GAS supplies for this winter are at their lowest for ten years, according to Ofgem, the energy markets regulator, leading to fears that large users could be cut off in the event of a severe winter.

Britain is approaching a “bottleneck” of tight gas supply, according to the regulator, as its own North Sea resources dry up and before new pipelines and storage facilities, necessary for importing gas, are completed.

National Grid Transco, which monitors the amount of available energy for Ofgem, said yesterday that only 476 million cubic metres (mcm) of gas would be available this winter, compared with 488 mcm last winter. That leaves only a 6 per cent margin over the record highest gas demand, 449 mcm, which occurred in January 2003.

The shortage of gas supply will alarm industrial and business users, who already face soaring energy bills, in some cases 50 per cent higher than last winter.

It will also add weight to criticism of the Government over its energy policy. Gas shortages have been foreseen for several years and were pointed out 18 months ago in a scathing House of Lords report on security of supply.

The CBI, the employers’ organisation, and the EEF, which represents the manufacturing sector, have been critical of what they see as government complacency over energy.

Michael Roberts, director of business environment at the CBI, this week called the Government’s most recent energy White Paper, in 2003, “complacent” and “behind the curve” because it failed to address the approaching problem of security of supply as Britain moves to become a net importer of gas.

Large consumers of gas such as chemical works and cement and ceramics factories are bracing themselves for shutdowns in the event of a very cold winter. If the weather is particularly severe, gas-fired power stations will be turned off to reserve supplies for domestic users. Ofgem and National Grid Transco tried to play down the problem yesterday, saying that demand could be met during an average winter “with only a small amount of demand reduction for large gas users”.

Alistair Buchanan, chief executive of Ofgem, said: “While gas supplies are lower than last year, the results of National Grid’s detailed consultation with the industry show that even in a severe ‘1 in 50’ winter (the kind that occurs once in 50 years) the energy market can deliver supplies to domestic customers. However, there is clearly no room for complacency.”

Britain’s last 1 in 50 winter was in 1962-63 when Siberian winds blew in a two-foot blanket of snow that covered London for two months. The River Thames froze, road and rail transport were crippled, there were frequent power cuts and the cost of fresh food rose by 30 per cent.

Since May, when National Grid produced a preliminary assessment of gas supplies for the coming winter, there have been some improvements. More gas has been imported through the Belgian interconnector, the first liquefied natural gas was delivered this summer to the Isle of Grain LNG import terminal and a new gas storage facility is due to open at Humbly Grove in Hampshire this month.

Britain is becoming increasingly dependent on imported gas as its output wanes and supply this year will be particularly tight as most new import projects are still under contruction. Wholesale gas prices have hit record levels this year because of concerns about security of supply, but prices are predicted to fall after 2007 when several new import and storage projects are due to open.

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