You're reading: Gazprom shuts down gas storage project in UK

MOSCOW - The project to build the Saltfleetby gas storage facility at what was once the largest onshore gas field in the UK has been shut down for good.

Gazprom Germania said in a report that, due to the situation on the natural gas storage market in the UK, a decision was made on October 31, 2014 to halt this project, remove remaining buffer gas from the facility and dismantle equipment.

The decision to close the project resulted in write-downs of 37.7 million on the equity accounted carrying amount of Wingas Storage UK Ltd, a joint venture between Wingas Storage and ZMB Gasspeicher Holding GMBH, Gazprom Germania said.

Wingas bought the Saltfleetby field from Australia’s Roc Oil in 2004 for GBP44 million.

This storage project has a long and dramatic history. Further exploration showed it has a difficult geological structure, which called into question the profitability of the storage facility. An accident occurred during the drilling of an exploration well, further increasing costs. The regional authorities finally blocked approval for construction of the storage facility, forcing Wingas Storage UK, for the first time in the history of Britain’s gas industry, to appeal to the national regulator and in 2010 the Department of Energy and Climate Change gave its permission.