Britain faces a potential shortage of natural gas this winter if high demand coincides with supply disruptions, according to a warning issued by the energy regulator Ofgem. The regulator stated that gas supply resilience has been weakened by declining North Sea reserves and reduced imports.
Ofgem noted that without intervention, the UK could experience a "negative supply margin," particularly on days with extremely high gas demand, comparable to a "1-in-20 cold weather day," combined with the loss of significant gas infrastructure. The situation is expected to become more constrained in the future. To bolster supply, Ofgem has approved a gas agreement with Belgium.
The recent approval of drilling in the Jackdaw field in the North Sea is anticipated to increase domestic gas production over the winter. This development is expected to boost production by approximately 6% at its peak, secure hundreds of jobs, and generate an estimated economic benefit of £2.9 billion. Tax revenues from North Sea oil and gas will be directed into a new energy wealth fund, initially seeded with £2 billion, intended for investment in renewable and low-carbon projects.
Despite the potential benefits, Conservative energy spokesman Andrew Bowie criticized the warning as "utterly outrageous," particularly the proposed solution of paying other countries for increased gas imports. He also highlighted that the warning was issued by Ofgem, which he suggested could not guarantee demand would be met.
Kemi Badenoch, a Conservative leader, urged the Prime Minister to authorize more gas and oil licenses, building on the approval of the Jackdaw project. Former President Donald Trump also commented on the development, calling for the UK to "go FULL BLAST" with North Sea drilling.
The Jackdaw project, initially approved by the previous Conservative government in 2022, faced delays due to a legal challenge from Greenpeace. Ministers have since approved drilling, with Downing Street asserting that a 2024 manifesto pledge against new North Sea developments does not apply as the site was already designated.
Energy Secretary Miatta Fahnbulleh acknowledged that the Jackdaw development would contribute to climate change and would not lower gas prices. However, she emphasized that using domestically produced gas is preferable to importing it. Regarding the potential Rosebank oil field project, Fahnbulleh indicated that decisions would be made on a case-by-case basis, differentiating it from Jackdaw because Rosebank is primarily for export.
Jonathan Brearley, the top civil servant in the energy department, has admitted that he cannot guarantee the UK will not run out of gas this winter if demand peaks and supplies are hit.
Tory leader Kemi Badenoch has stated that the Prime Minister should permit additional gas and oil licenses.
