Russian LNG affair highlights how vulnerable we are to fluctuating market forces

The fact that a cargo of Russian gas can be traded-on when it was intended to prop-up our supplies highlights the problem with growing reliance on Liquefied Natural Gas. 

 

On 13th December 2017, it was widely reported that a cargo of Liquefied Natural Gas (LNG) was being sent to the UK from Yamal in Russia to help plug a gap in supplies caused by a “perfect storm” of events that included the unexpected shut-down of the Forties pipeline that brings gas ashore from the North Sea.

The tanker arrived yesterday, 29th December and was greeted by a flurry of social media activity as the Russian Embassy bragged about how we’d had to accept a consignment of Russian gas to keep warm.

However, there’s a twist in the story. It’s since emerged that the gas has been offloaded into storage and will apparently not enter the UK distribution network but instead be loaded onto a different ship to take it to Asia where it can fetch a higher price.

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Opponents of fracking have — quite predictably — seized on this news to say it just proves that our supplies are not so vulnerable after all.

But they miss the central point, which actually further strengthens the argument for developing our onshore shale gas: that that Russian cargo of LNG is “portable” enough that it can be sent anywhere in the world and sold to the highest bidder, potentially leaving us short.

That’s the same with LNG regardless of where it’s produced, and the problem with that is that it makes up an increasing share of the gas we use — 12% in 2016. The more reliant we become on gas moved around in ships, the more insecure our supplies become. Owners of foreign LNG can even drop anchor off our shores and play a dangerous waiting-game hoping that prices will spike before they land their cargo.

Demand for gas is going to remain high for a long time and while that’s the case, it makes more sense to produce our own if we can to try and wean ourselves off imported LNG and make our energy more secure than it will be otherwise.


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