Mr Moffatt said he warned that closing Rough was a dangerous decision in key meetings with British officials but the Department for Business, Energy and Industrial Strategy dug in its heels. “They refused to listen and kept saying that we had diversity of supply: they misunderstood the responsiveness of liquefied natural gas to short-term shocks,” he said.
“We are now extremely vulnerable and I’m afraid the situation is going to get worse. Prices could go through the roof. You can’t rely on the interconnectors. Contracts can be rescinded and suppliers can declare force majeure: end of story. The EU made this very clear during the negotiations over Brexit,” Mr Moffatt added.
“We could easily see a three-day working week. The Government has been playing dangerous games with the grid and has allowed a situation to develop that is outside their control. It’s terribly depressing.”
Gareth Stace, director-general of UK Steel, said power prices had already reached “extortionate” levels and was forcing a partial suspension of operations across the sector. “Even with the global steel market as buoyant as it is, these eye-watering prices are making it impossible to profitably make steel at certain times of the day and night. The situation gets more urgent each and every day,” he said.
Europe is facing its own problems. The Norwegian fertiliser group Yara is curtailing output of ammonia, which relies on gas as a feedstock. Richard Ewing from ICIS said the dominoes are likely to fall across the Continent as far as Ukraine, with producers switching to the US wherever possible. Abundant shale gas in Texas, Pennsylvania, and the Dakotas means that locally consumed US gas costs a quarter of European levels.
A surge in European carbon prices to €60 a tonne – shadowed in the UK with an extra £18 premium – has compounded the shock and accounts for a fifth of the rise in electricity costs. This is now leading to open political revolt in Spain, Poland and other EU states. The European Steel Association said last week that the bloc risks being priced out of the competitive global market.
Mr Large said it is becoming a question of manufacturing survival in this country. “The UK has the most expensive industrial energy in Europe. We are running the very serious risk of meeting our carbon targets by deindustrialising the British economy,” he said.
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