July 2012, Vol. 239 No. 7

In The News

For Sale: World War II Oil Pipeline

An underground network of pipelines which kept Britain’s World War II effort well-oiled could be privatized as part of plans to modernize the UK’s energy infrastructure. Ownership of the Government Pipeline and Storage System (GPSS) could be transferred to the private sector, according to international legal firm Pinsent Masons.

The GPSS has its origins in measures taken by the government during the war to provide a secure oil distribution network for the UK. The network has been expanded and restructured over several decades and includes some 2,500 km of cross country pipelines, storage depots, pumping stations and other facilities.

The GPSS distributes 40% of the aviation fuel used in the UK, including international and military airports. Murdo MacLean, an energy specialist at Pinsent Masons, said proposals in the draft Energy Bill would allow certain assets within the GPSS to be transferred to the private sector.

He said: “These measures will be of particular interest to utilities or other investors who may wish to acquire interests in cross country pipelines and related infrastructure and earn revenues from the provision of oil transportation and storage services to government departments and commercial entities such as airports, which source fuel through the GPSS.

“GPSS is still strategically significant as it is used to supply major commercial airports such as Heathrow and Gatwick as well as bases of the Royal Air Force and the U.S. Air Force throughout Great Britain.”

Pinsent Masons said although there would be an “upfront benefit” in terms of the capital the government could receive for the asset, it is not certain when the government will move to invite private sector bids. The move was announced as part of a package of measures which will lead to the biggest shakeup of the UK energy market since privatization.