The Dutch gas market: trials, tribulations, and trends

This paper forms part of an OIES Gas Programme research theme focusing on the most important national gas markets in Europe (and elsewhere). The rationale behind these papers is that individual markets have specific characteristics and complexities which are essential to understand in order to look at future trends. This paper follows the previous publications on the UK, Spain, Italy, Germany, Brazil and Iran. The Dutch gas market, one of Europe’s key exporters, is at a significant turning point. A much stronger than usual earth tremor in 2012 caused by the extraction of gas from Groningen prompted the government to take action and restrain production from the field to help minimize the seismicity. In 2016, gas production from the giant field was less than half the volumes produced just three years previously, with almost no flexibility to cope with seasonality of demand. Nobody seems to be paying much attention to it maybe because there have been no signs of any major threat to security of gas supply nationally and in North West Europe. However, the complete change in the Dutch gas outlook means a major fall in regional production from a European perspective and a big increase in imports from elsewhere with potential security of supply implications (volumes, capacity, prices, and/or dependence). Consideration on the safety and health of the people of Groningen has also changed public opinion about gas dramatically. The use of renewables in power generation and an increased focus on energy efficiency have become the key policy drivers but the transition towards a sustainable economy is also overwhelmed by an anti-gas sentiment. This dramatic evolution casts an important doubt over the future of gas in the country but equally importantly in Europe as a whole, particularly for those countries in the North-West of the region whose imports of Dutch L-gas and H-gas have historically been crucial elements of their supply. It is no longer ‘business as usual’ and this paper offers some food for thought on the challenges but also the prospects and expectations for the Dutch gas industry looking ahead to a 2030 horizon