UK Energy Prices Spike on North Sea Pipeline Casualty

British power and natural gas prices spiked on Monday afternoon, after a shutdown of the Forties oil and gas pipeline in the North Sea exacerbated ongoing supply outages and already high demand due to colder-than-normal weather.

Wholesale gas for immediate delivery jumped as much as 28 percent to 74.00 pence per therm, its highest since the second quarter of 2013.

Day-ahead prices were nearly 11 percent higher at 63.90 p/therm.

The surge left British spot gas reaching near parity levels with month-ahead Asian spot liquefied natural gas prices, the world's premium gas market.

On Monday afternoon, operator Ineos said the Forties pipeline, which carries North Sea oil and gas to Britain, was in the process of being shut down for repairs following a leak.

The scope and duration of the outage is not currently known. Ineos was not immediately available for comment.

However, in the summer, when the entire Forties system goes offline for maintenance, Britain loses around 43.7 million cubic metres (mcm) a day of gas supply, Thomson Reuters gas analyst Oliver Sanderson said.

The impact from the current Forties outage on UK domestic gas production could be around -35 mcm/day, he added.

Gas prices had already been rallying on Monday due to outages affecting output at Rough gas storage site, North Morecambe gas terminal and lower flows into Bacton Seal.

The continuation of temperatures near zero was also driving up demand for gas for heating.

The UK power market was also higher. The day-ahead baseload price was up 14 percent at 61.50 pounds per megawatt hour.

Currently, there are five nuclear reactors offline with a total capacity of 2.8 gigawatts, putting more strain on the grid.

Reporting by Oleg Vukmanovic and Nina Chestney