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    Netherlands Extends State Control over Gas


The Dutch government is taking over more of the gas network and setting new requirements for Groningen ouput.

by: William Powell

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Netherlands Extends State Control over Gas

The Dutch government is extending its control over more gas assets, the industrial users' body VEMW said in comments September 4 and 5. With effect from 2021, state-owned transporter GTS will take over ownership of the Zebra gas line and other high-pressure networks in the southwest from regional network operators Enexis Netbeheer, Enduris and Zebra Gas network. 

From 2021, these networks will be part of the national gas transport network of Gasunie Transport Services and contribute to the use of the national gas transport network and the TTF gas market. VEMW will follow developments closely, it said.

Gasunie told NGW September 6 that it would not give any information about the financial settlement. "Most importantly, both existing and new parties can benefit from this acquisition. The new customers get access to the TTF market, which thus becomes more cost effective," it added.

The TTF is Europe's most liquid hub but the Netherlands is winding down its gas industry on environmental grounds. It is already a net importer as output from the Groningen gas field is falling sharply in response to the earthquakes that production has caused.

"An important principle for the acquisition is that it has no negative consequences for the other gas consumers in the Netherlands. The ACM [markets and competition] regulator will have to monitor this and assess whether a transfer from the networks to the national gas transmission network can make a positive contribution to the use of the national network and the TTF gas market," it said September 5. 

The EHD networks in the southwest of the Netherlands are regulated as a regional network and not as a national network, resulting in a difference in rules, permitted efficient costs and tariff structures.  

The additional high pressure networks start at the Dutch-Belgium border and have an extra high pressure level of more than 16 bar. The gas comes from Zeebrugge Hub, combining imported LNG, UK North Sea and Norwegian gas. 

The Zebra line was part of the infrastructure built in northwest Europe to accommodate flows of gas through Interconnector UK. That started up in October 1998 and was designed to provide a profitable outlet for UK gas, challenging the vertically integrated monopolies in the Netherlands and elsewhere.

GTS, together with the regional network operators Enexis, Enduris and Zebra had considered taking over the EHD earlier but was stopped from doing so by the expectation that contracted transport capacity would fall sharply when long-term transport contracts with gas suppliers such as RWE Trade & Supply and Delta Energy expire this year.

A transfer from the EHD networks in the southwest of the Netherlands to the national gas transport network could make a positive contribution to the use of the national network and the Dutch TTF gas market, VEMW said. The characteristics of the networks to be acquired fit much more with the national network manager than with the regional network managers. 

For the time being, it is unclear what the financial consequences are now and in the long term for the connected gas consumers on the networks to be transferred. Integration of the networks will also ensure that customers in the southwest of the Netherlands have direct access to the most liquid trading place, the TTF. In addition to the GTS transport, they can also use the Dutch gas balancing system, which offers flexibility at the lowest possible costs.

Dutch ministry takes over NAM strategy

And with effect from October 1, 2019, operator NAM will no longer decide how much gas to extract from Groningen every year. Instead, the minister for the economy will determine how much gas is extracted from the Groningen field, in consultation also with the state mining inspectorate (SSM). 

NAM did not comment to NGW on the possibility of closing the field or of NAM ceasing operations for commercial reasons before that date.

Under the new law, On minimising gas extraction from the Groningen field, NAM must continuously monitor the seismicity, using the parameters and the limit values in the measurement and control protocol (MRP). 

Earthquakes of 3.0 or more on the Richter scale require NAM to immediately inform the minister and the SSM and make a further analysis within 48 hours. In addition, the regulation also establishes the obligation to report within two weeks whether the safety risk deviates significantly from the data.

VEMW said September 4 the aim of the minister was to limit safety risks as much as possible, while also guaranteeing security of supply. NAM is obliged 'to adhere exactly to the operational strategy'. The minister can take interim measures if, for example, the safety interest demands this. To this end, a continuous insight into the consequences of gas extraction is of great importance. SSM will advise the minister in the event that limit values ​​are exceeded and any measures need to be taken.