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Ukraine: Gas Supplies

Volume 753: debated on Wednesday 2 April 2014

Question

Asked by

To ask Her Majesty’s Government what steps they are taking to safeguard gas supplies in view of possible developments in Ukraine.

My Lords, we currently do not have any disruption to gas supply through Ukraine. We have a range of different gas supply sources and high storage levels. The risk to our energy supply is low. We do not anticipate that a disruption to gas transiting Ukraine would have an impact on the UK’s physical gas supply, particularly as we currently source less than 1% of our gas from Russia, but we are monitoring the situation very closely.

My Lords, I thank my noble friend for her Answer, but even if, as we hope, the crisis in Ukraine blows over, should we not, as a matter of long-term policy, aim to reduce our dependence on imported gas and to regain energy self-sufficiency, which stood us in good stead over so many years?

My Lords, my noble friend is absolutely right to raise this very important issue, and it is right that the Government are encouraging investment in domestic gas production to help to reduce our reliance on imports. We are also taking steps to support UK shale gas exploration by accepting the recommendations of Sir Ian Wood’s report following his recent review of how to maximise recovery of oil and gas in the UK continental shelf. However, the real answer must be to ensure diversity of supply so that we can ensure affordable and cleaner energy.

My Lords, I am delighted to hear my noble friend say that we need to get ahead with the exploitation of our shale gas resources—their exploration, appraisal and development —which, as the Geological Society pointed out, we have in abundance. However, is it not time to follow up words with deeds, to sort out our immensely cumbersome and unnecessarily complicated regulatory system and to stop the present Secretary of State for Energy dragging his feet, as, I regret to say, he is doing at present?

My Lords, I am, as always, grateful for my noble friend’s intervention, because it enables me to lay out exactly what the department is doing. We are trying to streamline the planning processes so that we do not have unnecessary hurdles in the way. The Government have established the Office of Unconventional Gas and Oil to help to develop the shale gas industry in the UK. My noble friend will be aware of the new tax allowance recently announced by the Treasury, which will reduce the tax on a portion of a company’s production income from 62% to 30% at current rates. However, as with all projects, including shale, it must be subject to rigorous scrutiny through the planning system and the regulators and there must be proper engagement with local communities.

My Lords, I am glad to hear that the Minister now appears to accept that linking gas demand with Ukraine is not far-fetched but a very important issue. In reality, we are more reliant on coal from Russia than we are on gas: 70% of our coal is now imported, 40% of that from Russia. Will the Minister confirm that we must maintain every effort to support home-grown energy, including wind power, to reduce our dependency on both expensive gas and imported coal—which, I might add, would improve our air quality substantially?

As the noble Baroness is aware, the Government are encouraging a diversity of supply. I am sure that she will join me in congratulating Siemens on investing in offshore wind in Hull, generating 1,000 jobs.

My Lords, although Britain may not be reliant on Russian gas, that is not true for much of central and eastern Europe. There is a real issue here: since the problems we had between 2005 and 2009 over Ukraine, the EU and European states have been very unfocused on diversifying and getting alternative supplies of gas to that part of Europe. What is happening in terms of getting political will behind the Nabucco pipeline, or something else like it, which would bypass Russia and make the whole of Europe less dependent on a very unreliable state and partner?

My noble friend is absolutely right to raise that issue. The southern corridor project is a key pillar of EU and UK energy security and will bring gas from Azerbaijan directly to Europe. The choice of the most viable route is a commercial decision for those investing in the production and transport infrastructure. The UK Government support the southern corridor project but we cannot involve ourselves in the commercial decisions.

My Lords, if there is disagreement within the coalition, that is perfectly understandable. However, shale is very important internationally and nationally. In those circumstances, would it not be sensible to bring it to Parliament to decide?

My Lords, there is no division on shale. There was a decision taken by the coalition Government to support a diverse range of energy supply, so I reassure the noble Lord that there is no dissent in government on this issue.

My Lords, we have been hearing a great deal about the massive coal supplies which are available off the north-east coast of this country, which would give this country energy independence for hundreds of years. Would it not be as well to find ways in which this resource could be used, on a green basis, by gasification or other means?

My Lords, the noble Lord is of course aware that the Government have invested £1 billion to ensure that CCS projects go forward. However, the Government have no plans to re-evaluate the role of coal in the UK’s energy mix.

My Lords, although the Minister makes a strong case for what the Government are doing, one feels that there is an element of complacency. The noble Lord, Lord Lawson, is absolutely right: to achieve this is not a Sisyphean struggle when we can do things regarding contingency. One never knows quite what will happen. Thirty-two years ago, the Argentinions invaded the Falklands with less than 24 hours’ notice. Things change, so we should have contingency plans in place. We seem to have made it very difficult to get our shop in order to provide power, when power is needed if things go wrong.

My Lords, I reassure the noble Lord that we have plenty of supply and I urge him not to err into thinking that this country is fast running out of it. We have only a tiny dependency on Russia—less than 1%—so the Government are doing a very good job of ensuring security.