Dutch Gasunie Sees Income Up, Invests for Transition
Dutch state-owned gas infrastructure operator Gasunie saw annual revenue rise €94 ($112)mn to €1.372bn in 2020, with higher income from the commissioning of the German Eugal pipeline, which it part owns. Carrying Nord Stream gas south from Greifswald, it shifts gas flows in Germany leading to more demand for capacity in Gasunie's German arm. It transported 6% more gas there, with the closure of coal and gas power plants promising higher throughput in future.
Pre-tax profit (Ebit) was €859mn, up from €504mn, thanks mainly to a change in the tax regime that reversed an impairment of €300mn. The result after taxation was €600mn, €188mn higher than last year and the dividend was down €26mn to €262mn.
The economic stagnation caused by European governments' reaction to the Covid-10 pandemic, last year's mild winter and reduced flows from the Groningen field all meant that Gasunie had 4% less gas to shift through its Dutch network to Belgium and Germany. Overall it transported 1,085 TWh, down 2% on 2019. Consumers and smaller businesses used 6% less gas but power stations needed more gas.
Operating expenses were up €21mn on last year as it starts to spend on the energy transition. Energy costs of gas transport were up €26mn on last year, with less gas coming from Groningen field meaning importing gas and injecting nitrogen at conversion facilities to make low-calorie gas. The price of the energy required to keep the gas networks at the desired pressure has also risen.
CEO Han Fennema said the company had to "make anticipatory investments to get our infrastructure ready for the future energy system. In 30 years’ time, our network will be transporting green hydrogen, green gas, heat and CO2, in line with demand in the market and society. By 2050, some 30% to 50% of the energy supply will come from gaseous molecules, enabling energy to be stored economically and transported over greater distances. Our infrastructure will be linked to the electricity grid at many points. There, green electricity can be converted into gas at any time, and vice versa, according to supply and demand."
But this will all take time so by 2030, the Netherlands will still need three quarters of today's gas demand. "In 2022, NAM will be turning off the gas coming from the Groningen field, so we must ensure that we can receive sufficient foreign gas in our network and make it suitable for domestic use through quality conversion. Additionally, we need sufficient gas storage in the region for the Dutch market," he said.
The most ambitious project Gasunie worked on in 2020 concerns the development of a national transport network for hydrogen, the ‘hydrogen backbone’, which will cost €1.5bn and could be ready by 2026. For this network, Gasunie is repurposing existing gas pipelines as these become available due to declining demand for natural gas. The backbone connects large industrial hubs to factories that will "soon be producing blue and green hydrogen. This will enable major companies to wean themselves off natural gas, massively reduce their carbon footprint and maintain jobs, their export strength and innovation capacity for the Dutch economy."
Gasunie's share of that and other transition costs will amount to €7bn spread out over the period from 2021 to 2030, which is almost the same as the total value of its current assets. Green bonds will contribute a substantial tranche of the costs.