United Kingdom gas and LNG markets long-term outlook 2019

The UK's diminishing domestic production resulted in piped imports rising to record highs of 43 bcm in 2018. In 2019 we have seen a rapid increase in LNG supply up to 25 bcm as global oversupply resulted in more deliveries to the UK. The closure of Rough storage, has significantly increased reliance on imports at key times. The NBP price has fallen significantly during 2019. We forecast that the monthly average will be $4.8/mmbtu, compared to $8.0/mmbtu in 2018, as the long- expected wave of new LNG supply continues to hit the European market. Brexit has been delayed until the end of October 2019 at the earliest, so its impact has yet to be felt in the UK gas market. However, we believe its initial impact will be limited. The UK’s Committee on Climate Change, recommends a new emissions target for the UK: net-zero greenhouse gases by 2050. The report urges government to legislate for this to happen as soon as possible via a new Climate Change Act.