Gas Tariffs Code (Amendment) (EU Exit) Regulations 2019

Lord Howell of Guildford Excerpts

Thursday 26th September 2019 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, the noble Lord, Lord Teverson, has raised some very penetrating and expert questions—as one would expect from him—and I will briefly pursue two of them. He referred to our connectors. Of course, most of our interconnectors are for electricity, but there are some important gas connectors. These are part of our gas import scene, which is vastly important, given that domestic onshore gas is not really happening and offshore gas is still not at the level that it was. Post Brexit, will the auction rules on the granting of contracts for developing gas supplies and turbines apply equally to gas that originates inside the EU and comes to us when we are outside it? Remaining in the internal energy market of the European Union would be fine, but it is undergoing considerable stresses and strains—including, notably, the ever-growing appetite of Germany for imported gas, particularly Russian gas, from both existing pipelines and the new Nord Stream, which seems to be going ahead although the Americans oppose it. Will the Minister show a little more of the Government’s hand and their attitude to the internal energy market, which is not working well—it is causing considerable difficulties in eastern and central Europe—and requires a steady hand to ensure that it works for us if we remain in it?

[Lord Liddle (Lab)]

Building on the interventions by the noble Lords, Lord Teverson and Lord Howell, I have a question. The Minister will be aware that gas networks and cross-border supplies are a matter of high politics and security, as well as energy policy. The Russians, in their disputes with Ukraine, frequently threaten to interfere with gas supplies crossing Ukraine. When originally proposed, the new German pipeline that the noble Lord, Lord Howell, referred to, which connects Germany and Russia, was described by Poland and the Baltic states as the economic equivalent of the Ribbentrop-Molotov pact, in that it exposed them and made them vulnerable to discrimination by Russia, to put political pressure on their democracies.

As I understand it, if there was a such a crisis involving Russian gas supplies, we would be protected by the principle of non-discrimination, because we are members of the internal market. In other words, if there was pressure on gas supplies on the continent it would not be legal for suppliers on the continent to turn off the taps to Britain. What will the situation be when we leave the EU: will we have those kinds of legal protections, and will the Minister enlighten us as to what they are?

--- Later in debate ---

[Lord Duncan of Springbank]

Let me be very specific: it is the policy of this Government to remain part of the internal energy market. The policy has not changed—for the same reasons, in truth, that applied before. They still apply today.

I will write with a specific answer to the question about petroleum reserves, which might be helpful. It is important to stress that it is government policy to ensure that the reserves are adequate for every eventuality. They must be stress tested necessarily through the challenges that Brexit represents. It is not our ambition to in any way put at risk what those reserves mean for the functioning of the wider energy situation in the United Kingdom. I also stress that we are—primarily in gas, certainly—dependent on imports from outwith the EU as a whole, although not primarily from Russia.

[Lord Howell of Guildford]

We are talking about gas and not oil reserves. That means gas storage. As we know, our own gas storage system is not all that reliable and has within recent memory gone down quite severely, with devastating effects on short-term gas prices. Are we planning any further storage projects of the kind we have had in the past, or to replace the Rough storage facility in the North Sea as a result of moving into the Brexit situation?

[Lord Duncan of Springbank]

I do not believe that the Brexit situation changes the dynamic of how we approach the wider question of gas storage. We need to make sure that the storage is adequate for any—in fact, every—eventuality. Brexit itself has not changed the policy on that. It will be our intention to ensure that it is not only adequate but able to anticipate whatever challenges come ahead. We will remain committed to that end.