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Energy: Belarus-Russia Gas Dispute

Volume 719: debated on Tuesday 29 June 2010


Asked By

To ask Her Majesty’s Government what assessment they have made of the impact of the Belarus-Russia gas dispute on gas supplies to Europe.

My Lords, the Russia-Belarus gas dispute had minimal impact on European gas supplies, though flows to Lithuania reduced, as did pipeline pressure to Poland on 23 June. However, no customers were affected. The EU-Russia early warning mechanism, strengthened after the January 2009 Russia-Ukraine gas dispute, was activated and the Commission led EU engagement with both parties to urge a swift resolution. Any such dispute is regrettable but we welcome its swift resolution before EU customers were affected.

My Lords, I am grateful to the noble Lord and for the speedy resolution of the dispute. Does he accept that this dispute and the Russia-Ukraine difficulties show that Europe needs co-ordinated action on gas security? Can he say what progress has been made in the development of the southern corridor, which brings gas to Europe from the Caspian but is not dependent on Russia?

My Lords, this gives me a great opportunity to praise the former Minister who, through his work on the EU security of gas supply regulation, helped to enhance the resilience of the emergency plans and provided cross-border support of supply. We look forward to his plans being adopted in the autumn. I am grateful for the work that he has done—as, I am sure, is the rest of the House. The general point is that the UK is not dependent upon the Caspian Sea or Russia for its gas supply: 65 per cent of our gas comes from our own domestic fields, 20 per cent from Norway and the remainder from other international sources. We have reviewed this situation in the light of what we have just seen and I am confident that we can support our customers to the full.

My Lords, given the continued dependence of Europe as a whole on Russian gas, what pressure are the UK Government putting on the European Commission to look at the potential for shale gas in Europe, which over just a couple of years has in many ways revolutionised the security of energy within the United States?

My noble friend and coalition colleague raises a very good question to which not many know the answer, but I will do my best under the circumstances. The issue of shale energy, for those who are interested, is well advanced in the US. It is generating a great deal of supply, but it does not have the same planning restrictions that we do here in Europe, so only limited exploration has been carried out. As yet there has been no establishment of financial viability, but this is happening apace. The benefit from this for the UK is that as a result the US is importing far less LNG, which makes it cheaper and more available for this country.

Does the Minister not feel that he is being a little overconfident about Britain’s position in all this, given that our capacity for gas storage is very low compared with a lot of other member states in the European Union? What are the Government doing to encourage more gas storage in the UK, which is surely one of the key elements in dealing with any interruption of supply?

The noble Lord asks a good question. The reality is that we currently have eight days’ gas storage—more than we have had for a very long time, and after depletion from a cold winter. We have to establish security of supply. As I said earlier, 65 per cent of the gas we need comes from our own shores; 20 per cent from Norway, which we believe is a friendly source; and 15 per cent from other countries throughout the world. Having reviewed this, we feel confident that we can sustain the supply required.

My Lords, is not foreign control or ownership over the supply and distribution of energy resources in fact a national security issue for this country? Do the Government have a position on the foreign ownership of energy supply companies, such as the fact that most of London’s electricity is supplied by Électricité de France?

I think the noble Lord is being a bit unreasonable. I have explained where our gas supply comes from, which I think most people would say was adequate, and I really do not want to engage in whether France is a secure supplier of our electricity or not.

When the Minister answered the question from the noble Lord, Lord Hannay, I do not think he indicated whether it is the Government’s intention to increase gas storage capacity in this country. If they wish to do so and if they are going to abolish the Infrastructure Planning Commission, how will they be able to do so on a reasonable timescale and on terms that are acceptable to public opinion in this country?

I think I have made this clear. The truth is that we have enough supply, 65 per cent, coming in from our own shores, and we have to work out whether we can supply our customers. We have 135 per cent capacity, which is increasing to support the import of gas into the country. Quite frankly, I have answered this question quite bluntly and blatantly.

May I put a different point to the Minister? He referred to 65 per cent of our gas coming from our own source in the North Sea, but is that not going to decline fairly rapidly in the coming years?

My Lords, it will decline during the coming years, as we know. The fact is, though, that we have a broad spread of import, a secure supply from Norway and Holland and adequate capacity to store and provide for our customers. I referred earlier to our gas import capacity of 135 per cent, and that is increasing over the next few years to 165 per cent, which is more than adequate.