Dutch gas supply strategy to hinge on LNG, domestic production

LONDON (ICIS)–LNG is likely to be the cornerstone of the Netherlands’ gas supply strategy in the coming months and years, alongside potential increases in domestic production, as Norwegian supply is now capped.

In recent parliamentary sessions, Dutch Climate and Energy minister Rob Jetten said further boosting imports on the Norwegian route is unlikely as Norway is currently extracting at almost at its maximum capacity.

The Baltic Pipe from Norway to Poland will also become operational this coming autumn. This means that less gas will be available from Norway to the Netherlands, the minister added.

In the year to date, the Netherlands has imported just under 9 billion cubic meters (bcm) of Norwegian pipeline gas, data collated by ICIS showed. This was below the previous year when around 13.9bcm was imported over the same period.

Jetten said that scaling up to alarm phase 2 is premature for the Netherlands as there is no current physical shortage threat due to a drop in demand over the past months. He added that introducing a price cap on the energy price, which will be discussed by European energy ministers on 9 September in Brussels, could have a very distorting effect on the market.

Jetten is expected to update the parliament about shutdown plans, the order of the shut-down and the impact analyses of no Russian supply to Europe and extreme weather in winter by the end of the gas summer.

LNG INCREASING ROLE

Increasing LNG regasification capacity in the Netherlands represents the core strategy to improve the Dutch supply picture.

LNG imports totalled around 9.6bcm since the beginning of the year, more than double year on year.

Two floating storage and regasification units (FSRUs) arrived at the new LNG facility in Eemshaven on 4 and 6 September, marking the first new European LNG facility to come online after Russia invaded Ukraine.

Together the two FSRUs are set to have a regasification capacity of 8bcm/year, which will add to the existing 12bcm/year available at the Gate terminal facility. The terminal operator told ICIS it expects the first gas to reach Gasunie Transport Service (GTS)’s network by mid-September.

ICIS LNG Edge latest port information indicates the 173,000cbm Murex from US Sabine Pass reached the new LNG facility on 8 September. The 174,000cbm Gaslog Georgetown also from Sabine Pass is listed as a follow-up on 13 September. Various final activities are due to take place over the coming weeks with the terminal expected to run at full capacity by late November or early December, the terminal operator added.

Works at the Gate terminal are also set to add 4bcm/year of firm regasification capacity by 2025-2026.

DOMESTIC PRODUCTION

During previous parliamentary sessions the State Secretary for Economic Affairs and Climate Policy, Hans Vijlbrief said gas extraction from the Dutch small fields in the North Sea could also play an essential role in limiting the country’s import dependence while maintaining security of supply.

In total, an acceleration of gas extraction can lead to an additional production of 2-4 bcm/year over a period of 10 years, depending on the permits.

It would take around five years to ramp up to full capacity, but within 1-3 years an acceleration of approximately 1bcm per year is already possible.

Hans Vijlbrief added he is committed to improving the permit process, highlighting that extracting from the North Sea would reduce CO2 emissions compared with onshore field production or LNG imports.

More recently, Jetten said there is still no statement to be made about how much gas will be extracted from Dutch fields for the upcoming gas year.

However, the government position is not to increase production from the Groningen field due to earthquake related issues.

Currently, the Dutch government indicates the definitive closure of Groningen by 2023, pushed back from mid-2022. Following its closure, the Groningen field will only be used as a reserve resource in exceptional situations.

Jetten added that incumbent GasTerra has some long-term purchase import contracts, but these are due to expire within a few years. No other contracts have currently been confirmed.

Regarding Dutch long-term export commitments, government papers show these amount to 17.6bcm for the upcoming gas year and will drop to 0.5bcm by 2029. No longer-term contracts have been signed since 2012.