For a number of years the UK has basked in an abundance of gas supply, even while market liberalisation, new technology and low prices have driven a huge increase in UK gas demand. The largest growth has been in power generation (see figure 1) as more than 40 new gas-fired power stations have been built since 1990. New fields coming onstream led to a major oversupply of gas from 1995, which also saw gas spot market prices crashing to around 10p/therm. However, the gas bubble has been relatively short-lived, as production from the UK Continental Shelf (UKCS) peaked at 108 bcm in 2000 and has since gone in to decline. With demand continuing to grow and a supply gap emerging, there some been increasing concern in the industry, at the risk the security of supply that could be caused by a really cold spell in winter. This article considers the changing UK supply/demand match and its impact on the gas trading market, both in this and coming years.
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mWELCOME

Hello and welcome to the March issue of MZINE, our free monthly newsletter. This issue is titled Security of Supply, and we take a good look at the serious supply issues facing the UK and how the forecasted solutions will not only benefit the UK but also the rest of Europe . See MSTORY for the full story. MPRICES take a look at the Oil Forward Curve as well as a spot forward gas curve. We have more humour at MPHASIS as well as our thought of the month at MPATHY. Plus, of course, don't forget to check out MTRAIN for the latest training courses, places  are still available for the UK gas market introduction course in Aberdeen on 10^th March.

I shall be at the first few days of GASTECH on stand N22, working with the Gas Strategies team, so if you are there please come and say hello. LNG Today: 2004 edition will also be there at a special GASTECH price!

Please keep your thoughts, questions and articles rolling in. This month's MFEATURE is an article sent in by DR Robert Breen of Quogen Consulting. If you would like to contribute then email me. paul@mjmenergy.com

If you enjoy reading this newsletter and think you know someone who might also enjoy it then feel free to forward it on.

Kind regards

Paul Cassar
Editor
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mTRAIN

Below we have our training courses coming up over the next three months. All are in Oxford, England, apart from the 3rd March where the CIA in London are hosting our Buying I & C Gas course (open to all but with a reduction in price for CIA members) and 10th March, where we will be making a return visit to Aberdeen, Scotland. For more information and/or to book your place, please click on the course title or contact me by email or phone +44 (0) 1865 395826, fax +44 (0) 1865 395959

OTHER DATES

LNG FINANCE FORUM The Waldorf Hilton, London, 9-10 May 2005

16th - 17th June 2005 Emerging Carbon Markets: Can they deliver?

Course Review

 Buying Industrial & Commercial Gas

The Buying I&C gas is run jointly by the Energy Training Network and Energy Links Consultancy , represented by lecturers Nick White and Rowland Sheard. Rowland has many years experience, initially in marketing gas to industrial customers, more recently in assisting customers in buying gas, both for power generation and industrial use. Nick is an expert on the UK gas market structure. Together the course paints a picture of the complex issues surrounding the UK gas market today, and helps participants to understand the opportunities to out there for better gas purchasing. In the context of the current gas price enquiry and ongoing market concerns, the course is very timely.

Read the rest of this review

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mPRICES
FORWARD OIL CURVE

Upward revisions to global oil demand forecasts and flat non- OPEC supplies are keeping oil prices high despite OPEC's concerns about the second quarter. US crude stocks now look slightly more comfortable as refiners begin spring turnarounds, depressing prompt WTI prices and extending the contango at the front end of the forward curve. Distillate stocks, however, are back at the bottom of the historical range after deliveries surged to over 4.4 mbpd as cold weather hit the US East Coast, providing support for heating oil prices. Gasoline stocks are high after refiners boosted imports to compensate for maximising distillate output.

OPEC is expected to raise the minimum price target for its basket of crudes to at least $35/bbl when it meets next month, but further output cuts now seem unlikely unless oil prices fall sharply from current levels. Nearby WTI remains just over $47/ bbl and longer-term WTI prices are edging upwards again as the market reacts to the rising call on OPEC crude. The balance of Calendar 2005 WTI is $47.5/bbl – equivalent to just under $45/bbl for Brent and over $40/bbl for the OPEC basket of crudes.

Reproduced from CGES Monthly Oil Report with kind permission of CGES. www.cges.co.uk

mPRICES
February - gas prices

The Within-day and Day-ahead spot prices have more than doubled since this time last month, now ranging between 65.35p/th – 70p/th for Within-day and 63p/th – 72.25p/th for Day-ahead. The snowy days have arrived for the UK , but there is still plenty of gas. The system, despite maintenance reducing flows, has coped well and demand has not been as high as expected for most of the week.

For daily prices by email visit Heren Energy Ltd.

mPHASIS!
for the lighter side of life!

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mPATHY
thought of the month!

They may be misplaced, forgotten, or misdirected, but in the heart of every man is a desperate desire for a battle to fight, an adventure to live, and a beauty to rescue. - John Eldredge Wild at Heart

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mOFFERS
this month's exciting offers!

The long-term capacity auctions: a review of the UK gas entry capacity regime

January 2003 saw the first set of long-term entry capacity auctions in the UK gas market. Under this new regime shippers can buy rights to flow gas into Transco’s system up to 15 years ahead. With over £2 billion of capacity on offer the auctions are one of the most significant changes to the UK market since the introduction of the Network Code and the New Gas Trading Arrangements.   

The long-term capacity auctions provides a clear guide to the new regime, with explanations of all the key terms and systems. The different forms of capacity on offer and auction types are described and the ways in which Transco will manage the capacity system detailed. The complex issue of Transco revenue flows and incentives is clarified and the report also provides a detailed analysis of the first set of auctions completed in January 2003.    

The published price for this report is £450, but until 31st March we can offer MZINE readers a 50% discount - £225 + £25 shipping!

To take advantage of this exceptional offer click here.

For 2005 we have produced a high quality A2 year planner detailing all of our training courses as well as space for you to mark those other important events. There is also other useful information such as a conversion chart relevant to the energy industry and netconnections, a list of web addresses at your fingertips. To receive one, please send me an email with your postal address and I will send you one with our compliments. (while stocks last)

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mFEATURE

Selling the system and security of supply  

The sale of Transco distribution networks continues to roll on in 2005 with promises of additional savings to customers and improved safety. [See Transco.co.uk website – Network Sales] The projected savings, however, should be considered in relation to the overall system costs and the potential impact on security of supply arising from the fragmentation of the control of the pipeline grid.

To read the rest of this summary click here

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