LONDON, July 12, 2010 /PRNewswire/ -- Spot UK wholesale gas prices on Monday reached the highest level of the year as the key Day-ahead contract traded at 51.50 pence per therm. This is above peak January prices when demand was more then double current levels.

UK wholesale prices have been rising in the past month because of high demand for UK gas to be exported to Continental Europe and a reduction in send out of liquefied natural gas (LNG) from UK terminals.

In the past week, a drop in Norwegian imports and UK system maintenance has put further pressure on the UK supply system and spot prices have risen as a result.

The Day-ahead price for the summer to date has averaged 39.30 pence per therm. Last winter, the Day-ahead contract averaged 31.74 pence per therm.

The price for the coming winter reached 57.15 pence per therm on Monday, compared with 45 pence per therm in mid January.

"Although the UK spot price has reached a year high, it is below levels on the Continent. This is maintaining interest in UK gas exports, which is one of the main bullish price drivers. UK prices could rise further if the current combination of high exports, lower Norwegian imports and lower LNG flows continues," said Edward Cox, Editor of European Spot Gas Markets at ICIS Heren.

The UK is becoming more dependent on gas imports as North Sea reserves decline. Recent government data showed the UK was a net importer of gas in the first quarter of 2010 for the first time since 1968.

In the first quarter, around 25% of UK gas was sourced from LNG imports. Norway also typically provides around 25% of the UK's gas supply through two main pipeline connections.

The UK increasingly has to compete for gas on a European and global-wide basis.

Note to editors :

The majority of wholesale gas bought and sold in the UK is done on a spot basis. Major utilities who buy gas in order to produce electricity are involved in hedging. This means they will typically buy a certain share of their gas on the forward market which includes contracts such as the next month or the next season.

LNG is gas which has been liquefied. This allows it to be moved on a dedicated LNG carrier to any receiving terminal with regasification capacity. This has boosted the connection between markets around the world.

ICIS Heren is an information service provider for gas, liquefied natural gas, power, carbon and coal market intelligence. We publish a suite of tailored reports providing news, analysis, benchmark price assessments and indices. Through our reports we aim to bring liquidity and transparency to power and gas hubs, helping you analyse the sector and make informed business decisions.

For more information visit http://www.icis.com/heren

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    Contact details, for more information and interviews:

    Edward Cox
    Editor, European Spot Gas Markets
    ICIS HEREN
    Tel: +44(0)20-7911-1772
    E-mail: ed.cox@icisheren.com

SOURCE ICIS Heren

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