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    'LNG Replaces Dutch Gas Output': VEMW


LNG and pipeline gas imports have displaced Dutch output at a time of global over-supply.

by: William Powell

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Natural Gas & LNG News, Europe, Corporate, Import/Export, Market News, News By Country, Netherlands

'LNG Replaces Dutch Gas Output': VEMW

The value of Dutch oil and natural gas reserves fell from €169bn in 2013 – $200bn in today's money – to less than €8bn in 2019 while gas extraction in the Netherlands has fallen almost 60% over that time. In 2013 the giant Groningen field produced 53.9bn m³ and other fields just under 30bn m³ for a national total of 82.3bn m³.

But in 2019, the entire Dutch production was only 32.3bn m³, with domestic demand stable at 42.5bn m³ last year. The Netherlands has been a net gas importing country since 2018 and while in 2017 LNG accounted for only 1.5bn m³ of imports, in 2018 this had risen to 5.9bn m³ and to 9.9bn m³ last year, which was nearly all Dutch gas imports.

But there were no sharp price spikes over that period and gas has retained its share in the national energy mix, at 44%; while demand has fallen only slightly from 44.2bn m³ in 2013 to 42.4bn m³ last year.

Since 2018, the Netherlands has been a net gas importer with a strongly growing share of LNG, according to the Dutch statistics office in an article cited November 24 by major utility users' group VEMW

"In addition to a decrease in gas production due to the steady depletion of offshore gas fields, the political decisions since 2014 to reduce and even stop gas production in the Groningen field have been an important cause of the decline in the value of the reserves. In addition, the expected revenues from future extraction have been adjusted sharply downwards due to the natural gas price development: a decrease of 37% since 2013. The current natural gas price is used to estimate future revenues," said VEMW.

Industrial demand has remained stable since 2013 at 11.36bn m³ compared with 10.65bn m³ in 2013 with productivity growth of 8.5% 2015-2019. Gas consumption in the energy sector has risen 2.3bn m³ with the displacement of coal on the electricity market and the export of electricity.

VEMW CEO Hans Grunfeld said that turning off Groningen had not affected domestic gas consumption or the gas price although imports of Russian gas into Europe and LNG have risen sharply. This is good for the "diversity of the offer and thus for security of supply and price development. By displacing coal by renewable energy and natural gas on the electricity market, CO2 emissions will also decrease,” he said.

On the other hand, if European gas becomes short or Asian or other demand sends prices rising in other parts of the world, the Dutch state will have no means of releasing gas into the market cheaply. 

Groningen, discovered in the late 1950s by Anglo-Dutch Shell and US ExxonMobil, was the cornerstone of the west European gas industry, offering very flexible gas supplies in winter to customers at home and abroad. But following building damage caused by gas production, its further exploitation is considered too risky and it will be closed down leaving hundreds of billions of cubic metres in the ground in the next few years. Following it into the history books will be GasTerra, the half-state-owned marketing company, at the end of 2024.