Energy regulator Ofgem said in a December seminar that it was determined to get swift answers from the European Commission on why more gas did not flow from the continent to the UK during the period of high UK gas prices in late November 2005 (see graph right for flows through the UK-Belgium Interconnector). Questionnaires had been sent out to continental gas companies to find out whether or not they had spare gas, and the companies only got five days to reply, Ofgem said. Ofgem hoped to sit down with the EC to go through the results in late December.

A spokesman for Ofgem told Platts last week that Ofgem had managed to discuss the issue with the EC shortly before Christmas. But the spokesman did not specify the details of those discussions.

In late November UK gas prices spiked as high as 170p/th, five times the October average, as low imports of gas through the Belgium to UK Interconnector pipeline forced UK gas companies to meet demand with expensive gas supplies from storage instead. The pipeline never got more than two thirds full, and remained below even the 42-mil cu m/day forecast made by National Grid before the winter began, let alone the pipe's full 48-mil cu m/day capacity.

Ofgem is concerned that continental companies were holding back gas they could easily have supplied to the UK. Ofgem boss John Mogg wrote to the EC in November asking them to investigate whether continental companies were holding back their gas, or whether they genuinely had no spare gas.

Ofgem's markets managing director Steve Smith said at Ofgem's December seminar that the EC was working "very, very fast" on this issue and that he hoped for results soon. He added that the EC's recent Nov 15 report on the European energy markets showed the EC had an "appetite" to tackle tough issues.

Examining market behaviour in late November and early December, Ofgem's markets director Sonia Brown said at the seminar that imports had been lower than expected, though North Sea gas output was by mid- to late-December "encouragingly" delivering the volumes of gas that had been forecast before the winter began. When North Sea output was lower than expected in late November, when prices were highest, 67% of that was due to unplanned outages and 33% due to later-than-expected commissioning of gas fields. Only 0.33% of the lost gas was due to planned maintenance, Brown said. So it did not look like UK producers were deliberately holding back gas.

While the low imports drove up prices to the concern of energy buyers, from a system management point of view, there had not been great problems, National Grid's director of operations and trading, Chris Murray, told the seminar. The high prices encouraged users to cut their demand, making it easier to balance supply and demand. Murray said that November had been an early test of supplies, but had shown that there was the capability for demand side response, particularly in the power generation sector.

It had actually been easier to manage the gas system so far this winter than to manage the power system, Murray said. In power National Grid had issued two notices of insufficient system margin (NISMs), one on Nov 14 and one on Nov 24, he said (there was another Dec 29). But there have been no gas balancing alerts. But demand for gas should be higher in January than it was in November, so there could be further tests.

Ofgem's Smith said the market was working to balance supply and demand, through mechanisms such as demand-side response. "We think it has been effective," he said. He admitted that demand-side response was not easy for companies who had to stop production, but questioned whether government should be responsible in a privatized industry for stepping in and helping out the industrial users for choices that they themselves had made. "You've all known the rules of the game and you've all known how that's played," said Smith.

Kenton Bradbury, director of risk management and strategy at Eon UK, said that the company's German parent Eon was concerned about UK gas supplies and was investing-mils, even billions, in projects such as the Dutch to UK gas pipeline and the Baltic Sea gas line to bring gas to the UK. And he said that if there was any gas spare on the continent, companies would have tried to send it to the UK.

He said he could "strongly assert" that if there was any excess gas on the continent then an investor-owned company like Eon would be behaving very oddly if it was spending lots of money on projects to send gas to the UK, but then did not send that gas when it had the chance to do so. "If there were excess gas we could bring over, we would," he said. The EC will seek to analyse data from companies including Eon on how much gas they have in storage and how much spare capacity there is in pipelines. From this data, the EC hopes it can decide whether there was any spare gas that could have gone to the UK or not.

Ofgem's Steve Smith said that if only continental companies were as transparent as UK gas companies, Ofgem could already have judged whether there was gas spare on the continent or not. In the UK, National Grid has a data website showing levels of gas in store and expected production rates. Transparency was "a drum we've been banging in Europe for some time," said Smith. He called on continental companies such as Eon-Ruhrgas and Gaz de France to set up similar websites to National Grid's. "There's no excuse for any of those companies," he said, "information is the lifeblood of a properly functioning market, it could be done and it could be done now."