Saturday

22nd Jan 2022

Dutch businesses 'not guaranteed' gas over winter

  • Dutch gas storage facilities are currently only half full, against average December levels of 80 percent (Photo: Bilfinger SE)
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The new Dutch cabinet cannot ensure businesses will have access to gas over the winter, and some companies may have to take emergency measures, according to experts.

Dutch gas storage facilities are only half-full currently, against average storage levels in December of around 80 percent, experts told investigative platform Nieuwsuur this week.

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Storage levels in the country during the winters of both 2018 and 2020 dropped by more than 50 percent, making the scenario of gas running out not altogether inconceivable, due to the low current storage levels.

The threat of gas shortages is especially daunting because it provides 44 percent of Dutch energy needs.

Households have special protection due to European legislation, but Dutch companies that depend on gas may need to switch to coal or other energy sources.

Over the summer, the cabinet was repeatedly warned of winter gas shortages.

But as late as October, the cabinet stated supplies were sufficient, with outgoing secretary of state, Dilan Yeşilgöz, telling press gas policy reforms were "unnecessary."

But faster than expected economic recovery, lower than expected supply from Russia and the US, plus high demand - especially in China - added to rising gas prices.

China's state-owned companies were forced to pay higher prices for gas, making it attractive for producers to send liquefied gas there.

High prices, in turn, led to slow replenishment by energy companies in Europe.

"Traders and operators prefer to buy gas in the summer when the price is low, and then sell it during the winter for a higher price. But prices over the summer have not been low, so companies saw no profit in buying expensive gas," associate professor at TU-Delft, Aad Correljé, told EUobserver.

And while storage levels all over Europe are lower than usual, problems in the Netherlands are more pronounced.

France, Italy, Spain, Poland all have regulation ensuring gas storage facilities are well filled at the beginning of the winter, but the Netherlands along with Germany and Austria do not. But the Netherlands is even more reliant on gas, with 92 percent of households using gas for heating - the most of any EU country.

Gasunie, the state-owned company that regulates the transport of Dutch natural gas, warned market players on 21 July to "take responsibility" and safeguard the security of supply, but it lacks regulatory leverage like France.

Historically this has not been a problem.

Due to a giant gas reservoir underneath the province of Groningen, cheap gas has been abundantly available in the Netherlands since the 1960s.

But rising fears over earthquakes forced the government to phase out gas extraction since 2019. This has increased dependence on Russian and Norwegian imports.

What happens if gas runs out?

If gas runs out, the gas protection and recovery plan, drawn up by the ministry of economic affairs and climate, will kick into action.

Users may be asked to reduce gas use or be hit with higher taxes.

In the unlikely event of a full-scale gas crisis, some industries or regions may have to be forced to shut down or switch to another fuel such as coal.

Opinion

Why did gas prices suddenly spike?

The 29 September historic high of $1,000 per thousand cubic metres for natural gas is not likely to be the final one this year, as European economies are still in desperate need to fill their storage facilities before winter.

Gazprom chief warns EU on higher gas prices

Gazprom chief Alexei Miller has said the EU's planned energy union will raise the cost of Russian gas and warned that his company will stop supplying gas through Ukraine in 2019.

EU energy ministers clash amid gas price uncertainty

EU energy ministers met on Thursday to debate spiking gas and electricity prices, and clashed over market reform - with some countries, led by Germany, opposing actions put forward by France and others.

Lawyers threaten action over new EU gas and nuclear rules

Environmental lawyers are threatening to take legal action against the European Commission if gas is included in the EU guidelines for sustainable finances. But the draft taxonomy has also triggered discontent among some EU national capitals and MEPs.

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