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UPDATE 1-Europe's gas supply in focus as Dutch debate giant Groningen field
February 12, 2015 / 4:42 PM / 3 years ago

UPDATE 1-Europe's gas supply in focus as Dutch debate giant Groningen field

(Adds economy minister's comments)

By Anthony Deutsch

AMSTERDAM, Feb 12 (Reuters) - Gas supplies to Europe from the massive Groningen field in the Netherlands could be curtailed as Dutch lawmakers debating on Thursday face public protests over earthquakes blamed on the site ahead of elections next month.

The parliament debate comes as the European Union seeks to diversify energy needs in the wake of a deteriorating relationship with Russia.

The Dutch, the EU's largest gas exporter, can supply households and power plants for years, but supplies will start dwindling in 2025, and they will soon become a net importer.

The Groningen field was the main source of 13 billion euros ($14.73 billion) in government gas income in 2013 and a reduction could significantly impact state finances.

Its future has become a political flashpoint in the run-up to March 18 provincial elections that are expected to deal a blow to the ruling coalition of Prime Minister Mark Rutte.

Economy Minister Henk Kamp said last Friday that production would be capped at 16.5 billion cubic metres (bcm) in the first half of 2015.

That sent gas prices higher in Europe, as analysts read it as a reduction from a standing full-year cap of 39.4 bcm.

MINISTER UNDECIDED

Kamp told parliament on Thursday that 2015 production will be based on two ongoing studies, leaving the door open to higher production in the second half of 2015.

One considers safety aspects relating to the earthquakes, while the other will identify a minimum production level needed to meet domestic demand and international contracts.

"Now there are two options: One is 35 (bcm). The other is 39.4 (bcm). I understand you have different opinions and I respect them. ...I am going to wait to make a decision until July 1 when I have all the facts and advice."

Opposition lawmakers dismissed the temporary cap as a short-term election ploy and several parties on Thursday said they backed reducing production to 30 bcm.

Extraction has resulted in increasingly strong tremors, some measuring as much as 3.6 on the Richter scale, which have cracked buildings and led to widespread damage claims.

Dutch gas exports in 2012 totalled nearly 57.3 billion cubic meters (bcm), or around 12 percent of Europe's gas demand, data from the Gas Exporting Countries Forum showed. About 75 percent comes from the Groningen field.

It is operated by government-owned Gasunie and output is jointly exploited by the government, Royal Dutch Shell and Exxon.

$1 = 0.8822 euros Editing by David Evans

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