Energy regulator Ofgem has been asked by the Department of Energy and Climate Change (DECC) to look into whether further action is needed to ensure that medium to long-term gas supplies for consumers remain secure.

In the short term, gas supplies are relatively secure and the wholesale gas market in Britain has a strong track record in attracting significant private investment. More than £10bn has been invested in new gas importation facilities over the last ten years. But as Britain’s indigenous gas supplies decline and dependency on gas imports increases, consumers will increasingly be exposed to the global gas market for their gas supplies.

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Energy Secretary Chris Huhne said: “As our cold and nuclear power stations shut down, gas can provide flexible and reliable backup electricity to complement the next generation of renewable and nuclear energy. Our analysis shows that it is likely to remain significant beyond 2030, particularly with commercial carbon capture and storage.”

Ofgem Chief Executive, Alistair Buchanan, said: “In 2010 Ofgem’s Project Discovery identified a range of issues in both the gas and electricity markets given the need to find £200bn of investment between now and 2020.

“Project Discovery also identified the challenges posed by Britain’s growing exposure to a volatile global gas market. We have seen this recently where political instability in the Middle East and the impact of Fukushima have helped push upwholesale gas prices for this winter by 40 per cent. We therefore welcome the Secretary of State’s decision to commission Ofgem to look at the rapidly changing gas supply situation for Britain and whether further measures are needed to secure supplies.”

(CD)