Statoil Criticizes British Gas Plan

Statoil said Britain risks losing out on gas imports if it does not change its pricing system for bringing natural gas onto the mainland from offshore fields. Rune Bjornson, managing director of Statoil (UK) Limited, said the recently introduced system of auctioning entry capacity, or access rights to the national pipeline system, produced very high, volatile prices. "We are not happy with the regime. We would like to have a predictable, stable regime which is more reflective of actual costs," Bjornson told Reuters in an interview. The erratic prices produced by the auction system will discourage producers like Statoil, one of Europe's main gas suppliers, from supplying gas into Britain where demand for natural gas is booming, he said. Britain is a gas exporter but in around 2004/2005 it is expected to become a net importer as demand is expected to continue growing while domestic supplies will start to dwindle. The government, worried by security of energy supplies, recently launched a review to take a root-and-branch look at the energy sector, including the role of the gas industry. Bjornson said Statoil would open its Vesterled pipeline in October linking Norway's main North Sea gas fields with the UK gas network but was unlikely to export large volumes of gas through the pipe until the capacity auction system is changed. "Volumes though Vesterled are not likely to grow before the entry capacity situation has found a more satisfactory solution," he said. The 50-kilometre (31-mile) Vesterled pipeline could flow between 10 and 12 billion cubic metres a year of gas, depending on the pipe pressure and gas quality. Bjornson said Statoil had held talks with the government, UK energy regulator Ofgem and national pipeline operator Transco