Centrica, the owner of British Gas, has warned it will close the Rough gas storage facility off the coast of Yorkshire by April 2025 unless it secures a long-term financial support deal from the government to back a £2bn expansion. The company has already stopped injecting gas into Rough for this winter, citing unsustainable economics.
Centrica's ultimatum on Rough storage
Centrica chief executive Chris O'Shea stated on Thursday that Rough is essential for UK energy security and that closure would be detrimental. "I think this [Rough] is essential for the UK energy security. I think it would not be good if this was to be allowed to close, and that's why it's really a decision for government now," O'Shea said. He added that calling it a commercial decision for Centrica is "patently not true."
The economics of gas storage rely on buying low and selling high, but winter/summer price spreads have narrowed. Rough made a £57m profit in the first half of this year due to disruption from the closure of the Strait of Hormuz, but last year it lost almost as much. O'Shea argued that such volatility does not justify a £2bn investment without a regulated return.
Government warned of supply risk by 2030
New energy secretary Miatta Fahnbulleh faces a politically tricky decision on approving production at the Jackdaw gasfield and Rosebank oilfield, but a broader plan for gas supply security is urgent. A report from the National Energy System Operator (Neso) warned of "an emerging risk" to gas supplies by 2030-31 if a single large piece of infrastructure—such as an import terminal or the 725-mile Langeled pipeline from Norway—were to fail during a severe cold snap.
"In the unlikely event of the loss of the single largest piece of gas infrastructure, gas supply falls short of demand for all pathways in 2030-31," the Neso report stated. Gas accounted for 35% of UK total energy demand in 2024, and while renewables may reduce gas use for electricity generation by 2030, domestic heating demand will shift slowly as 24 million households have gas connections.
Alternatives and broader strategy
Rough, described as "a big balloon with a small straw," can hold large volumes but extraction is slow when urgently needed. The £2bn investment could re-engineer that, but other storage solutions—such as onshore salt caverns—or expanding interconnector capacity to Europe, or building more liquefied natural gas import terminals (the UK has only three) may be preferable. The rate of decline in North Sea gas production also matters, as Jackdaw alone would provide 6% of domestic production.
The government's interim response to its "gas system in transition" review is due within weeks. Real choices must follow, as projects like connectors, terminals, or storage take time to build. Meanwhile, the risk of a supply crunch has likely already increased.
