Economic Report 2016 - Oil & Gas UK

One consequence of the unexpected fall in gas demand in recent years and the recovery in UKCS gas production is that import dependence has declined since 2013, confounding earlier forecasts of ever-rising dependence. Maintaining this recent trend of greater self-sufficiency will not be easy if NBP gas prices remain in the range of 30-35 p/th, given the access of north-west European markets to lower-cost supply from Qatar, Russia and the US. As the current government has recognised, UKCS gas production is a critical element for UK energy security and its decarbonisation policy. Crude oil produced on the UKCS is capable of being delivered worldwide but gas (with the exception of gas from some small southern North Sea fields (SNS) delivered to the Netherlands) has to be delivered to the UK onshore network, the National Transmission System (NTS). Furthermore, indigenous gas production permits greater deployment of renewables without incurring the economic risks associated with excessive dependence on gas imports to back-up variable renewable output. In other words, maximising economic recovery of domestic gas from the UKCS will assist in delivering wider energy and climate policy objectives.

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Maximising economic recovery of domestic gas from the UKCS will assist in delivering wider energy and climate policy objectives.

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Figure 6: UK Gas Supply and Self-Sufficiency

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0 10 20 30 40 50 60 70 80 90 100 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

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Supply Volume (bcm)

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UK Production/National Transmission System Throughput

UK Net Production

Norway

LNG Net Imports Belgium/Netherlands

UK Production/NTS Throughput

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Source: BEIS, Oil & Gas UK projections

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