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UK produces a fifth more gas as Europe scrambles to end reliance on Russia

vladimir putin - Mikhail Metzel /Pool Sputnik Kremlin
vladimir putin - Mikhail Metzel /Pool Sputnik Kremlin

The UK is producing almost a fifth more gas than last year, boosting efforts to wean the country and its European neighbours off Russian energy.  

Production of gas in Norway has also climbed 10pc year-on-year, according to Bloomberg data analysed by Bank of America. North Sea drillers in British waters have produced 17pc more gas so far in 2022 than in the same period last year.

UK production in early June is running at almost 100m cubic metres (mcm) per day, after falling to 40mcm last summer.

Bank of America analysts said UK production had recovered from a “horrific” 2021 following a collapse in prices one year earlier and tougher environmental rules.

Falls in European and UK production last year were one driver of the rally in gas prices starting last summer that has sent household energy bills to record prices.

Russia’s war on Ukraine has since increased the pressure, as countries scramble to cut their reliance on Russia and look for replacements.

Politicians in the UK have been trying to get North Sea drillers to increase production, despite ongoing efforts to cut carbon emissions.

The UK gets little gas directly from Russia but there are concerns about a significant knock-on effect if Russia cuts off supplies to Europe this winter in retaliation over sanctions.

The EU has typically sourced about 40pc of its gas from Russia but wants to cut that by two-thirds this year.

It has faced widespread criticism that purchases of oil and gas from Russia are helping to fund the Kremlin's war on Ukraine.

UK prices typically closely track those on the continent - although have been lower in recent weeks amid an increase in shipments of gas to the UK from around the world.

Bank of America analysts said European natural gas currently “has the dubious honour of being the most expensive source of energy in the world.”

They said storage levels are normalising thanks to increased supplies which could help bring prices down, but warned:  “Energy security of supply remains a major risk and should support prices.”

Summer weakness in European gas prices was “unlikely to last,” they added, warning of “lasting damage to the European economy.”