Netherlands struggling to deal with declining LNG production

Bloomberg

In the Netherlands, once Europe’s largest natural gas supplier, one of the big questions is how to deal with declining production and incre- asing reliance on imports.
For hundreds of energy traders, utility executives and analysts gathering in Amsterdam for the Flame Conference, the Netherlands epit- omises the European energy security situation. Whether through pipelines from Russia or northern Africa or by ship from the US, more and more imported gas will be needed to feed the region’s power plants, companies and homes.
“The Netherlands is set to become a definitive net importer of natural gas,” said Carlos Torres, vice president of gas and renewables markets at Rystad Energy, a
Norwegian energy research company. Across Europe, nations are “now taking advantage of low LNG prices.”
The source of gas is a politically charged issue, with Russia supplying around 40% of the European Union’s fuel and building a controversial new pipeline directly into the region. The US says that dependency is dangerous and is urging the EU to build more terminals to ship in gas from its shale boom to bolster the bloc’s efforts at diversification.
LNG is playing a bigger role in Europe after new production plants caused global supply to outstrip demand, with the surplus boosting imports into the region’s liquid markets to record levels. The Gate LNG terminal in Rotterdam has seen renewed interest and could hit full capacity by the end of the year after years of being underused, Torres said.
European LNG imports more than doubled in the first quarter despite a warmer-than-usual winter, demonstrating a “genuine underlying demand,” according to Alastair Maxwell, chief financial officer of LNG tanker owner GasLog Ltd. While buyers took advantage of the lower prices to bring in more cargoes, declines in the region’s production were also behind the increases, he said.
The Groningen field, once Europe’s largest, is being phased out and will be closed completely by 2030 as the Dutch government seeks to limit earthquakes provoked by gas exploration. Its production is forecast to fall to less than half the nation’s requirements in the year through October, and will be just a third of peak output in 2013, according to BloombergNEF.