GCMA Associate Partners Inspired Energy have provided a short explanation on how Russian gas affects the UK energy markets... The UK only receives around 5% of its gas supply from Russia, which means that restrictions to Russian gas do have a direct impact on UK energy markets. However, the real impact of a restriction in Russian gas supplies is an indirect one: it causes stronger competition for gas supplies from other sources. A key importer of gas to both the UK and to the EU is Norway, who supply around 1/3 of the UK’s gas supply. Other key suppliers are Belgium and the Netherlands. If gas supplies from Russia are restricted then European nations are forced to turn to other gas suppliers e.g., Norway, with this increased competition for gas supplies providing a corresponding bullish signal to UK gas markets, and by extension power markets. Furthermore, it exacerbates competition for Liquefied Natural Gas (LNG) cargoes and providing upside risk to global LNG pricing as well. UK gas storage is also of a low capacity, with the Netherlands and Germany having 9 and 16 times the storage capacity of the UK respectively. This low capacity leaves the UK more exposed to spot market dynamics, meaning that a restriction of Russian gas into Europe could provide strong bullish pressure to UK energy markets. Do you subscribe to the GCMA’s weekly E-newsletter? Make sure you’re not missing out on the latest in the world of golf club management. Click here to join in.
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