CHEMICALS company Terra Nitrogen has restarted production at its Teesside plant after soaring gas prices forced it to partially shut down before Christmas.

The firm suspended ammonia production at its Billingham plant in November after gas prices hit a record high of more than £1 per therm.

At the time, it was cheaper for Terra to import ammonia rather than produce its own and the company said it would not resume production until UK natural gas costs fell.

"Prices went up to more than 100p a therm, but now they have dropped back down to between 50p and 60p and it is more economical for us to produce the ammonia again rather than import it," said a spokesman for Terra.

Last night, Dr Stan Higgins, chief executive of the North-East Process Industry Cluster, which represents chemical companies in the region, said companies like Terra are still at risk because of the volatility of gas prices in the UK.

"These types of problems will occur again and affect companies in the region until some kind of regulation is put in place to ensure that the gas prices we pay in Britain are the same as those in the rest of Europe," he said.

"Companies in the industry don't mind what price the gas is so long as everybody is paying the same, so that there is equality in the market."

Terra is the UK's largest producer of nitrogen fertilisers and a manufacturer of carbon dioxide, which is purified, bottled and sold to the food industry.

About 280 people are employed at the Billingham site, but no jobs were affected by the shutdown. The company's Bristol operation was also shut down last year and production has yet to get back up and running.

Terra has not ruled out similar shutdowns in production at the Billingham plant again in the next couple of years.

"We haven't started production at Bristol because gas prices are not yet at a level to sustain production there," said the spokesman.

"Similar shutdowns could happen again next winter, when there is a gap between supply and demand of gas coming into the UK.

"However, over the next 18 months to two years, there is a risk of large users of gas having to close down to keep household supplies up. It is a UK-wide problem.

"We will continue to work with trade associations in the UK to address the problem of gas supply and we hope we are not in the same position next winter."