Page 10 - EurOil Week 22 2022

EurOil POLICY EurOil

UK government, Centrica in talks on

reopening Rough gas storage facility

UK THE UK government is negotiating with energy scenario,” in which Russia cuts off all gas sup-
group Centrica on reopening the Rough gas stor- ply to Europe, according to the BBC. The UK
The facility was closed age facility, in a move to bolster its energy secu- imports very little gas from Russia, but a disrup-
in 2017 after being rity, the BBC reported on May 30. tion in supply to the rest of Europe would divert
refused subsidies. Rough was closed down in 2017 after Centri- LNG and Norwegian pipeline gas supply that
ca’s plea for subsidies to keep it open was rejected currently goes to the UK.
by the then-government of Prime Minister The- Under its contingency plans, the UK is also
resa May. The decision has drawn significant crit- considering extending the life of the country’s
icism in light of the current energy crisis and the last remaining coal-fired power plants, as well as
risk of Russia cutting off gas supply to Europe. the Hinkley Point B nuclear power station.
However, a new energy strategy unveiled by PM The UK’s Telegraph newspaper reported
Boris Johnson’s government in April notably did separately that Rough could be reopened in a
not make any reference to reopening Rough, matter of months, at a cost of GBP2bn ($2.5bn).
which formerly accounted for 70% of UK gas This would mean the facility would be up and
storage capacity. running before the onset of winter, when it will
The UK is one of Europe’s largest gas markets, be most needed.
but its storage capacity pales in comparison to According to the newspaper, talks with Cen-
that of other countries. While the UK has only trica have so far been constructive, but a sticking
9.7 TWh of storage capacity, Germany has 237 point is how the scheme will be paid for.
TWh, and Italy has 193.5 TWh. Centrica is confident that it could secure the
A depleted gas field situated off England’s investment it needs for the project, but only if
east coast, Rough was capable of storing 3.3bn the government provides regulatory support,
cubic metres of gas. The government’s current possibly through a “cap and floor” mechanism
discussions with Centrica are taking place as that would ensure a minimum return on costs,
part of preparations for a “reasonable worst-case according to the Telegraph.™

P10 www. NEWSBASE .com Week 22 02•June•2022