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Dutch quake leaves UK gas market on shaky foundations

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The UK has shut its ageing Rough gas storage facility, even as North Sea gas production ­declines, in favour of importing gas from Europe, Norway and on the global market via super-chilled tankers of liquefied natural gas (LNG).

A major North Sea pipeline outage last month coincided with problems at Norway’s offshore gas terminals, ­resulting in historic market price highs and laying bare the extent of the UK’s reliance on imports. One UK gas buyer turned to Russia for a cargo of arctic LNG. The UK typically sources LNG from the Middle East but buying one-off cargoes is also likely to become more expensive. China imported ­record volumes of LNG last year in a bid to wean its polluted cities off burning coal, lifting Asian gas prices to six-year highs. The UK will need to compete on price to lure cargoes away from lucrative Asian gas buyers.

Ben Samuel, of energy data firm ICIS, said the market price reaction so far had been “muted” while traders wait to see how deep the production cuts will go. But the long-term price for UK gas has none the less climbed 10pc higher than where it was last month ahead of the ministry’s decision. 

“The Netherlands is the benchmark gas market in Europe, and the price-setter, so anything that happens in the Netherlands will inevitably affect the rest of Europe and Britain as well,” Mr Samuel warned.

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