Telegraph: Gas firms in 'profiteering' inquiry
after prices soar: "BP,
Shell and other North Sea oil and gas producers
are under investigation by the Government over
claims that they may have been profiteering from
the gas crisis by withholding supplies.": Monday
28 November 2005
BP, Shell and other North
Sea oil and gas producers are under
investigation by the Government over claims that
they may have been profiteering from the gas
crisis by withholding supplies.
The Trade and Industry
Department and Ofgem, the gas and electricity
regulator, are trying to establish why North Sea
gas production has dropped more sharply than
gas prices have soared by 40 per cent to
170p a therm
The faster than forecast
rundown in output, in addition to a shortage of
storage capacity and renewed allegations of
market rigging, were among the reasons advanced
for last week's price explosion amid the turmoil
created by the cold snap.
soared by 40 per cent to a peak of 170p a
therm in a feverish spot market, resulting in
energy-intensive companies reducing production
and forcing the Government on to the defensive.
It accused traders of behaving irrationally.
Ofgem says that information
from oil companies about the rundown in North
Sea gas production came too late to bring
forward plans to increase storage capacity to
help cushion the shortfall.
Oil companies rejected the
profiteering claims. A BP spokesman said
yesterday: "Definitely not. We have been working
hard to ensure that our infrastructure is
operating smoothly so that we can make available
the maximum supplies of oil and gas."
Ofgem is attempting to
counter complaints that it has failed to provide
strong enough signals about the prospects of gas
shortages and price surges in a prolonged cold
In a series of initiatives
disclosed today, the regulatory body says it is
in talks with EU authorities, oil companies, the
National Grid and operators of the
interconnector - the North Sea gas pipeline
between Bacton, Norfolk, and Zeebrugge - to try
to improve the operation of the gas market and
pin down allegations of price rigging.
Sir John Mogg, the chairman
of Ofgem, has asked the European Commission to
hold an urgent inquiry into some of the reasons
behind the price explosion.
He wants the commission to
discover why continental suppliers are holding
back shipments to Britain despite the attraction
of higher prices and whether intervention by the
Spanish and Italian governments is distorting
the gas trade and represents the start of a
Ofgem is reinforcing
warnings of further production cuts by
energy-intensive industries along with further
price rises for domestic customers in a
prolonged cold spell but says it will be
"business as usual for most of Britain."