This Annual Report is a translation of the original Dutch Annual Report. The Dutch Annual Report is adopted and approved by the General Meeting of shareholders at 14 February 2019. This translation is for information purposes only and no rights can be derived from its content. In the case of any discrepancies between the English and the Dutch text, the latter will prevail.
Netherlands net importer of natural gas for first time
GasTerra’s turnover up in 2018 to 11.2 billion euros
The gas trading company GasTerra has reported a turnover of 11.2 billion euros for the past financial year (2017: 9.6 billion euros). The volume of natural gas supplied fell slightly, by 1.1 billion cubic metres, to 55.5 billion cubic metres. The rise in earnings, of more than one and a half billion euros, after years of decline is due mainly to the rise in market prices, as well as to its successful purchase and sales policy. The supply of Groningen gas fell again in the past gas year (1 October 2017 to 1 October 2018). The producer, NAM, produced 20.1 billion cubic metres of natural gas from the field, which is 1.5 billion cubic metres less than the permitted volume set by the minister for Economic Affairs and Climate Policy.
The key feature of 2018 for GasTerra was the government’s historic decision to end gas extraction in Groningen as quickly as possible. GasTerra is the sole buyer of this natural gas, which has been the foundation of Dutch gas consumption for decades. It is therefore very clear that the consequences for GasTerra are very significant, and uncertainty as to the company’s future role has increased. At the same time the government’s decision constitutes a new challenge. In the current transition period GasTerra’s work will be more critical than ever now that the task has shifted to minimising the share of Groningen gas. CEO Annie Krist: ‘For the time being GasTerra remains a vital link in gas provision. Natural gas is still very much needed, despite voices in the climate debate that give the impression that we will soon be able to do without this energy carrier. As in the years to come alternative sources will not be able to wholly meet demand, which is only falling slightly, management of the Groningen field, for which we share responsibility, is therefore vital to the security of supply of low-calorific natural gas in north-west Europe.’
The continued fall in production from the Groningen field automatically means that the need for imports is increasing. In 2018 the Netherlands was a net importer of natural gas for the first time since the huge field in Groningen was commissioned. Although the conditions for investment in small offshore gas fields have improved, the need for imports is bound to rise in the coming years. Annie Krist: ‘At present, the Netherlands still depends on gas for about 40 per cent of its energy needs. The use of gas-fired power stations may even increase in the next decade in order to secure electricity supplies, now that the proportion of sustainable energy in the energy mix is rising and coal-fired power stations are being phased out. Other indicators also point to demand for gas remaining high. All in all, in the years to come the Netherlands will still have to produce and import several billion cubic metres of natural gas in order to secure the energy supply.’
These developments mean that, in this respect, our country will increasingly resemble other European countries that get most of their gas from abroad. Annie Krist: 'Thanks to the expansion of the gas hub in recent decades, the Netherlands is well prepared for this new reality. Whether this also applies to the market in general is another matter. The current market structure still relies on surplus domestic production.’
Since its creation in 2005, GasTerra has devoted considerable attention to making our energy supply more sustainable. Efforts in this direction are focused primarily on raising awareness, research, development and sharing knowledge, but in recent years also on promoting the use of renewable gases. The company is financing innovative green gas projects. GasTerra is also the largest purchaser of green gas in the Netherlands and helps producers market this sustainable alternative to natural gas. The share of green gas in GasTerra's portfolio is growing steadily, and this trend is expected to continue.