The U.K. energy market must move away from its reliance on spot liquefied natural gas cargoes and negotiate long-term supply contracts to maintain future security of supply, a senior executive at Centrica PLC said Thursday.
"If the U.K. were the default location [for LNG] then other markets would have to pay a premium to divert gas from the U.K.," said head of gas market modeling at Centrica Tony Reed, speaking at a National Grid conference.
Without long-term contracts the U.K. has to pay premium to attract spot market cargoes, Reed said, and the spot market remains "highly volatile, liquidity is unpredictable."
He added that the company had already agreed longer-term supply deals worked out based on National Balancing Point pricing with StatoilHydro ASA (STO) and another gas provider.