New tariff to increase gas sent to Britain via Interconnector

More gas is likely to make its way from Belgium to Britain from 1 October 2016 due to a drop in tariffs levied by National Grid, which the network operator announced on Friday.

A fall in the commodity charge will make it less profitable to ship gas to Belgium’s Zeebrugge via the Interconnector pipeline.

However, the tariff drop will not be as great as National Grid’s indicative levels, released in earlier in 2016 (see ESGM 10 May 2016).

At the start of the 2016/17 Gas Year, the commodity charge to enter the British system will fall by 5.5% to 0.061p/kWh (1.788p/th).

National Grid is able to drop the charge as they expect more gas to enter Britain to meet increased demand from gas-fired power stations. This allows the operator to recoup more revenue from capacity charges.

When North Sea shippers bring gas into the Bacton terminal, they can avoid the commodity charge by using the short-haul service and delivering gas to Belgium via the bi-directional Interconnector pipe, which runs from Bacton to Zeebrugge.

Under short haul, shippers can profitably export gas to Belgium when the Belgian Zeebrugge-British NBP spread, or basis, is above -1.9p/th – the current commodity charge. A lower basis drives volumes to Bacton.

But from 1 October, a basis of -1.788p/th or lower will drive deliveries to Britain. thomas.rodgers@icis.com