Do you know what prices the contracts for imported gas from Ormen Lange and LNG into Milford Haven have been struck at? We used to have some really long term (and low priced) contracts for N Sea gas supplies but I'd assume we are having to move to world market rates for both Norwegian and LNG imports. If / when US gets their LNG infrastructure in place we'll face some hefty competition for supplies hence higher prices.
I dont know unfortunately, I will try and find out!
I suspect you are correct in that we will have to pay market prices. I think the LNG is under a 25 year contract , so I presume although we pay the market rate, it cannot be hijacked by the US.
http://www.hydrocarbons-technology.com/ ... laffanref/
From the link
A fleet of 16 to 18 LNG carriers will be constructed to support shipping of the lean LNG to the dedicated UK terminal
A fleet of 16 to 18 LNG carriers will be constructed to support shipping of the lean LNG to the dedicated UK terminal. The orders for new LNG tankers were placed in mid-November 2004.
Three South Korean shipyards were commissioned to build eight state-of-the-art tankers that will be 50% larger than conventional LNG ships. Daewoo Shipbuilding and Marine Engineering will produce four 210,000m? tankers at a cost of around $875 million, while Hyundai Heavy Industries and Samsung Heavy Industries took orders estimated at $450 million to build two vessels each.
The remaining eight LNG transport ships will be provided under a series of 25-year time charters with two consortiums, ProNav-Commerzbank-Qatar Gas Transport Company and Overseas Shipholding Group-Anglo Eastern-Qatar Gas Transport Company. These state-of-the-art vessels will range in size from 209,000m? to 216,000m? and will be on average 50% larger than conventional LNG ships, thus making transportation more economical.
As for this:
I'm strugging to figure out how UK is going to afford imports of both NG and oil on a massive scale as N Sea continues on the downslope; after all most of our manufacturing base and some services have moved offshore hence we don't appear to have that much sound overseas earnings with which to offset these increasing import costs for energy.
I think to get in perspective, France , Spain ,Italy , Germany etc all use more oil than the UK and import the whole lot!! Its a similiar story for natural gas , we are a bigger consumer , but we will not be importing the same proportions as these countries for another 15 years ( 75%+)
I think there are still implications though. The trade deficit would double if we had to import 100% right now.
The implication of this would be higher interest rates to prevent the pound from collapsing. Unfortunately , higher interest rates will without a doubt cause a big recession as we are already on the edge of one at 4.5%.
If rates go 6-8%+, then you will see the housing market crash and millions with negative equity.
Unemployment would rise as consumer spending was squeezed by inflation (from energy prices) and interest rate rises.
So a recession is inevitable.
Its not all bad though, there are some self correcting mechanisms at work, these could in theory prevent total economic collapse:
1) A higher trade deficit would weaken the pound. Imports would become more expensive and so demand would fall. A weaker pound also makes UK good cheaper to foreign buyers, so this could correct the deficit.
2) Higher energy Prices passed onto factory gate prices could be offset by a weaker pound. It also could be argued that all nations have to pay the higher prices so the net competitive difference is negated.
3) Housing market correction would reduce reduce new builds and leave a lot of property empty. There is your imported energy "demand destruction". This would help correct the deficit, but people would pay the price through having to live in with family (ie occupancy rates would increase again per household, ie from 2 to 3 like it used to be)
4) Higher Energy prices will make imports from the far east less competitve as they have the extra cost of moving the goods 8000 miles.
5) A recession in the western world (we will all face it at the same time IMO) would reduce drastically the demand for Chinese/Asian goods. This would reduce there demand for energy. This would restrict how high prices could go.
6) Higher Unemployment causes demand destruction of imported goods first (as key priority goods like food etc are produced at home). This again will correct the deficit.
7) Higher unemployment should self correct as wages would fall(as people become more competitive for jobs). This would improve the UK's export prices.
None of the above is very pleasant, but it is just examples of how perhaps that even though standards of living will slip the economy will still exist and we wont have a total collapse.
Remember the early 80's recession caused energy demand to fall 14% over 4 years and unemployment/trade deficits corrected over time.
We dont have cheap oil to help us this time, that is perhaps why the sacrifice will be wages and our standard of living?
TB
).
). To do that would involve massive changes in the way we do things - much less heavy industry, organic farming, much more localisation, trains, canals, etc.. The question is whether anyone has even a vaguely plausible strategy for going down this route. You can't just say "Stick up loads of wind turbines," "Only organic farming," etc., you have to say how we'll get from here to there. So, I wondered if anyone (and university energy departments might be good candidates) had scenarios worked out, which could be presented as realistic alternatives.