British gas prices rose a record 7-year high by almost 50% on Friday following the closure of the UK-Belgium import pipeline due to technical problem. Gas prices for within-day delivery spiked at 150 pence per therm, which was more than 50% above Thursday’s closing price, following the closure of the pipeline linking Britain and Belgium that facilitates gas imports from Europe. The gas prices have since eased to 124p a therm, but are still 27% higher on the day.
The UK gas market has been under severe strain after weeks of unseasonably cold weather drained gas supplies. If the pipeline remains shut for a number of days, Britain’s grid operator would be forced to trigger all emergency supply options, which could involve negotiating agreements with big gas users to cut their demand. Traders suspect that this would cause the gas prices to rise even further. The Interconnector is one of Britain’s main gas import pipelines and on Wednesday set a new record exporting 783 gigawatt-hours of gas from Belgium to Britain. Britain’s domestic gas supply is depleting and the government has pinned its hopes on shale gas extraction to help reduce the country’s import dependence.
But the government risks running out of stored gas by April 8 based on the fall in its reserves seen since the cold hit at the beginning of March, according to Reuters report. Gas storage sites have been depleted by 90%, with the equivalent of less than two days’ consumption remaining, data from Gas Infrastructure Europe shows. If the current forecasts are anything to go by, Britain would have to turn to imports from Norway and Russia sooner than expected. Separately, Scottish and Southern Energy (SSE), one of the UK’s biggest power suppliers, warned on Thursday that there could be electricity blackouts in the country within three years.