Feeling the pressure from natural gas

The European directive establishing a competitive internal natural gas market will be the most important, though not the only, factor in advancing the rapid and far reaching changes which Europe's natural gas sector is undergoing. The knock-on effects which these changes will have on the chemical industry are examined. The benefits of opening up the gas market will be more consumer choice and a more efficient and globally competitive EU gas industry. But for the chemical industry it raises strategic issues surrounding gas procurement such as price risks and security of supply. These are especially acute where gas is used not just as a fuel but also as a feedstock. As the electricity market is progressively deregulated, independent power generation using combined heat and power could be an attractive choice in the chemical industry with the possibility of selling surplus electricity on the spot market. Other changes in the gas sector could arise from the environmental targets agreed in Kyoto which are likely to lead to an increase in fuel taxation, and the development of a spot market in gas as the link between oil and gas prices becomes less direct. (UK)