Centrica Plc hasn’t started refilling the UK’s biggest gas storage facility in the North Sea, potentially leaving the nation without reserves for next winter.
The company usually starts to inject fuel into the Rough facility by this time of year, ready for next winter, according to UK grid data compiled by Bloomberg. The site is old, needs to be upgraded and is operating at reduced capacity. That makes it unprofitable, according to Centrica.
Centrica’s decision not to start rebuilding inventories coincides with questions over the future of Rough, which partially returned to operations in 2022 when the loss of Russian gas supply pushed European prices to record levels. Centrica Chief Executive Chris O’Shea in February promised an update on the operation in the coming months. The company declined to comment further on its plans for Rough when contacted Monday.
The owner of British Gas has said it could invest £2 billion to upgrade the site to include hydrogen but is seeking support from the government through a price cap and floor mechanism. Centrica previously sought government help for Rough before its decision to close the facility in 2017. For now, withdrawals of gas from the facility off the east coast of England continue.
If Rough were to close, it would leave the UK more exposed to global price volatility and imports of LNG. The facility can currently hold enough gas for six days of average consumption or just under four peak winter days.
“As we see our domestic supply ever dwindle and support pulled back we come more reliant on LNG imports in particularly to meet industrial demand,” said Nick Campbell, a managing director at Inspired Plc, a consultancy. “Therefore we are at the whims of international pricing.”
O’Shea has previously said that Rough would have saved UK consumers around £5 billion in the two years of the energy crisis if it had been operating at full capacity in that period.
Centrica expects a loss of between £50 million and £100 million this year, Chief Financial Officer Russell O’Brien said on the company’s last earnings call.
With assistance from Anna Shiryaevskaya and Elena Mazneva.
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