Dutch Market is "Changing Radically" - Gasunie
Dutch state-owned gas infrastructure operator Gasunie has pointed to major changes in how northwest Europe’s gas market is operating.
"The gas market is changing radically, partly due to developments relating to the Groningen field," said its CEO, Han Fennema, on March 17 at the company’s annual results, noting the Netherlands’ increased reliance on imports. It also said the total volume of gas that it transported declined by 4.4% to 109.7bn m3 (1,179 terawatt-hours of gas, or TWh). The amount transported through its Dutch gas system was 95.7bn m3
Dutch distributor GasTerra’s CEO, Gertjan Lankhorst, had said on March 1 that a production cap imposed on the giant Groningen field in the Netherlands meant that “business will never be the same again.” The cap was introduced following a series of quakes from operations at the field. In 2015 a Dutch court imposed an annual cap going forward on Groningen that is roughly half the 54bn m3 it produced in 2013. Moreover Royal Dutch Shell, which jointly operates the field with ExxonMobil, admitted there is a risk that cap may be reduced further.
Gasunie – which operates the national gas transport system in the Netherlands and a similar regional system across northern Germany – said it had increased its financial provision for shutting down and removing parts of pipelines to make its system in the Groningen area more earthquake-resilient. Meanwhile in Germany, it started up a new 64km pipeline between Fockbek and Ellund on time last September, involving work last April excavating under the River Elbe, a busy shipping route.
The Groningen field produces low-calorific gas, which is what most Dutch households and businesses consume. So as a consequence of lower Groningen production, the volume of gas that Gasunie had to convert from high- to low-calorific gas – because of a heavier reliance on imports to the Netherlands – more than tripled to 16.9bn m3, from 4.8bn m3 in 2014.
Dutch economy minister Henk Kamp last year said that more nitrogen-blending capacity will be needed in future for such conversion to maintain supplies; Gasunie said it continues to prepare for the construction of such an installation.
Gasunie also co-owns the Rotterdam GATE LNG import terminal among other assets. GATE's throughput increased for the fourth year running, to reach 21 ships unloaded in 2015, compared to 14 in 2014.
GATE also loaded 788 trucks and containers with LNG last year, four times as many as the 174 in 2014; some went to bunker ships at other ports, and some was used as a road transport fuel; a second platform for such small-scale LNG loading is due to be operational in mid-2016.
Gasunie’s net profit in 2015 was €553mn, down 8.3% on the previous year’s €603mn, and it proposed a correspondingly lower dividend to the Dutch state of €332mn.
TTF trade up 25%
Gasunie said the Title Transfer Facility (TTF), the Dutch trading hub that it operates, once again showed strong growth, with its total traded volume in 2015 increasing by 25% to a volume of 1,551bn m3 (16,684 TWh), an all-time record. “As a result, the volumes traded on TTF, which is the largest gas trading platform in continental Europe, are approaching those of the British National Balancing Point (NBP), which in 2014 was still twice as large as TTF,” said Gasunie’s statement. It added that international traders were increasingly finding their way to the Netherlands – and that the maximum number of active TTF traders had increased to 138, from 127. Two weeks ago GasTerra, a leading TTF market participant, also pointed to a rise in its liquidity.
Mark Smedley