LNG mixed blessing for U.K.

Dec. 29, 2010 at 7:28 AM

LONDON, Dec. 29 (UPI) -- Liquefied natural gas may help Great Britain deal with energy security but it exposes the market to global pressures, energy analysts said.

The International Energy Agency predicted a growth in the natural gas market with energy companies like Royal Dutch Shell expected to eventually produce more gas than oil.

London estimates that, as reserves in the North Sea start to run dry, the United Kingdom will rely on imports to meet 70 percent of its gas demand by 2020. As much as 60 percent of that is expected to come from LNG.

Simon Fairman, who manages a LNG terminal on the Isle of Grain, said that LNG is a mixed blessing for the region, noting shippers tend to go where the prices are most attractive, London's Guardian newspaper reports.

The United Kingdom can get most of its energy needs through pipelines, which are susceptible to geopolitical issues. LNG, however, exposes British markets to global concerns, warns Nick Campbell, an analyst at energy consultancy Inenco.

"With pipelines we are competing against Europe for gas," he said. "With LNG, we are competing in a global market."

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