Less than a month after the first part of Britain's residential gas market opened to competitive gas supply, one major gas supply company has announced a split and another new supplier has taken shape.
Half a million homes in Southwest England were given a choice of gas supplier for the first time in late April, breaking the long monopoly of British Gas plc (OGJ, May 6, p. 50).
The residential sector is the last gas supply market to open to competition, after the British government liberalized industrial gas supplies in March 1992 and commercial supplies the following August.
There was a rush of companies to enter the new market as it opened, but there has been an expectation of a shakeout with major gas producers and electric power companies becoming the main players (OGJ, July 24, 1995, p. 12).
Alliance split
One of the biggest companies in the industrial and commercial sector has been Alliance Gas Ltd., a joint venture of BP Exploration Operating Co. Ltd. 50%, Statoil (U.K.) Ltd. 40%, and Norsk Hydro AS 10%.
Alliance claims to supply 12% of the industrial and commercial market, currently providing some 3.2 billion cu m/year of gas to 24,000 sites throughout the U.K.
Now the partners have decided to split the company, with BP and Stat oil dividing the customer base between them and Hydro pulling out of U.K. gas supply.
Two new U.K. gas marketing firms will be formed, becoming operational from Aug. 1: Alliance Gas will be owned 100% by Statoil, while BP Gas will be owned outright by BP.
An Alliance official said current customers will be split between the new companies by volume and will not initially be given a choice of which company they prefer to join.
Alliance is among a number of major industrial and commercial sector players that opted out of the residential pilot scheme.
Of the split of Alliance, BP said, "Both companies see the developing gas market as having considerable potential, for example the growing new market in spot gas and impending opportunities to trade gas through the Interconnector pipeline to (continental) Europe.
"In order to meet these challenges in the best way, BP wishes to achieve greater synergy with its other energy businesses by bringing its gas marketing activities fully under the BP brand."
Statoil's version of events was, "The joint venture has brought us to the top of the independent gas supply market. Like BP, we believe the time is right to pursue our independent marketing and business strategies.
"Statoil, already with a major presence in Europe, is intent on developing its presence in the U.K. and Ireland. Alliance Gas provides the opportunity for Statoil U.K. to integrate its gas activities."
A Hydro official said the company pulled out of the venture because it saw nothing to gain in continuing in U.K. gas supplies. One factor was said to be that Norwegian gas cannot be sold in the U.K. except under existing supply contracts.
Beacon Gas
Amoco (U.K.) Exploration Co. and regional electricity utility Seeboard plc of Crawley, U.K., formed a new joint venture, Beacon Gas, to provide gas to homes in Southeast England.
Seeboard said, "Beacon Gas will enter the market in the second half of 1996 and is expected to be the leading new competitor in the southeast residential gas market when it opens to competition early next year."
The electrical power firm supplies two million customers in the region with electric power and has supplied natural gas to industrial and commercial users since the market first opened.
Amoco operates a number of gas fields in the southern North Sea. It also operates two North Sea gas pipeline systems and two onshore terminals.
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