Tuesday 1 June 2004

OFGEM INVESTIGATION INTO WHOLESALE GAS PRICES FAILS TO ACKNOWLEDGE IMPROVEMENTS IN INFORMATION FLOW

Responding to Ofgem's statement on Friday, 28 May regarding its investigation into wholesale gas price rises in October and November 2003, Malcolm Webb, Chief Executive for the UK Offshore Operators' Association (UKOOA), the representative organisation for UK oil and gas producers, said:

"UKOOA notes that Ofgem has resolved to their satisfaction five of the seven lines of enquiry into the potential causes of last autumn's high wholesale gas prices.  Ofgem's investigation is the latest of several independent enquiries in recent years which have failed to find any evidence of market manipulation or malpractice.

"We look forward to Ofgem completing their work in the two outstanding issues regarding volumes of gas supplied through five of the 14 beach head sub-terminals and through the UK-Belgium Interconnector, so that the investigation can be concluded without further delay.

"I was, however, surprised that Ofgem's report refers to a lack of information about gas supplies from offshore fields, without acknowledging the significant progress that the industry, together with Transco and the Department of Trade and Industry, has made in recent months to improve information flow in this regard.  Indeed, Ofgem was itself party to these discussions and was instrumental in helping to progress the whole issue to a satisfactory conclusion.

"In November 2003, UKOOA's members, representing over 95 per cent of total UK gas production, agreed to standardise the information provided via the terminal operators to Transco on gas supplies from offshore fields and on planned and unplanned maintenance programmes. 

In March 2004, UKOOA subsequently also agreed to provide Transco with further operational and planning information to help with its "Transporting Britain's Energy" (TBE) 10 year planning process.  This information contains market sensitive data and the agreement by Industry to release such data to Transco represents a major step forward, only made possible by confidentiality agreements between Transco and the companies concerned. 

"This information used to be provided by our members informally, but a change to Transco's gas transporters licence in April 2002 meant that Transco might have been forced to publish it and so participation by producers fell sharply.  Now it has been restored which helps Transco and benefits security of supply.

Finally, UKOOA members have also agreed to Transco providing information about flows into the National Transmission System (NTS) to the wider market in an aggregated form but we understand that Transco and Ofgem have yet to determine how this will be implemented.

"We are somewhat surprised that these points have not been made clear in Ofgem's recent report."

Ends

Note to Editors

The UK Offshore Operators' Association (UKOOA) is the representative organisation for companies licensed by the British Government to explore for and produce hydrocarbons in UK waters.  It has 30 members. 

Investigations into allegations of manipulation of the wholesale gas market have been carried out by Ofgem, the DTI and the European Commission on several occasions since 2000.

For more information, please call 020 7802 2400.