Race on to supply UK with gas

FOREIGN companies are racing to supply Britain's £13 billion-a-year gas industry after decades of self-sufficiency from the North Sea.

Russia's Gazprom, the world's largest natural gas producer, is talking to UK companies, hoping to win long-term contracts and to supply gas via a planned £3 billion pipeline through western Europe.

But it faces competition from producers in the Middle East who want to export liquefied natural gas (LNG) - a process by which the temperature of gas is reduced to cut its volume before it is transported on tanker ships.

They appear to have the whiphand over piped gas because Britain is building three LNG plants to convert the liquid back to gas when it is delivered. The first is due for completion next year.

Investment is being driven not only by the UK's dwindling reserves, but also by the rapidly rising price of gas, up by almost a quarter in the past year.

National Grid Transco warned this month that Britain is running out of gas faster than expected.