Section 4 - Gas. Net Imports increased by 56 per cent in comparison to Q (Chart 4.4).

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1 Section 4 - Gas Key results show: Gross UK production of natural gas in Q was 4.0 per cent down on Q2 2015, at 116 TWh (Chart 4.1). Within this production of associated gas was 3.0 per cent higher, whilst dry gas production was 15.5 per cent lower (Chart 4.2). This decline contrasts with recent strong growth over the last year. Net Imports increased by 56 per cent in comparison to Q (Chart 4.4). Imports in Q were up 20 per cent in comparison to the same in 2015 (Chart 4.5). This was largely driven by imports from Norway, which were up 34 per cent. Exports decreased by 27 per cent over the same time frame, driven by decreases in exports to Belgium via the interconnector and Ireland down 22 and 45 per cent respectively (Chart 4.4). The decreases in exports to Ireland are due in part to new indigenous production coming on line in Ireland in late 2015 whilst the decrease in Belgium exports is related to the maintenance on the interconnector in June UK gas demand was up 16.4 per cent compared to Q2 2015, with a notable increase in demand for electricity generation, which was up 47 per cent on the same last year. The principal driver for this increase is the reduction in coal generation capacity which is described in further detail in Section 5. (Chart 4.6). Chart 4.1 Production and imports and exports of natural gas In the second of 2016, gross production of natural gas was 4.0 per cent down on Q This contrasts with the recent upwards trend since the beginning of 2014, but is more in line with the general decline since UKCS production has decreased by 6.5 per cent on average per annum since production peaked in Imports were significantly up in comparison to Q2 2015, by 20 per cent, this was driven by a 34 per cent increase in imports from Norway. Exports decreased significantly, down 27 per cent, driven by a decrease in exports to Belgium (down 22 per cent) and Ireland (45 per cent). The decrease in Irish exports is due in part to the Corrib gas field off the North West coast of Ireland entering production in late Belgian exports were reduced in June of this year due to maintenance on the interconnector. September

2 Chart 4.2 Production of dry gas and associated gas In Q associated gas production which includes gas production from oil fields increased by 3.0 per cent versus Q This increase partly reflects steady production from a number of new, relatively large condensate fields in the North Sea. Dry gas production which is extracted from gas fields only was 15.5 per cent lower in Q than Q Chart 4.3 Gas availability Gas available at terminals is equal to the gross gas production minus producers own use, plus net imports. Gas availability is seasonal, mirroring gas demand, and peaks during Q1 and Q4 each year. Gas availability in Q increased by 16.7 per cent compared to Q to 190 TWh. This was driven by an increase in net imports. The long-term picture shows that the average availability over 4 rolling s had remained fairly constant since the start of 2012 before increasing slightly since the start of September 2016

3 Chart 4.4 Import and exports Net imports increased significantly, up 56 per cent in comparison to Q This was driven by a significant increase in imports and a significant decrease in exports. Imports in Q were up 20 per cent in comparison to the same in This was largely driven by imports from Norway, which were up just over a third. Exports decreased by 27 per cent over the same time frame, driven by decreases in exports to Belgium via the interconnector and Ireland down 22 and 45 per cent respectively. The decrease in exports to Ireland is at least partially due to production from the Corrib gas field in Ireland which commenced in late Chart 4.5 Imports by origin Imports were significantly higher than in comparison to Q2 2015, up by 20 per cent. The rise was largely driven by imports from Norway, which were up 34 per cent, and made up 63 per cent of all imports. A further 31 per cent of imports were sourced as LNG from Qatar. Norway remains the biggest supplier of gas to the UK, with Norwegian imports comprising 63 per cent of total imports, up from 57 per cent in the same of the previous year. The share of gas received as LNG decreased from 40 per cent to 32 per cent over the same period. September

