Page last updated at 15:01 GMT, Wednesday, 4 January 2006

Where Britain gets its gas from

By Nils Blythe
BBC News business correspondent

Until recently, supplies of gas from beneath the North Sea were sufficient for all of Britain's domestic needs.

British Gas van
Not all Britain's gas originates in the UK these days

Indeed, Britain exported gas to continental Europe through an undersea pipeline from Bacton in Norfolk to Belgium.

Now all that has changed. Dwindling supplies from the North Sea mean that Britain is now importing around 10% of its gas.

The imported gas arrives via the pipeline to Belgium, which is in turn linked to a network of pipes which criss-cross Europe.

A small amount of gas is also imported as liquefied natural gas (LNG) via a terminal on the Isle of Grain, in Medway, Kent, which was opened last year.

As North Sea production continues to fall, these imports are going to rise rapidly.

It's estimated that by 2010 half of Britain's gas will be imported. And by 2020, existing North Sea gas fields will be supplying only 10% of our gas needs.

So where will the new imports come from? The answer lies in a huge construction programme which is already under way.

Imports growing

The existing pipeline to Belgium is being upgraded to be able to deliver 15% of the UK's peak gas demand by the end of this year. A new interconnector to be built between Holland and Bacton will supply a further 10%.

The biggest pipeline of all is due to be completed later this year. The Langeled pipe will link Britain directly to a huge gas field off the coast of Norway, which will be capable of supplying 16% of the UK's peak demand when it is fully operational.

At the same time, new import terminals for LNG are being built at Milford Haven in Wales.

Those terminals are due to start receiving gas in late 2007. When they are fully operational, they will be capable of handling about 20% of Britain's gas.

Gas ring on cooker
Britain's gas will soon come from a wide range of places

The LNG for Milford Haven will be supplied under long-term contract from the Gulf state of Qatar. And by the end of the decade, Britain will have a reasonably diverse range of suppliers, including the Middle East and Norway.

But up to a quarter of the UK's gas will be coming from the continental network, whose biggest supplier is Russia.

And the terms on which Russia supplies gas to the European network will be very important in determining the price we pay for gas in future.

At present, 40% of Britain's electricity is generated from gas. That figure will rise in the coming years as the current generation of nuclear power stations is decommissioned.

As the new import facilities come on stream, a better balance between supply and demand for gas is likely to be achieved. But many industry experts are concerned about energy supplies in the middle of the next decade.

Tony Blair has commissioned a fresh review of energy policy, including consideration of building new nuclear power stations. It is due to report by early summer 2006.

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