UK Gas Producers Welcome Exoneration in Gas Price Inquiry
Posted: 28 March 2005
The UK Offshore Operators Association (UKOOA), the representative body for oil and gas production companies in the United Kingdom, welcomes the publication today of the Trade and Industry Committee Report on Fuel Prices, which clears gas producers of withholding supply to drive up wholesale prices in Autumn 2004.
Malcolm Webb, UKOOAs Chief Executive, said: "Yet another inquiry finds no evidence to support allegations that UK gas producers are manipulating the market by withholding gas supply. Similar investigations have been carried out by the Department of Trade and Industry (DTI), the European Commission and, most recently, Ofgem. None of them have found any evidence of manipulation in the market place. I hope that now we can finally put this issue to rest once and for all."
In the last twelve months, gas producers have taken significant steps to improve the flow of information about gas supplies from UK fields to National Grid Transco (NGT) and the wider market. In March of last year, UKOOA reached an agreement with DTI, NGT and Ofgem for the release to NGT of commercially sensitive forward production plans and the publishing of four items of information for release to the wider market. The release of UKOOA members forward plans in the spring of 2004, under confidentiality agreements, gave NGT the best planning data it has ever received.
Buyers also now have access to the most information they have ever had, which includes the projected deliverability of gas reflecting planned maintenance (for UK production and direct imports, interconnectors and from store), as well as daily flows into the National Transmission System (NTS) ahead of day and after the event.
Close to "real time flows" into the NTS, separately for UK production and imports, and from store, will be published by Transco in the third quarter of this year. For full details of the range of information published by Transco on its website, please refer to the Transco Information Exchange at http://info.transco.co.uk and click on Index of Reports.
"We note suggestions have been made that the industry should make a contribution to eradicating fuel poverty," adds Malcolm Webb. "It remains our belief that the issue of poverty is best dealt with by Government. A year ago, the Treasury was predicting that it would receive £3.6 billion for the current tax year from our Industry. Today, including the £1 billion of tax brought forward for earlier payment in the recent budget, the Government expects to receive in the region of £7 billion in 2005/06 from UK oil and gas companies, effectively doubling such revenues. It is for Government to decide how this windfall created by higher oil and gas prices should best be spent."
"Investor confidence was damaged through the tax changes in 2002. Capital investment declined and drilling activity slumped in 2003. Investment is now accelerating in the UK continental shelf. Any move to increase the tax burden would deter investment and the jobs that depend on it."
Posted by Editor Pipeline Magazine
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