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UK to rely on LNG tankers

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LNG Industry,

Bloomberg are reporting that for the first time in more than three decades, natural gas traders, utilities and producers are preparing for a winter without the UK’s biggest storage facility.

With Centrica Plc’s North Sea Rough storage site almost empty after wells deteriorated, the UK is set to lose a quarter of its daily supply capacity during the winter as well as its ability to quickly respond to short-term swings in demand. Britain will import more fuel, which may be costly and create opportunities for traders and producers, as well as boost business for smaller storage sites.

The shutdown of Rough will impact the UK economy through more volatile energy prices during the peak winter season and increase the reliance on imports via LNG tankers that can take weeks to arrive.

The halt also offers Russia an opportunity to strengthen its grip on deliveries to Europe, which faces declining local production and extraction caps at the region’s biggest field at Groningen in the Netherlands.

In the past, a fully operational Rough provided a buffer against price swings.

While additions of LNG capacity globally have not yet seen a wave reach Europe, expectations are that extra supply is on its way. Gas for winter delivery to the UK has slid 12% this year, but demand in other markets could pull some of the LNG away from Europe.

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