Ofgem approves amended interconnection agreement between Interconnector Limited and National Gas at Bacton

Ofgem has published its decision approving proposed amendments to the interconnection agreement between Interconnector Limited and National Gas, the document that governs the physical and commercial interface between the Belgium-UK gas pipeline and the GB National Transmission System (NTS) at Bacton^[1].

What the agreement covers

Interconnector Limited operates the 235 km bi-directional gas pipeline running from Bacton in Norfolk to Zeebrugge in Belgium, commissioned in 1998. The pipeline is owned by a consortium in which Fluxys holds a 76.32% equity interest and Snam holds the remaining 23.68%. It is capable of carrying gas in either direction - forward flow from the UK to the continent, and reverse flow from the continent into the GB system - with the direction on any given day determined by the relative balance of supply and demand across the two markets.

The interconnection agreement (IA) is the bilateral contract that sets out how Interconnector Limited interfaces with the NTS operator at the Bacton interconnection point. Under Standard Licence Condition 3 of the Gas Interconnector Licence, any such bilateral agreement - and any amendment to it - must be submitted to Ofgem for approval before it takes effect. Ofgem's approval is conditional on both parties having agreed the terms.

The regulatory mechanism

The approval process is a standard but non-trivial step in gas interconnector governance. Ofgem acts in its capacity as the Gas and Electricity Markets Authority (GEMA) when issuing these decisions. The regulator reviews whether the proposed amendments are consistent with the licensee's obligations and, once satisfied that both parties have agreed the text, issues a formal decision.

This pattern has recurred as the counterparty on the GB side has changed name. The original IA was entered into with National Grid Gas; subsequent decisions have tracked the rebranding to National Gas Transmission and then to National Gas. A revised Pressure Service Charges Agreement (PSCA) between the same two parties - which governs the charging mechanism for pressure services at Bacton - was approved by Ofgem on 13 March 2025 following a submission on 4 March 2025.

Why it matters

The Bacton terminal is one of the most strategically significant gas entry points in Great Britain:

• It connects the NTS to two continental European pipelines: the Interconnector (IUK) to Zeebrugge and the Balgzand-Bacton Line (BBL) to the Netherlands.
• The Interconnector pipeline has a UK import capacity of up to 21.2 billion cubic metres per year and a UK export capacity of 20 bcm/year.
• The pipeline's flexibility - it can change flow direction within a few hours - makes it a key balancing tool between the NBP and continental hubs including ZTP and TTF.

Keeping the IA current with operational standards and the evolving corporate structure of the NTS operator is a prerequisite for the pipeline to continue functioning within the GB regulatory framework.

What to watch

The broader regulatory backdrop is shifting. On 25 March 2026, Ofgem launched a Call for Input on the future strategic approach to interconnection, with a response deadline of 1 May 2026. Ofgem has indicated it intends to consult on the high-level regulatory framework for new interconnection delivery and financing in the second half of 2026. How that framework evolves will determine the conditions under which the next generation of interconnector projects - including offshore hybrid assets - are regulated, financed, and contracted. The Bacton bilateral agreements will remain a live instrument throughout that transition.