including a 42% increase in 2008 – customers who signed up to the British Gas Price Protection 2010 tariff have saved £1,153 or 22% compared to those on the average standard plan.

The tariff was initially £85 a year more expensive than the standard average plan, but by June 2006, energy bills had gone up enough to make it £95 a year cheaper.

Chris Eagle, marketing director of Energychoices.co.uk, said: “While these customers managed to save a significant amount over the last five years, you should always think carefully before fixing your energy.

“Even without fixing your energy prices, you can still take advantage of some of the best deals on the market by switching energy provider. And always pay by direct debit and sign up for paperless billing if you can so that you can make the most of the discounts on offer,” he added.

Source: uSwitch.com

 LONDON, April 20 (Reuters) - Prompt British gas prices eased
on Tuesday on comfortable supply, while prices for contracts for
next winter and beyond rose.

 Prices for gas from Oct. 1, 2010 to March 31, 2011, rose
about a quarter penny to 41.40 pence per therm ($6.34 per
mmbtu), while contracts for the following six-month period next
summer rose about 0.35 pence to 38.50 pence per therm and Winter
2011-12 firmed to 48.80 pence.

 "The back of the curve is relatively strong compared to the
prompt. People maybe think we are coming out of recession
faster, at least the banks seem to," said one trader with a
utility, adding that stronger oil prices might be having some
effect on gas sentiment.

 A rebound in industrial demand for gas in Europe could
tighten supplies again, helping push up prices after a slump
since late 2008.

 But whether demand will rebound strongly enough to make a
significant impact on supplies remains uncertain, with an
ongoing shale gas boom in North America and increasing liquefied
natural gas production set to keep pressure on gas prices.

 "There's a lot of gas around still," the trader said.

 European gas markets were largely influenced by oil until
global gas supplies swelled and demand dipped last year, making
more cheap gas available on spot markets. [ID:nLDE624135]

 A strong rise in oil prices in 2010 is in stark contrast
with the ongoing weakness in forward gas prices in Britain,
Europe's biggest gas market.

A top executive of Russian gas monopoly Gazprom says the company has customers for all the gas from its new pipeline running from Russia to Europe.

Alexander Medvedev says gas companies have agreed to buy all gas from the Nord Stream.

Medvedev’s remarks are aimed at speculation that the pipeline is too expensive and Europe does not need more Russian gas.

Russian President Dmitry Medvedev, Chancellor of Germany Angela Merkel and Dutch Prime Minister Jan Peter Balkenende are taking part in the Friday ceremony marking the start of pipeline construction near Vyborg, about 130 kilometers from St. Petersburg.

The euro7.4 billion Russian-German venture will carry some 55 billion cubic meters of gas annually.

The chief executive of Centrica has hit back at British Gas engineers who are threatening to strike, saying they need to work harder and not get in the way of change. Sam Laidlaw made the comments in a letter to staff on the internal website of British Gas’s parent company, after 8,000 household boiler engineers represented by the GMB union voted for strike action that could take in the next fortnight. Mr Laidlaw states: “In my view, the real reason for the [strike] ballot is a concern about modernising working practices which we have not yet announced.”

“We need to give customers what they want. This includes servicing their boilers and appliances when it is convenient to them, not just when it is convenient to us. Many of our customers are now dual income families and can no longer wait in all morning or afternoon for a British Gas engineer.” Gary Smith, GMB national organiser, said the union has agreed to talks about the future role of engineers in the context of pay negotiations. But he added there were outstanding issues.

The Conservatives say they will force power firms to provide sufficient gas and electricity supplies as part of a plan to guarantee energy security. The Tories plan to incentivise firms to build added capacity and intervene over supply contracts and storage facilities to protect gas supplies in the winter. Tory leader David Cameron said energy policy was “out of date” and Labour had failed to modernise key infrastructure. Labour said the policy approach was “simplistic and ill-thought through”.

Publishing a consultation paper on energy security, the Tories said they supported government plans to build a new generation of nuclear power stations to replace the majority of existing plants which are due to cease operating by the middle of the next decade. However, the Tories said Labour had “consistently ducked” the challenge of reforming power infrastructure and diversifying energy sources to offset the fall in North Sea oil and gas production.

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