Pilkington turns to oil as gas prices soar

Pilkington, Britain's leading glassmaker, has been forced to move from using gas to oil to run its UK operations because it could no longer afford to pay its enormous gas bill.

The news comes as investors wait for news on details of a possible bid by Nippon Sheet Glass, Pilkington's largest shareholder.No formal offer has yet been made and this weekend the Japanese company's executives flew back to Tokyo to discuss their options.

Pilkington's move to oil is the latest sign of how British industry is suffering under soaring gas prices. The recent drop in temperatures has pushed up the cost of natural gas, raising the day-ahead price from 36p per therm to 82p per therm.

David Workman, the director-general of the British Glass Manufacturers' Confederation, said his members were also operating at a competitive disadvantage to their rivals on the Continent. British manufacturers are paying around 50 per cent more for gas than their rivals on the Continent, and 30 per cent more for electricity.

With the Met Office forecasting a cold winter, concern has also been rising among industrial users that their energy supplies could be interrupted in the event of a severe cold snap. National Grid, the company that distributes gas throughout the UK, has the right to cut off the gas of industrial users to preserve supplies for domestic customers.

Jeremy Nicholson, the director of the Energy Intensive Users Group, said the group was planning to write to the Government to ask for some form of compensation system to be put in place in such an event.

The news comes as the CBI, the employers' federation, prepares to publish a report on the long-term needs of Britain's energy market.

600450 Pilkington turns to oil as gas prices soar glassonweb.com
Date: 21 November 2005
Source: Telegraph.co.uk

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