(Repeats to fix link to analysis in para 8)
BARCELONA Dec 2 Centrica (CNA.L) is running all
its gas fired power plants at full capacity this winter to lap
up a deluge of cheap gas in Britain amid a slump in global
demand, an executive from Britain's biggest gas-fired power
generator said on Wednesday.
Coal has in the past been favoured by power generators in
Britain for round-the-clock power generation in winter because
gas prices normally rise markedly as heating demand surges in
the residential sector.
But two new LNG import terminals that opened in Wales
earlier this year, along with an older facility near London that
Centrica has import capacity at, have seen some 87 LNG cargoes
delivered in 2009 as producers unload their fuel in one of the
world's few accessible markets, driving down UK spot prices to
around half where they were last December.
"As gas prices have fallen we have switched all our gas
fired power plants on, which we weren't expecting to do this
time last year or certainly two years ago, which is one of the
methods we have of dealing with all the LNG that arrives in the
UK," Simon Bonini, director of LNG at Britain's biggest
residential gas supplier told the CWC World LNG Summit in
"Instead of coal being the baseload supplier of power in the
UK it's actually gas right now."
Gas demand surges in winter because it is used to heat two
thirds of Britain's homes. This usually makes it relatively
expensive for the next biggest users of gas, power generators,
who typically switch to burning coal before switching back to
gas generation during spring when gas is cheaper.
Centrica does not have any coal fired power plants, so
usually only supplies power from its gas plants when prices are
high at peak times to day in winter, but Bonini told Reuters
Britain's biggest residential gas supplier said the company may
continue to run its plants flat out around the clock all winter.
Reuters predicted in an analysis in July that weak gas
prices and sagging demand could see gas supply most of Britain's
electricity well into winter, sidelining coal plants and cutting
Britain's carbon emissions as a welcome side effect.
European demand for gas is expected to fall by about 10
percent in 2009. The United States has largely lost interest in
imported LNG because of falling costs for its own production,
leaving LNG suppliers that have invested billions in new
facilities aimed at supplying North America scrambling for a
market to sell it in.
"We see the UK as the destination of choice," Bonini said.
Continental European buyers already struggling to take
delivery of all the gas they are obliged to take from big
pipeline suppliers like Russia on long-term oil, linked
contracts have been less able to take advantage of the plentiful
supply of super-cooled gas on the world market than Britain, the
biggest and most liquid spot market outside the United States.
(Reporting by Daniel Fineren)
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