End of an era as Netherlands set to be net gas importer in 2018

LONDON (ICIS)–The Netherlands is set to become a net importer of gas for the first time in 2018, according to ICIS analysis of flow data, as falling domestic production erodes the country’s decades-old status as north-west Europe’s swing supplier.

Pipeline imports have outpaced exports in the year to-date for the first time since Dutch gas production began in the 1950s. The deficit comes despite unusually high exports in the first quarter, when extreme cold weather caused demand in north-west Europe to rocket and sent wholesale spot prices to record highs.

As of 17 August, imports in 2018 exceeded exports by 255 million cubic meters (mcm), wiping out an export surplus of around 5 billion cubic meters (bcm) in January to August last year, according to data from grid operator GTS.

It is not unusual for Dutch imports to be higher than exports during the low-demand summer months, but this year the deficit emerged from March and has been steadily widening ever since.

The Netherlands produces and exports low-calorific gas to Germany, Belgium and France. It imports high-calorific gas primarily from Russia and Norway.

Production drop

In order to reverse the trend, the Netherlands would have to export more gas this winter than in previous years, which would in turn require higher domestic production.

That would conflict with government plans to close the biggest field, Groningen, as quickly as possible, in response to earthquakes caused by gas extraction in the region.

New rules to limit output to “never more than necessary” are set to come into force from gas year 2019-20, but even in the current gas year–ending 31 September–operator NAM does not expect to produce all of its allowed quota of 21.6bcm.

The Central Statistics Bureau (CBS) said in April this year that imports exceeded domestic production for the first time in 2017, but that the Netherlands was still a net exporter.