The UK gas pipeline operator Lattice has announced plans to cut 2,400 jobs from its 13,700-strong workforce.

The jobs are to go at its Transco gas distribution business.

Last year the energy regulator Ofgem set a target for Transco's operating costs below the amount it currently spends.

Transco says meeting the regulator's targets will mean major restructuring over the next two years at a cost of �230m.

It is estimated that three quarters of the jobs to be cut will be in management and back office positions.

Lattice also announced that its pre-tax profits before one-off items fell to �680m last year, a fall of �54m on the previous year.

By lunchtime on Thursday Lattice's share price was up 2p at 169p.

Union fears

Speaking on BBC Radio 4's Today programme, Lattice's chairman Sir John Parker said the job cuts would not affect safety.

"Our board will not compromise on safety or standards of service," he said.

"We had similar levels of cuts five years ago and the safety record of the industry I think is recognised across the world as leading in its practice."

But Union leaders disagree.

"You cannot keep cutting into a company's workforce and not expect problems," Dave Johnson from the Unison union told the Today programme.

Mr Johnson said his union would be speaking to Lattice about the cuts, but would not rule out strike action.

"If we face compulsory redundancies we will fight them."

Price review

Last September the energy regulator Ofgem ruled on how much Lattice's Transco operation could charge.

It said Transco would have to cut prices by 4% in 2002, and by 2% every following year until 2007.

At the time Lattice described Ofgem's price review as "extremely challenging".

Gas distribution costs make up about 35-40% of consumers gas bills and the ruling was expected to cut about �5 off the price of an average bill.

Origins

Lattice is one of the companies to have emerged from the privatised gas industry.

British Gas was first privatised in 1986, but in 1997 it was split into two businesses - BG and Centrica.

BG controlled the pipeline business while Centrica had the domestic supply business and the British Gas brand.

In 2000, Lattice was spun off from BG. It runs the UK gas distribution business, with Transco being its best known trading name.

BG - now known as BG International - now concentrates on international exploration and production.