Investing.com – Natural gas futures for the U.K., and northwest Europe rose on Friday following U.K. utility Centrica PLC (LON 🙂 announced that it had partially opened the Rough storage facility beneath the North Sea.
Centrica stated that the investment it made in the recommissioning of the largest U.K. storage facility will enable it to store up to 30 Billion cubic feet (850 Mcm) of gas in the coming winter season.
This will make it possible for both the British gas markets and the European gas markets to adapt to a new reality, without Russia supplying nearly a quarter of their gas needs. This is especially important for the U.K. as it had depended on many sources to ensure spot market supplies in recent decades. However, this has allowed its strategic storage capacity atrophy. Centrica reports that the U.K. holds the lowest level of gas storage in Europe, at 9 days. This is compared to Germany’s 89 days, France, and the Netherlands of 103 days. The U.K. also has the lowest levels of gas storage at 123-days.
Centrica stated that Rough was the U.K.’s largest storage site and that it will start at around 20% of its original capacity. Rough will increase U.K. storage by approximately 50% even though it is a small scale.
Rough’s immediate impact is to provide more space for energy suppliers to secure natural gas supplies today and for the next six-months. Spot market prices fell sharply in recent days due to the fact that European storage facilities were almost full after the summer’s aggressive precautionary buying. This resulted in a relative abundance of gas supplies on the market, which could only have been cleared by low prices.
The front-month rose 6.5% to reach 230 pence a thermo, while the front month contract rose 5.7% at 113.5 euros per megawatt-hour, its highest point this week.
Centrica plans to increase the facility’s ability to accept injections of both natural gas and hydrogen in the long-term.
“In the short term, we believe Rough could help our energy system by stocking natural gas when there’s a surplus and producing gas when the nation needs it during cold spells and peak demand,” Chris O’Shea CEO Centrica said in a statement. Although rough is not a panacea for energy security it is an important part of a series of steps that can all be taken to help the UK this winter.