How much Russian, Groningen, Norwegian or Algerian gas is created every day through the Dutch pipes? The Ministry of Economic Affairs wanted to receive this question a few years ago. The department, responsible for the energy supply, called in the Central Bureau of Statistics to gain some insight into the international gas market within its own national borders.
“These numbers are difficult to obtain because the gas market has been liberalized for more than twenty years,” says gas expert René Peters of TNO. “On that market, there is no specific quality of gas, but simply the individual energy. The properties can be adjusted later.” If the foreign gas from Germany enters the Netherlands, it can be Norwegian, Russian or Danish gas, for example. As a result, it is not easy to write to one country.
Now that the tensions between Russia and Ukraine are becoming current, the demand in the Netherlands is dependent on supplies from the Russian state-owned company Gazprom for its heat and power production. Should the large supply decrease for whatever reason, is that a problem?
There are no longer any fixed agreements with Russia, says Peters, and that makes it difficult to determine exactly the contribution to the Dutch gas demand. Much Russian gas is obtained through short-term contracts. “If you had long-term contracts with Russia, then you know for sure how much gas will come there. On the ‘spot market’ [waar kortetermijncontracten worden verhandeld, red.] you often know where the gas comes from and you also do not know about the English party not selling to a Belgian party. The Netherlands is also an important transit country.”
In its research at the request of the ministry, Statistics Netherlands still bases itself on figures from 2017. There are current data, but the statistical office does not want to disclose them because of the knowledge. Gasunie – responsible for the transport of gas – and trading house Gasterra, a semi-government company, are also unwilling or unable to provide data.
Nevertheless, it is possible to estimate the different origins of ‘our’ natural gas. The composition has rapidly become more international in recent years. In 2013, it was still 53 billion cubic meters extracted from Groningen soil, well more than the Dutch consumption of 40 billion cubic meters. This year, according to current agreements, a maximum of 7.6 in Groningen gas will be extracted, which will partly be billion. One publication comes from other parts of the Netherlands, for example from the North Sea. These ‘small fields’ are good for a yield of 8 billion cubic meters. For years, Norway has been able to generate a maximum of around 10 billion euros and the same amount of liquefied gas (LNG) can enter the country via the port of Rotterdam – the ‘Gate terminal’. That’s a total of 34 billion of the required 40.
“In practice, the rest has to come from Russia, that’s about 15 percent of our total use,” says Peters. “You can say that the Russian gas is replacing the lower yield from the Groningen field. After all, the other suppliers are at their maximum capacity.” In practice, much more Russian gas flows through the Netherlands: a large part of it goes via a pipeline from North Holland to England.
Oil and gas expert Jilles van den Beukel also estimates that Russia will supply about 15 percent of the required gas this year. “It is still important that the Netherlands is part of the European gas market, that is where the price is determined. And Russia provides about 30 to 35 percent of that market, which is 500 billion cubic meters in size.”
These supplies are fixed with contracts, Russia is not currently willing to supply the spot market. This can be seen in the reduced Russian deliveries: in 2019 the share in Europe was still 40 percent. “Everyone is asking what will happen if Russia cuts its supplies on military action. But why would they do that?” Van den Beukel wonders.
In any case, it would cost Russia a lot of money. In an earlier confrontation with Ukraine Russia, the gas supply to that country was temporarily halted. “That was a payment conflict and then the distribution was cut off. Being the main transit port, everyone got stuffy. Now those gas flows – via Nordstream 1 in the Baltic Sea, via Poland or via Turkey – are more spread out. And Russia has always kept its contractual agreements.”
It may be an advantage that the Netherlands (with 15 percent Russian gas) is less dependent than the average in Europe. And in the event of rising tensions, there may still be fallback options. “I know whether that is feasible, but you could not call on Groningen extra in the event of a crisis,” says TNO expert Peters. A few very cold weeks bigger than the loss of Russian supplies. A quick peak demand is easy to solve with our that start gradually.”
The Netherlands does run more financial risk because it has almost no long-term contracts. As a result, it has to make more purchases on the currently more expensive spot market. In recent years, the gas price was so low that trading on this short-term market was much more lucrative. “We rely on the confidence that the free market will always function properly and that lengthy contracts for security of supply are unnecessary. You can question that,” says Van den Beukel.
According to the international former specialist of the NAM (the operator of the Groningen fields), the Netherlands assumes that you can bring in enough on the gas market, if you only have enough. See the recent price explosions in December as supply slipped. can happen in international political tensions. “What is disappointing in the Netherlands now is the price tag attached to that gas. Security of supply is mainly for the country that can and is willing to pay the most.”
A version of this article also in NRC in the morning of January 20, 2022