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Energy: Gas Supplies

Volume 695: debated on Monday 15 October 2007

asked Her Majesty’s Government:

What measures they are taking to avoid any difficulties in gas supplies in the coming winter.

My Lords, as National Grid’s Winter Outlook Report confirmed, the delivery of new gas infrastructure means that we are in good shape going into this winter. New flows of gas are expected from Milford Haven’s Dragon liquefied natural gas terminal and the Aldbrough storage facility. Increased flows are also expected from Norway with connection of the Langeled pipeline to the Ormen Lange field. However, with the weather having the single largest effect on demand, we cannot, and will not, be complacent.

My Lords, I note what the noble Lord has just said. Although this is a bit before his time, is he aware that this is the fourth year in succession that I have asked a Question about the reliability of winter gas supplies? Does he agree that, in spite of improvements in the import infrastructure and as both National Grid and Ofgem have stated in their reports, interruptions to the supply of gas from the Continent are still possible due to factors entirely beyond our control? In those circumstances, is it not desirable that in the short term we should substantially increase storage capacity and overcome the planning delays which are preventing this from happening so as to act as a buffer and, in the longer term, we should make it an absolute priority to diminish what would otherwise be our increasing dependence on imports of gas from abroad?

My Lords, I am grateful to the noble Lord for a tour d’horizon of the current issue, much of which was before my time. The planning regime of the nation has needed and will continue to need constant review, and it needs to be improved with a degree of speed in many areas of infrastructure. Gas storage facilities are no stranger to that.

Of course, the greatest risk that we face is always the weather. I am not here to give noble Lords a forecast of the weather—I even forecast that the All Blacks would get to the final of the World Cup—but, ultimately, we must ensure that our imports come from a spread of sources. Being reliant on one sort from one place is not in the national interest and does not take place; we must keep a variety and ensure that we can dip into one if, as the noble Lord rightly says, another is interrupted. That is the plan; it is in place, and I am confident that it will work.

My Lords, can my noble friend tell the House what proportion of imported gas comes from Russia, bearing in mind the fact that in the past year or two the Russian suppliers have doubled—or more than doubled—the price of gas, possibly in pursuit of political goals? How much are we at risk if the same thing should happen with supplies from Russia to this country?

My Lords, I can assure my noble friend that I shall be in touch to give the exact figures with regard to Russia, because I do not know; but I do know that we are not reliant only on gas from Russia. I am pleased that at last we have the Milford Haven terminal, which is very close to completion. That will enable Qatari gas to come to the United Kingdom, and the Norwegian pipeline is very much on song already; the first tap was turned just a couple of weeks ago. I shall get back to my noble friend on his question about Russia, but noble Lords can rest assured that this nation’s ability to keep gas flowing does not rely only on Russia.

My Lords, I am most grateful to my noble friend, who is always the soul of courtesy.

Noble Lords who have already spoken are rightly concerned about the problem of energy security in the light of reliance on Russia and the geopolitical factors involved. The noble Lord will be aware that there has been a lot of talk within the European Union about how to address this matter, but no agreement has been reached. Will he give an assurance that in the absence of European Union agreement—which may or may not be desirable, although it is not there—this country will ensure that it has whatever gas storage capacity is necessary to secure us from a serious potential threat?

My Lords, the most important thing for noble Lords to understand is that it is not the function of imports that makes this country vulnerable; it is single sourcing in any form. First, a spread of different sources has to be encouraged, and we must ensure that the storage of those sources takes place. The noble Lord is right that we must make sure that we have adequate storage facilities.

Secondly, we must make sure that our membership of the European Union is maximised when it comes to dealing with the issue of Russian imports, just as if we were today in Germany, Spain, France or anywhere else within the European Union. Our membership of the EU gives us a bit of clout to negotiate on that basis. We are not alone in being dependent on various sources of imported gas—Germany has it big time, as does Spain. But we must ensure that we keep it varied and make sure that it is stored in adequate quantities.

My Lords, the Minister said that weather is a factor. That is because boilers are switched on at this time of year for heat. Can he say what the Government are doing to replace the 4 million G-rated boilers still in operation in this country?

My Lords, does the Minister remember that when he was head of the CBI he made eloquent speeches in defence of a capital gains tax of 10 per cent to encourage enterprise and activity in the gas supply industry? How does he reconcile that with Mr Darling’s proposal to increase that tax by 80 per cent to 18 per cent? Before he answers that, can he take the House into his confidence? Does he sometimes lie awake at night, worrying whether he has joined the wrong ship?

My Lords, as a former serving officer in the Royal Navy, I have never worried about joining the wrong ship. Questions of tax would be better addressed to noble Lords from the Treasury.

On my attack a couple of years ago, I was worried when I headed the CBI about whether we had enough gas to get us through a cold winter. The noble Lord is quite right; I made my views felt. The two things that I said we needed desperately were to get Milford Haven online and the Norwegian gas coming in—then, if we had a mild winter that year, we would be fine. That is what I actually said, and those things happened. I have no doubt that we will be fine this winter. I am pleased that what I said then brought about the awareness that led to those actions being speeded up.