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Natural Gas

Question for Department for Energy and Climate Change

UIN 207362, tabled on 29 August 2014

To ask the Secretary of State for Energy and Climate Change, what assessment he has made of the effect on the UK economy of the supply of gas from Russia to Europe being cut off.

Answered on

10 September 2014

The direct risk to the UK’s own energy supply is low as we currently source less than 1% of our gas from Russia and have a well-functioning gas market able to access a diverse range of supplies from domestic producers, Norway, LNG and storage, as well as the Continent. There would, nevertheless, be potential indirect impacts if Europe as a whole stopped receiving Russian gas. With the System Operator (National Grid) we have assessed, and continue to assess, the impacts of the complete cessation of the gas supply from Russia to Europe on the UK and will include the latest analysis as part of the annual DECC/Ofgem Statutory Security of Supply Report.

The impact on the UK economy would depend on the length and type of disruption. As many external bodies have noted, the impact on prices would depend upon the length of disruption, the costs of LNG imports and storage levels in the EU.

DECC commissioned a 2011 report from Oxford Economics looking at the effect of fossil fuel price shocks on the UK economy. DECC uses this report to inform its general understanding of the impacts of gas price shocks. This paper can be found on the HMG website:

https://www.gov.uk/government/publications/fossil-fuel-price-shocks-and-a-low-carbon-economy.

Answered by

Department for Energy and Climate Change