Centrica Chief Warns of UK's Gas Import Reliance

Reuters - Britain's dependence on gas imports will rise to 70 percent by 2020 and the country needs to secure more supply from a variety of sources to meet that demand, the chief executive of Britain's biggest utility, Centrica (CPYYY), said on Wednesday.
 

Britain's own gas production has slumped from a peak around the turn of the century and output rates are expected to fall further as resources decline, exposing the country to increasing imports from abroad.
 

Centrica, which is the owner of Britain's largest household energy supplier British Gas, has signed long-term supply deals with gas producers including Qatargas and Cheniere in the United States.
 

"By 2020 we will be reliant on imports to meet 70 per cent of the country's gas needs. So when it comes to security of supply, there is a pressing need for solutions," Centrica chief executive Sam Laidlaw told a conference in Houston.

Centrica has also taken a small stake in a shale gas licence in Britain anticipating that the unconventional fuel will help dampen Britain's import dependence.

Laidlaw also said that political interventions in Britain's energy market were fragmenting the industry.
 

Last autumn, a fierce public debate erupted about the affordability of energy bills after UK opposition leader Ed Miliband promised to freeze energy prices if his Labour Party is elected next year.

Britain's current energy secretary, Ed Davey, added to political pressure on Centrica last month when he said its British Gas unit may need to be broken up because its profit margins were excessive.

"Political uncertainty is the enemy of investment. As a result, investment in new UK generating capacity has virtually ground to a halt," Laidlaw said.

Britain is in danger of a power capacity crunch from next year when a number of old and polluting coal-fired power plants have to shut down.

Uncertainty about government reform of the electricity market has resulted in a drop in investments into new stations, meaning that currently not enough new capacity is coming online to replace the old plants.