The hairline crack that helped cost UK £3.8bn
Pipeline fault partly blamed for widening Britain’s trade deficit at end of last year
A HAIRLINE crack in a major oil pipeline helped fuel a multibillion black hole in the country’s finances, a report has revealed.
The shutdown of the Forties pipeline at the end of last year resulted in oil exports plummeting and the price of imports increasing significantly.
Last December, a fracture was discovered during a routine inspection of the pipeline near Aberdeen.
As repairs were carried out, oil prices surged to what was then a two-year high at more than $67 a barrel.
Petrochemical giant Ineos operates the Grangemouth refinery where the pipeline terminates. It bought the 42-year-old system from BP in 2016.
Figures released yesterday by the Office for National Statistics (ONS) showed the UK trade deficit widening by £3.8billion to £10.8billion in the three months to December 2017.
The publication states ‘the trade deficit in fuels (oil) had the largest impact on the widening of the trade in goods deficit’ as North Sea production was slowed significantly by the pipeline’s shutdown.
This led to the country importing £1.2billion of oil, while the closure also hit production output, contributing to a major drop in mining and quarrying.
The closure also caused industrial production to suffer its biggest fall for five-and-a-half years in December. Industrial output fell by 1.3 per cent between November and December, the biggest monthly drop since September 2012.
ONS senior statistician Ole Black said issues caused by the Forties pipeline closure offset an increase in manufacturing in other sectors at the end of last year. He added: ‘Manufacturing continued to grow strongly in the last three months of the year, with metal goods and pharmaceuticals driving growth. However, overall production growth slowed due to the shutdown of the cracked Forties pipeline.’
Last year’s Forties shutdown sent mining and quarrying down 19.1 per cent in the last three months of 2017, according to the ONS figures.
The statistics also showed that goods trading was hit by a £2.1billion increase in imports from non-EU countries, as well as a drop in exports to the EU, which have been worsening since hitting a recent peak last summer.
The surplus in services sold to other countries also narrowed over the period by £500million.
The Forties pipeline, which brings 40 per cent of the UK’s North Sea oil ashore, was briefly shut down again on Wednesday after a problem was discovered with a valve connecting the pipeline to the Kinneil gas plant at Grangemouth.
About 450,000 barrels of oil are pumped through the pipeline each day from North Sea installations, along with 3,500 tons of gas.
Ineos said that the pipeline had been closed down temporarily but later confirmed that it was fully operational again the next day.
The company, owned by billionaire Jim Ratcliffe, last night declined to comment on the ONS figures.