UK Gas Security Of Supply: What Role Will Government Play?

DESNZ’s interim response (the “Interim Response”) to the Gas System in Transition: Security of Supply consultation (the "Consultation"), published on 18 August 2026, signals the Government's intent to intervene in gas infrastructure to support the UK's LNG import infrastructure and capacity, but without a defined commercial support model, confirmed timelines or specific mechanisms. The central questions remain unanswered: on what terms, and when?

Domestic production and import strategy

North Sea gas production has declined by 74% since its 2000 peak, and the UK has been a net gas importer since 2004. The Government’s conclusion: the North Sea can no longer be relied upon, and the UK will become progressively more dependent on import infrastructure.

For upstream producers, the Interim Response's silence on the fiscal and licensing framework for domestic production is itself a point of contention. During the Consultation, Offshore Energies UK argued that the decline is substantially a consequence of fiscal and policy decisions, not geology, and that output could be materially higher under a reformed investment environment. The Aberdeen & Grampian Chamber of Commerce went further in its reply to the Interim Response, opposing “unprecedented” Government intervention to expand LNG import capacity as an expensive route to undermining energy security. The Interim Response does not engage with either argument.

With domestic production in structural decline, the resilience and adequacy of the UK's import infrastructure become critical questions for gas security. Two of the Government's three priorities in the Consultation address these questions: ensuring (i) infrastructure capacity for broad demand, and (ii) system resilience to unplanned outages. In response, many respondents (41%) agreed with the Government's assessment that existing LNG infrastructure is robust and commercially viable, as indicated by recent investments into Grain and South Hook and by LNG terminals' ability to sell long-term bilateral contracts to shippers. Respondents were also broadly positive that greater geographic diversification of LNG terminal capacity, expanded storage options or Floating Storage and Regasification Unit (FSRU) deployment could strengthen gas system resilience, particularly by broadening supply entry points and providing flexibility during low-probability, high-stress demand events.

However, the UK's growing dependence on imports carries its own risks. These are partly geopolitical in nature: LNG accounted for 39% of UK gas imports between January and May 2026, with 70% originating from the United States, raising concentration risk in the event of global trade disruption or volatility in US export policy. The Interim Response notes further limitations:

• UK LNG terminals are less competitive than European counterparts due to higher entry charges and operating costs.
• Infrastructure operators considering LNG terminal or storage expansion face significant capital requirements, with limited visibility on whether Government support, potentially exceeding £1 billion for a single project, will materialise.
• As regulated third party access exemptions granted to LNG terminals at the time of construction or expansion begin expiring (2029, 2035), future capacity sales will be subject to Ofgem-regulated open sale processes. With LNG imports becoming increasingly important to UK energy supply security, DESNZ will have to reconsider the extent of this regulation to accommodate expanding LNG supply to the UK.
• Despite acknowledging the strategic value of interconnector pipeline imports with continental Europe for supply diversity and cross-border trading, respondents cautioned against overreliance, noting that imports cannot be guaranteed during European or global supply shocks.

Beyond the limitations observed in the Interim Response, the current position of the UK gas storage sector indicates that, compared with Europe, the UK may simply lack the infrastructure to support this import strategy. Centrica, the owner of the UK's largest gas storage facility, Rough, has warned that the facility faces potential closure next year without a £2 billion financial support deal from DESNZ. Centrica and other industry participants have been pressing DESNZ to recognise Rough's importance for UK energy security, especially given the UK can store an average of 12 days of usual gas use (Germany and France currently have 89 and 103 days respectively).

Commercial models for gas infrastructure

The Government's third priority for UK gas security is ensuring the gas system has viable commercial models to allow gas security infrastructure to operate. Respondents agreed that market-driven commercial incentives alone are currently insufficient to support operators in maintaining additional capacity for low-probability demand peaks. Accordingly, the Government recognised that "long-term commercial model[s] in the form of financial or revenue support may be required”. If implemented, these models may particularly benefit gas storage operators and two bi-directional gas interconnectors, where profit margins and forward bookings are in long-term decline.

The Interim Response provides no detail on a preferred commercial support model; respondents’ views were divided between cap-and-floor, Regulated Asset Base and Contract for Difference structures, with others suggesting system-operator-led capacity tenders or hybrid models. Regardless of the model, most respondents favoured market forces prevailing as far as possible, with the Government acting as an enabler by providing investment certainty and easing regulatory barriers.

While the Energy and Utilities Alliance described the Interim Response as a “pragmatic, consumer-focused transition” in energy policy, the absence of a defined commercial support model or incentives creates continued uncertainty for infrastructure investors and operators considering capacity expansion or asset life extension.

Regulatory reform

Most respondents were clear that policy clarity and regulatory stability will reduce risk for investors and encourage the market to respond proactively. There was broad agreement that measures to reduce regulatory barriers would increase the UK's competitiveness on the global LNG market and help secure imports.

DESNZ has not specified which reforms it will pursue or when. Much of the relevant regulation sits outside DESNZ’s direct competency, resting with bodies such as the HSE, National Gas and Ofgem, meaning inter-agency coordination will be required.

Balancing the energy transition with near-term gas security

Around 70% of UK households rely on mains gas for heating, and gas accounts for approximately 30% of UK electricity generation. These are not marginal dependencies. The Government acknowledges that the energy transition will not happen overnight and that the gas system will remain critical for decades.

Around 21% of respondents highlighted the potential future repurposing of gas storage infrastructure for hydrogen or biomethane to maintain energy security while supporting net zero objectives, and most (65%) saw opportunities for commercial support mechanisms to facilitate future hydrogen and CO₂ storage and prevent stranded assets. However, the Interim Response acknowledges that capital requirements for hydrogen-ready facilities may be double those of conventional gas storage, whilst offering no detail on how these opportunities might be realised in practice.

Stakeholders investing in dual-use or transition-ready infrastructure face continued uncertainty until the Government clarifies how it intends to provide financial support for assets that serve both near-term gas security and longer-term decarbonisation goals.

Looking ahead, the Interim Response signals that the Government does not take the role of the gas system for granted and intends to provide the sector and investors with sufficient comfort to ensure that decisions can be taken today to help provide security for tomorrow. For an industry that has long pressed for greater policy clarity, that signal matters. However, the challenge ahead remains considerable. The Government plans to set out a more detailed response (including its "minded to" position on all options) in due course and is conscious of the lead-in times to potential interventions and the pace required to deliver them before any risks to gas security materialise. No date for that response has been set. Until then, the risk is that investment decisions continue to be deferred at precisely the moment when long lead times demand the opposite.

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