18 February 2013 17:19 [Source: ICIS news]
LONDON (ICIS)--Avoiding excessive exposure to price volatility is as key in ensuring UK’s energy security as securing physical resources of energy, a source from the Department of Energy and Climate Change (DECC) said on Monday.
Speaking at the International Petroleum Week in London, running 18-20 February, Chris Barton, head of domestic and international energy security for DECC, described UK’s energy security as “one glass half full” and two glasses “half empty.”
The UK has been fortunate in experiencing strong energy security to date, “partly due to good fortune… because of [access to] the North Sea oil, but partly due to liberalised energy markets and robust regulation,” he said.
But declining domestic reserves of fossil fuels is increasing UK’s exposure to volatile global fuel markets, the sources said.
Meanwhile, the timing was still premature to talk about shale gas reserves meeting this gap in the UK, Barton added.
“UK production is falling while UK demand holds steady. Our import dependency will therefore increase.”
UK was being exposed to risks including “sudden shocks” and “slow-burners”, he said.
Sudden shocks include supply disruptions, geopolitical tensions and industrial disputes.
Slow burners included rising global demand for oil and gas that could lead to “risk of increasing level and volatility of international energy prices.”
Barton also added that insufficient investment could be another long term risk factor for the UK.
“We need to combine competitive markets with robust regulation to ensure energy security,” he said.
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