UK Gas Industry



The Gas Forum is an association of gas shippers and suppliers. Established in 1994, it represents the views of its members to BERR, Ofgem, consumer bodies, the European Commission, National Grid and others. The Gas Forum is active in delivering a range of benefits and services to companies either already active in (or planning to participate in) the downstream gas industry. Each year the Gas Forum Executive Committee formulates a strategic plan for the future against the backdrop of changes to the organisation of the energy industry and to the trade associations that serve it.

There are several issues that the gas industry and the Forum itself will need to address in the next twelve months. At a time when the energy industry is rarely out of the press, the Forum intends to lead and contribute to the developments on issues such as security of supply, smart metering, regulatory reform, industry redesign and the competitive market, both at home and in the global market that we now find ourselves exposed to.

The GB Gas Market has transitioned from its status as a net exporter of gas in the early 1990s to facing a requirement for 40% of the country’s demand to be delivered via imports this year. This dependence on imports will increase and thus further investment in the necessary import infrastructure will be required. Such investment, however, is costly, so it is crucial that investment risks to gas producers, both in the UKCS and from further afield, are mitigated to the greatest degree possible. The Forum will therefore be stressing to Government and Ofgem (and National Grid) the importance of developing a NTS system entry capacity regime that is fair and predictable with respect both to capacity levels and charges, in order to help reduce investment risks; and a light-touch approach to Third Party Access Exemption applications.

An obvious effect of GB’s dependency on imported gas is the possible risk to security of supply as the country finds as UKCS production levels decline . National Grid and our Members are acutely aware of the importance of a robust, rigorous gas emergency regime in Britain. The current discussion with regard to the actions of the traded gas market in the early stages of a gas supply emergency requires a higher degree of engagement from Government and, in particular, the Health and Safety Executive and BERR, to ensure that the industry considers all available tools to encourage non-UK gas to flow to the UK, in the event of a gas emergency.

Following on from the sale of the Gas Distribution Networks (GDNs) in 2005, Ofgem began a review of the NTS Exit Capacity Regime,. This was due to its concern that the fragmentation of ownership of the gas transportation network created the potential for inefficient investment or inefficient operational decisions resulting from the new commercial interface between the National Transmission System (NTS) and the Independent GDNs. Since this time, there have been ongoing developments in relation to the introduction of enduring NTS offtake arrangements, including a successful appeal to the Competition Commission by E.ON, supported by the Forum, with regard to the Authority’s decision on a modification to the Uniform Network Code. The final decision by Ofgem in regard to Exit Reform is due to be published in November 2008, with any changes taking effect in 2012. The Gas Forum has been highly active in the debates regarding Exit Reform and has commissioned studies by both NERA and TPA Solutions to inform the decision making process.

The development of smart metering for both business and domestic users is rapidly gaining pace. The Government has already mandated the installation of advanced metering for all larger non-half hourly read electricity and non-daily read gas sites in the non-domestic sector. This affects approximately 40,000 gas sites with consumption of between 732 MWh and 58,600 MWh per annum by 2009. The Department for Business, Enterprise and Regulatory Reform is also currently consulting on smart and advanced metering for small and medium sized businesses and domestic end users.

xoserve’s Project “Nexus”, the redevelopment of the data processes and systems that underpin the competitive gas market, offering industry parties a great opportunity to contribute to the redesign of these systems based upon knowledge and experience of recent industry developments and current system limitations, as well as to secure flexibility for future development.

The Gas Forum intends to be fully engaged in these and any other forthcoming industry developments, utilising the skills and knowledge of its members to both inform and influence the debate.

If you would like more information, or are interested in joining the Forum, please contact gasforum@gemserv.com or visit our website at www.gasforum.co.uk.