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Energy: Gas Storage

Volume 707: debated on Tuesday 27 January 2009

Question

Asked By

To ask Her Majesty’s Government what steps they are taking to ensure an early and substantial increase in United Kingdom gas storage facilities in the light of the recent dispute between Russia and Ukraine over supplies.

My Lords, the Government are working to facilitate new gas storage projects by implementing the reforms to the consents procedure under the Energy and Planning Acts 2008. National Grid’s Ten Year Statement identifies 17 commercial gas storage projects which, if they all go ahead, could increase Britain’s gas storage capacity to 20 per cent of current demand levels by around 2020.

My Lords, I thank the Minister for that extremely helpful and full Answer. However, I remind him—I see that he is laughing, but I never ask anything difficult—that as recently as last December, our Prime Minister announced that there would be vast sums of money for infrastructure projects. Will any of that money enable us to look more quickly into other possible gas storage facilities, given that we have only an inadequate 14-day supply at present, compared with other countries, including France and Germany, which have supplies for 100 days?

My Lords, I was waiting for the “but”, and it came. I do not think that funding from Government is appropriate. We have 17 potential projects at various stages of development by the commercial sector. I am sure that that is right. We reckon also to have a storage capacity of 4.5 billion cubic metres, which is about 4 per cent of demand. The noble Baroness made a comparison with Germany. As a proportion of imports, our storage capacity is about the same as that of Germany.

My Lords, is not the real problem here, as the Question states, the dispute between Ukraine and Russia? Is it not a fact that Europe did not take any notice of the wake-up call in 2006, when Russia first cut off the supply? What proposals on this issue are the Government bringing to the Czech presidency summit, to make sure that the problem is not just for us but also for the rest of the European Union?

My Lords, the noble Lord makes a very penetrating comment. Clearly, events between Russia and Ukraine in the past few weeks have very much concentrated minds. The Government have been in close touch with the EU and the presidency to reinforce the need for Europe to consider and take action in these matters in a very decisive way. I know that they are being given consideration within the EU Energy Council. I assure the noble Lord that this Government will put all due pressure on the EU to ensure that the lessons are learnt quickly.

My Lords, does not the credit crisis mean that the storage plants that the Minister talks of are less likely to get the funding they need and that they will not actually be built? It is no good producing all sorts of wonderful ideas when the chances are that we will not get the money for them. On reflection, should not the Government have used the good years to ensure that the country had adequate storage facilities and not put our energy security at risk by dithering and delay?

My Lords, I do not know where dithering and delay come into it. We have taken action in the energy and planning legislation to facilitate the development of more storage facilities. Noble Lords need to recognise that we have a huge storage facility in the North Sea. Of course, the credit crunch may have an impact in certain investment decisions, and I would not walk away from that, but I assure the noble Baroness that we are keeping this under review.

We are not at all complacent but I am confident that we can come through and ensure that we have sufficient storage capacity. Some of the projects are very close to fruition and we can have confidence that we will have that storage capacity.

My Lords, can the Minister say what, if any, increases in gas storage in the European Union have been constructed since the wake-up call of the first crisis between Ukraine and Russia two years ago? Is that not the sort of object that the EU’s stimulus package should be directed towards? What does he think of the desirability of having a minimum storage requirement in the EU for gas, just as there is for oil?

My Lords, the question of what might be called strategic gas storage within Europe is under consideration at the moment. As for the UK, we remain to be convinced, since our concern is that a strategic supply would simply displace current commercial supply. However, I recognise that in continental Europe there are different considerations. I assure the noble Lord that we will continue to urge the EU to take decisive action in this area.

My Lords, have not this Government been urging the EU to take decisive action in this area for several years? That action has not been taken. It would be very desirable if it had been taken, but it has not. However, the fact that it has not be taken and is unlikely to be taken does not exonerate this Government from ensuring that we, nationally, have adequate gas storage, not least because, although Mr Putin can afford to cut supplies for a short period, he cannot afford to cut them for a long period. Therefore, if we had adequate gas storage facilities to cover a short period, we would be in a very much stronger position than we are in today.

My Lords, we have to remember that very little of our gas comes from Russia, we have a huge storage facility in the North Sea, we are not at all complacent and we are facilitating investment in further storage facilities. On the question of EU action or not, I believe that the events of the past few weeks have concentrated minds considerably in the EU. We will continue to press the EU to take the action necessary, alongside the actions that have been taken, such as a third internal market package to encourage Europe to have a more competitive approach to energy following the example that this country has set.