Netherlands Might Be Net Importer by 2021: TNO Report
Dutch research institute TNO has outlined four scenarios of how declining production from the key Groningen gasfield will turn the Netherlands from a gas exporter into an importer. Three envisage the country becoming a net gas importer only in 2030-35 but one foresees it happening as soon as 2021.
TNO says it’s up to the Dutch government to shape the transition, but says according to its estimates, this is happening faster than most had expected. Its white paper ‘Netherlands: from gas exporter to importer’ (Dutch only) was published August 30.
The report recalls how gas exports generated for the Dutch economy almost €300bn ($360mn) in gas revenues in the period 1965 to 2016 but that, were Groningen output to be restricted below the new statutory cap of 21.6bn m³/yr and exploration efforts curtailed, then the Netherlands could become import-dependent in 4 to 6 years.
The highest Dutch court will rule in mid-November whether Groningen should be allowed to continue producing at all, given concerns over earth tremors which may be why TNO's study covers all options.
In its analysis, TNO admits there is a high level of uncertainty on supply and demand assumptions explaining why, in one of its scenarios, it assumes Groningen output will be reduced by 2bn m3/yr after 2020 – faster than the field’s natural depletion. The report however points to competition between Russia and Norway for EU gas market share as something that should help Netherlands in its transition from exporter to net importer.
Factors which it incorporated into its study were estimates of future Groningen production, output from smaller fields, and the expected decline in the country’s gas demand. Data from Energy Research Centre of the Netherlands (ECN) and Gasunie’s Dutch gas grid operator GTS were included.
One element of uncertainty is that a political decision has yet to be made on whether to accelerate all domestic installations to switch to high calorific gas, or to build conversion units that will mix H-cal gas with nitrogen to create a ‘pseudo-Groningen’ (or L-Cal) gas. The international gas market offers only H-Cal gas, which means it is a decision that can’t be ducked.
Import dependency, according to TNO, is not the main problem. There are ample opportunities for gas to be imported via pipes or as LNG. The real challenge, it argues, is how to assure that gas has the flexibilty to play a leading role in the next stages of the transition to a lower carbon economy.
It says the Dutch government needs to determine policy on domestic energy supply, as renewables become a greater part of the Dutch energy mix, so that the market is clear about long-term objectives.
Gasunie said September 1 in response to TNO’s study that it was good that it draws attention to the relationship between gas and the energy transition. But it takes TNO to task over some of the assumptions in the scenario where Groningen output would fall by 2bn m3/yr post-2020. It also says that any suggestion that Netherlands is entering ‘unknown territory’ over imports is wrong as “the Netherlands has gradually become embedded in an interconnective European gas market.”
In a liberalised market, the relative volumes of Dutch imports and exports will depend heavily on short and medium-term price differences between the Dutch TTF and other hubs in the region. Dutch gas marketer GasTerra, which purchases Groningen output among gas from other sources, told NGW: "We do not conclude new export contracts. New players need to buy gas directly from other gas traders or on gas hubs such as the TTF."
Mark Smedley