(Adds Ofgem comment, detail.)
LONDON -(Dow Jones)- The U.K. has sufficient supplies of natural gas to meet demand for the coming winter months, partly as a result of increased liquefied natural gas imports, leading industry figures said Wednesday.
Speaking at U.K. regulator Ofgem's annual seminar on National Grid's Winter Outlook report here, EDF Energy head of market and analysis Cathy McClay described the U.K supply position as "comfortable."
This year's report, published Oct. 1, shows U.K gas and electricity demand is expected to be lower than last winter as the recession continues to depress energy consumption.
"The supply overhang in the global LNG market will take time to clear due to a combination of the economic downturn and new liquefaction capacity," McClay said.
Ofgem's Kersti Berge supported this view, saying the forward curve for quarterly U.K. gas prices indicates a more muted seasonal pattern than in previous years, bringing less price volatility.
She outlined a number of potential risks for prices as major economies recover from recession but said the main threat to maintaining supplies in the next few months would be risk of "severe winter [weather]."
A key driver for price direction in the coming year will be the decoupling of oil and gas prices, said McClay. Prior to March 2009 coal, gas and oil prices were correlated relatively strongly, but gas and oil prices have since diverged sharply, partly due to a structural change in the gas market.
There has been significant expansion of LNG infrastructure in 2009 with three import facilities now in commercial operation. U.K. storage facilities have also filled in record time and currently stand at a record high of 4.4 billion cubic meters.
Analysts from energy consultancy Wood MacKenzie said key ongoing concerns for the U.K. gas market will be the pace of Asian demand recovery and uncertainty over how much LNG will eventually arrive on U.K. shores. The latter will depend on U.S. gas futures prices relative to the U.K., and likely be driven by shale gas supplies.
-By Angela Henshall, Dow Jones Newswires; +44 (0)20 7842 9285; angela.henshall@dowjones.com