Energy regulator Ofgem is carrying out an inquiry into concerns the UK gas market may be failing consumers and undermining security of supply by exporting gas at times of peak demand.
Huge pipes connecting the UK and its North Sea gas fields with Holland and Belgium should help to moderate prices in both regions by allowing imports when the gas price spikes.
But an analysis by Energydesk - reported in The Guardian - has found that gas was frequently exported from the UK, despite the price being lower in Europe.
Our research suggests that, on some occasions, imports from Qatar and Belgium may also be more expensive than gas exports from the North Sea.
That analysis - along with further information we have received, has been passed to Ofgem.
An Ofgem statement said: “We have discussed the research Greenpeace has carried out with them and are considering whether it warrants further action along with the other evidence we have already gathered.”
“Ofgem takes any allegations of market manipulation very seriously and we would urge parties to come to us with any information or evidence they may have.”
UK prices stay high
Price and volume data for the gas market is hard to obtain and full data is not publicly available - making any analysis difficult.
However our research suggests that during 2012 gas on the main UK-Belgium pipeline, the only means by which UK gas may be exported, flowed in the wrong direction more than one fifth of the time - especially during the more expensive winter months.
That means gas was exported even when the price in the UK was higher than Europe.
An analysis of trade data provided by HMRC (best if downloaded) also shows that the average price of imported gas from Qatar was higher than the average price of gas exported to Europe during October and December 2011.
It suggests consumers are getting bad value - though the anomaly may be down to daily price volatility.
Our research supports Ofgem’s own analysis which found that on the pipeline between the UK and Holland gas flowed in the wrong direction 28% of the time between January 2009 and June 2012.
The full capacity to import gas from Europe was never used.
Cold snap exports
The Ofgem call for evidence notes that when this happens "security of supply is undermined, since it may result in additional gas being exported from a market facing a gas shortage".
The situation was particularly serious in February 2012 when a cold snap in the UK saw prices reach almost double their normal level.
The situation was made worse when Centrica’s giant Morecombe gas field closed and imports from Qatar also plummeted.
Yet despite the price spike, and the fact the UK price was higher than that in Belgium exports across the UK-Belgium pipeline actually increased by over 40%.
Between March 2011 and March 2012 UK energy bills rose by £150, with £100 of the rise due to the higher wholesale cost of electricity and gas.
Dutch case
A second pipeline between the UK and The Netherlands - which can only import gas - is also failing to respond to price signals, according to Ofgem.
HMRC data suggests the pipeline failed to increase imports during the February 2012 price spike. Indeed, Ofgem discovered that no matter how high the price the pipeline has never seen full use.
In a reversal of the trend between the UK and Belgium, Ofgem found the UK frequently imported gas from The Netherlands even when the price was lower than on the continent - as was usually the case during the summer.
But those imports aren’t necessarily good value for the UK consumer.
Analysis of HMRC data shows that gas imported from the Netherlands were almost always more expensive than alternative import sources from the Norwegian North Sea or Qatar.
Indeed on 13 months since December 2010 imports from The Netherlands were more expensive than exports to the next door market of Belgium - suggesting possible trading of gas across the pipelines, increasing prices.
Commodity charges
The explanation for the failure of the so-called interconnectors to respond to price signals is disputed.
The operator of the link between the UK and Belgium - IUK - has submitted evidence to Ofgem questioning their analysis.
They claimed that using different data on the price of gas in the UK shows fewer incidents of gas flowing the wrong way.
They also claimed that so-called commodity charges charged by the National Grid to bring North Sea gas into the UK are driving supplies to Europe.
Their evidence to Ofgem suggests those charges have recently increased by 29% meaing there is an active incentive to take gas from the UK to Belgium.
Ofgem is investigating the claims - but it’s analysis suggests they do not entirely explain the behaviour of the pipeline as gas often flows into Belgium even with large price differences.
This is the second time Ofgem have investigated the interconnectors. In 2006 a report was
published analysing some extraordinarily high gas price spikes in 2003 and 2005.
The interconnector was implicated but ultimately found to be operating as expected and Ofgem maintained a ‘watching brief’.
