Further written evidence submitted by
the Gas Storage Operators' Group (GSOG)
On Wednesday 3 March 2010 the Treasury Sub-Committee
held a meeting as part of its inquiry into the Management of the
Crown Estate and took evidence from Mr Roger Bright CB, Chief
Executive, the Crown Estate.
During this meeting Mr Bright was asked if the
approach the Crown Estate was currently taking to offshore gas
storage projects was purely focused on revenue generation and
would be of potential huge detriment to other Government policies.
In reply Mr Bright said that the Crown Estate
was doing "all we can to facilitate|.On gas storage, we have
made available our proposed terms since 2007 and have been in
negotiation with four main operators in this area. We have reached
agreement with three and one we have not reached agreement with
because they have a fundamentally different viewthey want
a cost plus basis. We have offered to go to independent arbitration
and they have refused".
This statement is misleading and false; the
purpose of this supplementary note is to present the sub committee
with the correct facts.
There are four gas storage operators currently
developing offshore gas storage; two have agreed terms; two have
not. The following table identifies the current offshore projects,
company, size and whether or not agreement has been reached with
the Crown Estate.
|Asset size (MCM)||570
By way of relevance the following table helps provide a comparison
of the offshore capacity signed up with the crown estates.
|Not Signed Terms (MCM)||7,270
|Signed Terms (MCM)||2,000
|% signed terms||22%
In addition, Mr Bright's comment that agreement has not been
reached with one company because "they have a fundamentally
different viewthey want a cost plus basis" is also
misleading. Both CSL and ENI (and indeed other operators) believe
that rental charges based on a cost plus basis is appropriate
given the Crown Estate's monopoly status in the provision of offshore
strata and the clear excess of supply over current and forecast
The GSOG would like to formally register its disappointment
that this important area of debate was effectively curtailed by
the use of incorrect and misleading evidence.