GasTerra Spat with Engie Shows Major Rift

Dutch wholesaler GasTerra is in a long-term gas sales and purchase contract dispute with French Engie. The tone of these disputes has changed from earlier times as buyers are adopting more assertive tactics. 

Under the contract, new terms and conditions take effect from the start of next month, when the French customer must take 2bn m³/yr more gas than it thought necessary back in 2009 when the contract was revised.

Engie, having failed to reduce the volume through negotiation, this summer began to link the requirement to take more gas to the politically sensitive matter of the Groningen production cap, which the government is expected to lower by another 3bn m³/yr from next month to 24bn m/yr. Engie's plan to deal with the surplus could take Groningen (low calorie gas) away from the market.

Neither side told NGW how much gas Engie's contract is for, but Engie said September 13 that Belgian and French households take about 10bn m³/yr of the low-calorie gas, suggesting the contract is for more than that. Engie intends to convert the 2bn m³ into high-calorie gas this coming gas year; and bigger volumes thereafter.

GasTerra said September 12 that "the need for the low-calorific Groningen gas is ultimately only determined by the reduction in the number of end users, such as the number of households in the Netherlands and abroad, not by agreements between market parties."

GasTerra said Engie could re-sell the surplus on the market but Engie said it would be more profitable to convert it to high-calorie gas and then resell it elsewhere.

William Powell

A longer version of this article appears in the next issue of Natural Gas World magazine.