How Does the Gas Industry Work in Great Britain?

Written by Valda Energy

Energy

05/07/2024

The gas industry plays a vital role in powering the UK economy and keeping British companies open for business. But do you know exactly how gas gets from the source to the supplier to you?  

Where does our gas come from? 

Until around 10 years ago, Great Britain was mostly self-sufficient in gas and received natural gas from the North and Irish Sea. Nowadays, we are investing more in renewable sources to create a more sustainable future. Much of our gas supply now comes from Norway and the USA. In 2022, Norway accounted for 55% of UK gas imports.   

How is gas distributed? 

Gas from Norway is imported to the UK. Some of our gas also comes through pipes under the English Channel from Belgium and the Netherlands. We also get it in a liquid state, known as Liquified Natural Gas (LNG), which is shipped from places such as Qatar and the USA. 

For gas produced in the UK, the extraction is carefully monitored and governed by the North Sea Transition Authority (NSTA), which controls the extraction as well as the physical moving of gas to the market.  

The gas is then purchased by an OFGEM licenced gas shipper, who then pays a transporter to move the gas across the distribution network, from beach terminals such as the Bacton Gas Terminal to the consumer through a network of approximately 187,000 miles of pipes.  

The National Grid acts as both the system operator and transmission operator for Great Britain to balance supply and demand.  

Where does my energy supplier come in? 

Your OFGEM licenced energy supplier will purchase gas from the shipper and sell it to customers. 

Since the 1990s, when the UK energy market was opened to competition, customers have been able to pick suppliers based on their needs. This has led to a rise in competition in the market and more competitive rates.  

In most cases, energy suppliers are the single point of contact for energy consumers. As a result, they may be required to pass on network maintenance and operation costs that are beyond their control. This charge is often included in your standing charge, which is passed back through the gas industry's supply chain.