RNS No 7695k
OFGAS 
10th September 1998



          AUCTION AGREEMENT BRINGS COMPETITION TO GAS STORAGE

The storage of gas will change from a monopoly to a competitive business
following an agreement today between Ofgas and BG plc on the auction of BG
Storage's natural gas storage capacity.  The auctioning of storage rights in the
Rough and Hornsea facilities will be completed by 1 May next year.

Under the auction arrangements, purchasers will be able to buy capacity rights
for up to 5 years, but no bidder or associated group of bidders will be able to
buy more than 20% of capacity in the auctions.

Today's agreement means that storage prices from Rough and Hornsea will no
longer be regulated by Ofgas.  BG Storage's five Liquefied Natural Gas (LNG)
storage facilities are not part of the auction process, and will continue to be
regulated by Ofgas.  These prices will be fixed at current levels for the
1999/2000 storage year.

"This is good news for all gas users," said Clare Spottiswoode, Director General
of Gas Supply. "Storage capacity is used by the industry to smooth out peak
demand.  These innovative proposals will bring competition and deregulation to
yet another part of the gas supply chain, with further benefits to customers."

Ms Spottiswoode confirmed that, so long as the agreement was implemented in
full, it was not her intention to refer the storage issue to the Monopolies and
Mergers Commission.


Notes to Editors

BG plc, which includes Transco, the gas pipeline company, stores natural gas in
two major areas - Rough, a depleted gas field under the North Sea, and in
underground salt cavities at Hornsea, in north-east England.  At present all of
BC's storage facilities are subject to a separate price control by Ofgas.

Copies of the main points of the agreement are available from the Ofgas Press
Office.
 


Press enquiries:         Chris Webb         0171 932 1608
                         Andy Whateley      0171 932 1668
                         Out of hours       0374 728971
                         Web Site           http://www.ofgas.gov.uk/

                         Ofgas has an ISDN line for radio interviews



END






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