UK Gas Prices May Benefit from Global Shale Developments, says Navigant Report

UK gas prices could fall as much as a quarter according to a report by Navigant Consulting published on Wednesday. The analysis was commissioned by the Department of Energy and Climate Change and released on the website of the government.

“Our base case assumes that European unconventional gas production is limited in the next twenty years. As a result we would expect UK gas prices to fall slightly in the near future, following the oil price, and then to be supported by US LNG imports as they come on line from 2016 onwards,” reads the report.

It predicts UK prices falling to around 60p/therm in 2020, following then US gas prices, which are expected then to grow over the following 10 years.

The report presents three different scenarios. The predicted prices vary from 52.8 to 73.4 pence/therm in 2020 and from 49.7 to 81.1 pence/therm in 2030.

“In the second half of the period under review, the main factor determining the gas price in our view will be the extent to which US LNG exports and indigenous European unconventional gas production are able to disrupt the current oil price indexed European gas markets,” explains the report.