KASSEL – New groupings of German businesses are pressing on with their efforts to gain control of significant shares of the lucrative British energy market. Great Britain, being regarded as an ally of the USA and hence as a potential obstacle to Germany’s efforts to achieve dominance, is becoming dependent on foreign producers for its energy supplies and will thus become more susceptible to politically motivated pressure.
Supplies of gas from the British waters in the North Sea made Great Britain self-sufficient in the 1970s. Stocks have since been in decline, and the country’s ability to meet its own needs will decrease dramatically over the coming years, even though the need for gas is on the increase, driven primarily by the use of natural gas in power stations. Even now, during the winter months, Great Britain is required to meet its need for gas in part by supplies from abroad; from the middle of the decade, the country will be dependent on fluctuating gas imports all year round.
Competition
Ever since ‘liberalisation’ in 1998, the British natural gas market – far and away the largest in Europe – has been marked by fierce competition. Although Centrica, which grew out of the former monopoly British Gas, still enjoys 62% of the market in gas, foreign groups such as Gaz de France and the Dutch Gasunie are increasingly contending for a share of the market. Ruhrgas, the leading German gas provider, will, for example, take over the supply of gas to Powergen, the largest British power supplier.
Alliances
Last year, Wingas, a joint venture between the Russian company Gazprom, the largest natural gas producer in the world, and the BASF subsidiary Wintershall, concluded a framework contract with Gazprom’s offshoot Gazexport a contract to market Russian natural gas in Belgium and Great Britain and announced its intention of itself becoming active in the UK. Efforts at expansion are also being helped by the EU’s ‘Growth Initiative’, for which Berlin successfully fought; this is an aid programme totalling billions of euros and intended to fund a natural gas pipeline connecting Germany with Russia in the East and Great Britain in the West.1)
A joint venture has just been concluded, involving as equal partners the Norwegian industrial group Norsk Hydro and Wingas, with the intention of securing the German supplier a substantial share of the British market. As Wingas’s managing director, Dr. Rainer Seele, explained, ‘We are strongly represented in the natural gas market on the Continent, and Norsk Hydro holds large quantities of gas in the British Isles’. Norway wants to massively expand its exports of natural gas to the UK; Norsk Hydro, second only to Statoil among Norway’s oil and gas producers, is currently engaged in opening up a natural gas field in the Norwegian waters of the North Sea, which is to be linked to the British mainland by a new pipeline and is intended, in the short term, to meet up to 20% of Great Britain’s gas requirements.
1) see also: subsidies.
see also: ‘Wingas: Expansion in Belgium and the UK’ and ‘In good hands’.
Sources:
‘Wingas-Joint Venture will britischen Markt erobern’; Handelsblatt, 11 December 2003;
‘Wingas gründet Gashändler mit Norsk Hydro’; Financial Times Deutschland 11 December 2003;
Hydro and WINGAS set up joint venture: http://www.hydro.com
