The management of the Crown Estate - Treasury Contents


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 view—they 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.


Project
Bains
Baird
Hewett
Gateway
Infrastrata

Company
CSL
CSL
ENI
Stag
Infrastrata
Asset size (MCM)
570
1,700
5,000
1,500
500
Signed Terms
N
N
N
Y
Y


  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 view—they 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 demand.

  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.

March 2010







 
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