Market outlook

BBL Company was established on 9 July 2004 in order to design, construct, operate and exploit the BBL pipeline for the transmission of natural gas from Balgzand in the Netherlands to Bacton in the United Kingdom. Since the first gas transport through the BBL to the UK on 1 December 2006 our business environment, the North-West European gas market, has undergone essential changes with the effect of increasing uncertainty with regards to supply and demand but of course also regulatory changes and obligations.

Increasing Uncertainty and import dependency

The UK is one of the largest gas consuming markets in Europe with a gas demand of 77 Bcm in 2013 and shows great dependency on natural gas. However,  the outlook on gas demand in the UK is uncertain; various future scenarios (FES, CERA, TYNDP)  predict a range between 770 and 940 TWh for gas demand in 2026. Domestic production has fallen rapidly in the UK which causes an increase in demand for gas imports. Having peaked at 119 Bcm in 2000, indigenous production has been long in decline, moving down to 38 Bcm in 2013. While the UK used to be self-sufficient it required about 50% of gas being imported in 2013, with increasing import dependency expected to increase any further in the time to come.

Figure IHS CERA depiction of UK production versus Import.
Figure IHS CERA depiction of UK production versus Import.

The relevant question is how much gas will need to be coming from the continent. This will give us an indication on the relevance of the BBL pipeline for the UK. Scenarios vary largely in their expected gas supply from the continent expressing their uncertainty on the battle of continental gas versus LNG.

Promising outlook future role BBL

While future energy outlooks predict decreasing UK peak supply with  peak demand increasing any further we see a  promising outlook for the role of BBL now and in the future. BBL will not only be providing the UK with stable volumes but we expect the BBL to be increasingly  supporting the UK in their need for daily (winter) peak demand due to decreasing indigenous production in the UK as well as due to the intermittency of renewable resources which strengthens the need to resort gas as a back up.