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HOUSEHOLDS and businesses are being cut off from supplies of liquid petroleum gas because Scots producers want to sell abroad.
North Sea oil and gas firms supplying the Mossmorran natural gas liquids plant in Fife believe the LPG can be sold into the European natural gas market at a much higher return.
J Gas, a major Bathgate-based provider of LPG to Scottish homes and businesses discovered the issue when finding out that a key supplier said it would no longer be providing the LPG from the facility near Cowdenbeath.
J Gas say that this will have a big effect on supplies across the UK.
The plant has supplied J Gas with 90% of its LPG in the past 25 years.
J Gas say that they were told the decision applies to all suppliers of LPG in Scotland, which equates to nearly 30% of the UK market.
LPG is used as a fuel in a range of applications including in heating and cooking appliances, industrial applications, in vehicles and as a propellant and refrigerant.
LPG can be obtained primarily as propane, butane or a mixture of the two and is supplied in a variety of ways including in canisters, cylinders and in bulk storage tanks.
In a letter sent to customers, J Gas say that it had been told that from January 1, a main supplier of LPG at Mossmorran would no longer be providing supplies.
“Having had no prior warning of this, we are sure you can imagine our reaction to this news.
“After the initial communication, they further explained that this decision applies to all suppliers of LPG in Scotland.
“The main reason for this is that the upstream partners supplying the terminal have made the decision that they can sell the LPG produced in Scotland into the European natural gas market and a much higher return than the current LPG price through a process commonly known as spiking.
“Basically, they can achieve natural gas margins, which, as I am sure you are well aware, have been at record highs this year.”
J Gas and other suppliers have called on the trade association, LGUK to engage with the UK and Scottish Governments to alert energy ministers to the “gravity of the situation”.
It says that it has has since been able to secure availability of LPG for 2023 but will have to raise its prices by 7.8p per litre. It says that they have been told they may only receive 45% of their required annual volume from Mossmorran.
The cost a litre of LPG has increased drastically since the start of the UK energy crisis and in October, 2021 it stood at 67p per litre.
According to globalpetrolprices.com it has risen to 76p in January – 14p higher than the average price around the world.
But in Germany, Sweden and Switzerland LPG prices are at around £1 a litre, in Spain it is at 89p and in France it is at 87p.
Scottish Liberal Democrat economy spokesperson and MSP for North East Fife Willie Rennie said: “This could be a real problem for homes and businesses across Scotland who rely on liquid petroleum gas. Many businesses are already teetering on the brink and a further increase in energy costs is the last thing they need.
“Both of Scotland’s governments need to set out what action they are taking to persuade firms upstream in the production process to change course and support Scots through the cold winter months.
“Mossmorran plays a crucial part in Scotland’s energy infrastructure, they must not allow Scots to go cold this winter.
“I have written to the Scottish Government to request a parliamentary statement on this matter.”
A Scottish Government spokesman said: “We are aware of the issues raised and are in discussions with Liquid Gas UK and the upstream partner to better understand their commercial decision to reduce supply via Mossmorran.”
Scottish Energy Secretary Michael Matheson contacted the UK Government for assurances about supplies.
The gases, which are processed at Shell’s Mossmorran plan belong to whichever North Sea producer put them in the system at St Fergus.
The producers then dictate what happens once processed.
It is then loaded onto a road tanker, or taken to a shipping terminal, depending on the producer’s instructions.