Financial Times: Gas companies probed for 'market abuse': “An inquiry has been launched into long term North Sea gas contracts involving BP, Shell, Exxon Mobil, Total, Amerada Hess, Centrica and Perenco for possible market manipulation” (ShellNews.net)
By Andrew Taylor, Utilities Correspondent
Published: October 6 2004
An inquiry has been launched into long term North Sea gas contracts involving BP, Shell, Exxon Mobil, Total, Amerada Hess, Centrica and Perenco for possible market manipulation.
Ofgem, the energy regulator which expects to complete its probe in about four weeks, wants to know why the contracts involving about 4 per cent of North Sea supply were not delivered last autumn despite sharply rising wholesale gas prices.
A parallel inquiry into last winter's gas prices by the Financial Services Authority failed to find any evidence of market abuse.
Ofgem also called for an EU probe into the continental market to see whether any companies had prevented gas from flowing to the UK market. The moves were announced as gas wholesale prices for January soared yesterday to a record 73p a therm - more than double the price a year ago. The regulator said most of the increase had been caused by the need to replace declining UK supplies with more expensive continental European gas.
The Energy Intensive Users Group, representing large industrial customers, said Ofgem's findings failed to explain why British prices were 40 per cent higher than on the continent.
Alistair Buchanan, Ofgem chief executive, said the "small knot" of North Sea contracts still being investigated were negotiated before the gas industry was privatised in 1986 and involved supplies from the Sean, Indefatigable and Leman fields.
Centrica, Britain's biggest household energy supplier which buys gas from all three fields, said it had done nothing wrong. It had failed to take its full allocation from Sean because it could buy cheaper gas elsewhere. It had also taken its full allocation from the other two fields.