September 11, 2013 / 6:21 PM / 4 years ago

Higher gas prices in southern France seen as industry threat

* France’s southern gas hub suffers lack LNG imports

* Situation “damaging” for industrials - regulator

* Low gas stocks in France could also hurt industry - lobby

PARIS, Sept 11 (Reuters) - Sharply higher gas prices in France’s southern gas hub compared with the northern zone are threatening the future of industries such as fertilizer makers, which heavily rely on gas supply, energy users and regulators said on Wednesday.

Gas prices in the southern gas hub called PEG Sud have been 10-15 percent higher for the past 18 months as the zone relies for around 50 percent on global Liquefied Natural Gas (LNG) supplies, which are heading to the more lucrative Asian market.

While LNG imports have also slumped in the northern gas hub called PEG Nord, the area benefits from pipeline imports from Norway and Russia. However, transport bottlenecks between the two zones are preventing the convergence of prices.

“This situation is very damaging for industrial players in the south of France,” Philippe de Ladoucette, the head of France’s energy regulator CRE, told a conference adding that the government was currently creating a gas-intensive status for those industries to give them preferential access to the gas.

Those industries, which also include makers of synthetic polyamides commonly used in the textile and automotive sectors, consume around 10 percent of France’s 500 annual terwatthours.

“I know some very beautiful factories which are threatened,” Claude Conrard, head of the lobby for France’s heavy energy users UNIDEN, told delegates without citing names.

Ladoucette said he expected a single gas hub to be created by 2018.

This will be achieved by doubling the transport capacity of the Val de Saone gas pipeline in central France which dates back from the 1970s. A decision on the 700 million euro ($931.10 million) project is due in the first half of 2014.

Another problem, according to Conrard, was that heavy industry would have to be the ones halting their gas consumption without financial compensation in case of a supply disruption this winter.

“There will not be enough storage, that’s certain, so let’s light a candle and pray for winter to be mild or else we could have gas supply shortages during peak demand,” Conrard said.

French energy officials, the regulator, gas grid GRTgaz and gas users have repeatedly voiced concerns over low levels of gas stocks in some parts of Europe ahead of winter.

Gas storage levels across Europe are currently 72 percent full, against 85 percent at the same time last year, according to Gas Infrastructure Europe data, following a drawn-out cold winter which depleted Europe’s storage tanks.

$1 = 0.7518 euros Reporting by Muriel Boselli and Michel Rose; Editing by David Evans

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