4 Map: UK imports and exports of gas Q Blane (UK) Field 0.0 TWh Ula Field (Norwegian) Vesterled Pipeline 7.0 TWh NTS UK-Ireland Interconnector Langeled Pipeline 37.1 TWh LNG 0.0 TWh 0.7 TWh 16.5 TWh 9.9 TWh Tampen Link & Gjoa/Vega 23.0 TWh BBL 5.5 TWh Nominated BBL export, Chiswick, Grove, Markham, Minke Windermere & Windgate. LNG 24.1 TWh Imports LNG Out 0.9 TWh LNG 11.5 TWh UK-Belgium Interconnector 4.6 TWh Exports NTS - National Transmission System for gas, including link to N. Ireland 1. Please note that imports and exports in this map uses nominated flows through the UK-Belgium Interconnector and BBL pipeline as in table 4.1. The figures here will differ from those in ET Table 4.3 which uses actual physical flows through the Interconnector. 33 September 2016

5 Chart 4.6 UK demand for natural gas UK Overall demand in Q increased by 16.4 per cent compared to Q Within this: Gas use for electricity generation rose by 47 per cent compared to the same last year. This is in line with the recent trend this year as coal fired power plants have been taken off line (see section 5 for further information). Final consumption increased by 2.8 per cent, with domestic consumption up 2.4 per cent. Whilst temperatures were broadly comparable with the same period last year, April in particular was notably colder than the same period last year (7.5 degrees Celsius against 9.1 degrees Celsius in 2015). Relevant table 4.1: Natural gas supply and consumption page 35 Contacts for further information: Matthew Curds James Halliwell Upstream gas Downstream gas Oil and Gas Statistics Team Oil and Gas Statistics Team Tel Tel Matthew.Curds@beis.gov.uk James.Halliwell@beis.gov.uk September

6 4 GAS Table 4.1. Natural gas supply and consumption per cent change nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd p GWh per cent change 1 35 September 2016 SUPPLY Indigenous production 427, , ,085 93, , , , , , ,392r 116, Imports 476, , ,079 89, , ,690 92, , , ,314r 111, of which LNG 124, , ,973 40,151 27,046 35,602 36,565 39,242 40,988 36,466r 35, Exports 128, , ,063 40,102 24,049 28,105 39,789 52,520 41,161 20,141r 28, Stock change 2-2,383 +3,515-18,072-7,057 5,754 34,500-11,042-15,919-4,024 31,688-8,669 Transfers Total supply 774, , , , , , , , , ,125r 189, Statistical difference -1,269 1, ,124r 655 Total demand 775, , , , , , , , , ,249r 189, TRANSFORMATION 243, , ,191 67,012 64,173 59,266 55,370 60,259 63,063 81,213r 78, Electricity generation 217, , ,616 62,105 56,961 51,144 49,713 55,338 56,361 73,091r 73, Heat generation3 25,631 25, ,576 4,906 7,212 8,122 5,656 4,921 6,702 8,122 5,656 - Energy industry use 52,172 57, ,489 11,694 13,482 14,651 15,534 13,079 14,315 15,652r 15, Losses 6,856 6, ,574 1,656 1,667 1,438 1,115 1,834 2,114 1,164r 1, FINAL CONSUMPTION 473, , ,070 56, , ,763 90,643 60, , ,220r 93, Iron & steel 5,454 5, ,329 1,270 1,375 1,589 1,454 1,224 1,108 1,191r 1, Other industries 87,878 89, ,903 16,764 25,204 29,532 19,291 17,118 23,146 25,849r 20, Domestic 278, , ,954 21,842 95, ,307 49,034 25,510 84, ,714r 50, Other final users 96,378 98, ,526 14,956 27,854 36,019 19,547 15,448 27,149 36,149r 20, Non energy use 3 5,430 5, ,357 1,357 1,357 1,317 1,317 1,317 1,317 1,317 1, Percentage change between the most recent and the same a year earlier. 2. Stock change + = stock draw, - = stock build. 3. For heat generation and non energy use, the 2016 figures currently shown are the 2015 figures carried forward - these will be updated in July 2017.