Gas price rise: US boss holds crisis gas talks with UK

The boss of a US company that supplies 60% of the UK’s food-grade carbon dioxide supply has held crisis talks with the government over shortages.

Tony Will, chief executive of CF Industries, arrived in the UK earlier after the firm stopped production at its two fertiliser plants because of soaring wholesale gas prices.

Food firms are warning a shortage of CO2 is threatening produce supplies.

High global demand for gas has been blamed for the recent surge in prices.

Carbon dioxide is used to stun animals prior to slaughter and in dry ice form to keep food fresh for storage and transport. It is a by-product of fertiliser manufacturing.

Last week, CF Industries, the UK’s biggest CO2 producer, stopped production at its Teesside and Cheshire fertiliser plants “due to high natural gas prices”. Wholesale gas prices have jumped by 250% since January, according to Oil & Gas UK, the industry group.

CF Industries said it did not “have an estimate for when production will resume”.

The BBC has also been told that officials from the Department for Business, Energy and Industrial Strategy have been “working with” the company in recent days.

Business Secretary Kwasi Kwarteng tweeted that he had met Mr Will and “discussed the pressures the business is facing and explored possible ways forward to secure vital supplies, including to our food and energy industries”.

Food producers and supermarkets have warned of the impact CO2 shortages are having on the industry.

‘Tipping point’

Ranjit Singh Boparan, owner of UK poultry giant 2 Sisters Food Group, said the decision by CT Industries to halt operations, was a “massive body blow” for the food sector and placed it “at breaking point”.

Adam Couch, the boss of pork producer Cranswick said the industry was “already at tipping point ahead of the demanding Christmas period”.

“We have worked tirelessly throughout the pandemic to keep food on the shelves, but there is a real risk of product shortages across the country if the government does not act immediately to address these issues,” he added.

Supermarket Ocado said it had “limited stock” of some frozen items due to gas shortages, while another supermarket told the BBC the situation was “escalating quickly”.

One supermarket executive told the BBC the CO2 issue is “escalating quickly” and was causing a “big supply issue”.

“The big meat suppliers are saying they have two to three days’ supply and are now having to prioritise how they use what they have,” he said.

He said the problem “compounds” supply issues the food, drink and supermarket industries are already facing due to shortages of HGV drivers in the UK, caused partly by the pandemic and Brexit.

‘Continuity of supply’

The British Poultry Council said that the supply chains will “inevitably slow down” if CO2 supplies become tighter and more unpredictable in the next five to seven days.

A spokeswoman said product types might be reduced as meat companies streamline production to try to cut down the impact of shortages.

Ian Wright, chief executive of the Food and Drink Federation, stressed that the UK was not going to run out of food, but said there would be “major concerns” over supply to supermarkets and other food outlets.

He suggested the government would need to take an “innovative” approach to dealing with the shortage of CO2, such as perhaps subsidising companies who produce the gas over the next four or five weeks.

“Or the knock-on effects of this may well be felt right the way through to the end of the year and particularly over the key Christmas trading period,” said Mr Wright.

Wholesale gas prices

Mr Kwarteng has been in talks with energy suppliers as well as the energy regulator Ofgem over the weekend amid fears more small companies could go bust in the coming days.

COP26 president Alok Sharma told BBC’s Andrew Marr Show that people should not be concerned about the risk to the supply of gas. And he said the energy price cap and warm homes discount – two cost-limiting measures – would protect people.

An Ofgem spokesperson said: “Ofgem continues to work closely with government and industry to ensure consumers continue to be protected while global gas prices are high and will speak further on these issues at the industry roundtable [on Monday].”

Source: BBC

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