Government to assess commercial support for gas capacity retention

The UK government has signalled its intention to investigate commercial support schemes designed to preserve existing gas infrastructure capacity. This move follows the publication of an interim report on the consultation regarding the gas system in transition. The Department for Energy Security and Net Zero outlined three primary challenges in November last year, citing declining North Sea production, concerns over consumer bill affordability, and the decommissioning of networks. The consultation sought views on whether state intervention was necessary to secure gas priorities, specifically ensuring sufficient infrastructure capacity to handle a broad range of demand. This includes preparing for low-probability, high-stress scenarios as domestic supplies diminish and guaranteeing system resilience against unplanned outages. The department also requested input on establishing commercial models that enable infrastructure to operate effectively.

The interim report noted that respondents broadly agreed with these three priorities. Most participants believed the market would not achieve these objectives without government intervention. However, while a long-term commercial model involving financial or revenue support may be required, there was no consensus on the specific form such support should take. In response, the government will consider which scheme is most likely to benefit Great Britain’s gas storage operators and two bi-directional gas interconnectors. These assets are currently experiencing long-term declines in profit margins and forward bookings. Other barriers identified during the consultation included difficulties for market entrants in progressing beyond early development stages. These challenges were attributed to complex regulatory requirements, grid connection constraints, and ongoing investment uncertainty.

Energy Minister Michael Shanks stated that the government intends to ease regulatory barriers to allow the market the best chance of securing the system. He confirmed plans to explore commercial support schemes to retain current gas capacity. Shanks also indicated an intention to fully consider the support necessary for developing additional import or flexibility capacity. This could involve a floating storage and regasification unit or a strategic gas storage reserve. While deferring detailed decisions until the full release of consultation results, Shanks acknowledged that the costs of implementing a strategic gas storage reserve or an FSRU would likely amount to billions of pounds over a 25-year timeline. The consultation ran from 26 November 2025 to 18 February 2026 and received 115 responses. A full response to the consultation is expected to be published in due course.

In related developments, decisions on the Rosebank and Jackdaw oil and gas developments are expected to be deferred until the autumn. The consultation period for Rosebank, the UK’s largest untapped oilfield, ended on Monday, one week after the window for public input on Jackdaw closed. The Faroes Energy Industry Group described a potential rejection as a goodbye to an oil and gas future in the Atlantic Margin. Meanwhile, the department maintained that the North Sea remains a vital national asset, supporting jobs, growth, and the UK’s energy security.