The dramatic decline of oil prices over the past couple of years has led to the re-evaluation of investments into UK North Sea oil and gas production.
Potentially untapped resources that remain on the British continental shelf are in areas of more challenging geographies and environments.
Even before the commodity crash, many were anticipating a dramatic decline in UK gas production post-2020.
At present, Britain still produces around 50% of its natural gas demand, but this could fall as low as 10% in the next decade, unless a dramatic rise in the oil price incentivises an investment spree.
So who picks up the slack?
A lot has been made of the potential LNG glut hitting Europe in the coming months, with the ramp-up of US LNG in particular seen as a potential game-changer.
Post-2020, the overhang could become more acute and Britain, with its LNG capacity underutilised even in the peak import year of 2010, could be a likely destination.
Talking to representatives of a major Japanese utility this week, the expectation is that by 2020 most of the country’s abundant nuclear power stations will be back online.
A lot of suppliers in the country have overbought LNG, in case the anti-nuclear public sentiment leads to a cut in nuclear capacity.
Assuming it doesn’t, many utilities are considering the possibility of diverting to Europe, especially given the country has virtually no storage capacity to stockpile excess volumes.
But it’s not just the Japanese – in South Korea and China suppliers are also said to be long on LNG, with slower economic growth the key problem.
Four years is a long time in politics and economics, but a short time to develop a gas field. Britain need not worry, as the volume of LNG on the spot market by then could make 2016 look insignificant. ben.samuel@icis.com