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Europe gas supply in focus as Dutch debate giant Groningen field
February 12, 2015 / 1:36 PM / 3 years ago

Europe gas supply in focus as Dutch debate giant Groningen field

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 Netherlands and the European Union seek to diversify energy needs in the wake of the worst confrontation with Russia since the Cold War.

The Dutch, the EU’s largest gas exporter, can supply their 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, already strained by years of austerity.

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 Liberal Prime Minister Mark Rutte.

CAP TALK BOOSTS GAS PRICES

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

That sent gas prices higher across major European trading hubs, as analysts read it as a reduction from a standing full-year cap of 39.5 bcm.

But in a letter to parliament, Kamp said full-year production would be based on the findings of an inquiry into the safety aspects of gas extraction, leaving the door open to higher production in the second half of 2015.

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.

In 2013, production came in 54 bcm, well above projected levels, even after research showed extraction was causing quakes, lawmaker Agnes Mulder of the opposition Christian Democratic Appeal said.

“What will happen in the second half of this year?,” she said. “What is most important is safety, that people can safely live in their homes ... that’s why production must be reduced as a precaution.”

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.

As the debate in parliament began, protesters in the public gallery sang the folk anthem of the Groningen region.

The Groningen field is the largest natural gas field in Europe and the 10th largest in the world.

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

$1 = 0.8822 euros Reporting By Anthony Deutsch, editing by David Evans

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