Industry Trend Analysis – Russia, Norway, LNG To Benefit From Groningen Cap – SEPT 2015
BMI View : A strong decline in Dutch gas exports over the coming 1-2 years provides an opportunity for Russia, Norway and LNG exp orters to increase gas supply , in a weak European gas market .
The Netherlands is an important gas producer and net exporter in Europe. In 2014, it produced some 66.3bn cubic metres (bcm) of gas and exported an estimated 38.4bcm (net exports). This makes it the second largest gas producer and exporter of natural gas in Europe after Norway. It is a crucial supplier to many neighbouring countries, notably the Germany, Belgium, France, Italy and the United Kingdom.
However, the Netherland’s large export capacity is set to strongly diminish within the coming 2 years, based onexpected production cutsat the Groningen field. We previously highlighted that legal, political and social pressures will see the Dutch government reduce productiontargets for thegiantGroningen field from 42.5bcm in 2014 to 36.0bcm in 2015 and 32.0bcm from 2016 onwards.This is notably due to concerns over an increase in the frequency and intensity of earthquakes in the area directly linked to production from the maturing field( see ‘Gas Falls 30% On Groningen Cuts, Maturing Fields’, June 17 ).
When added to maturing production from other onshore and offshore fields, Dutch gas production will be significantly reduced over our forecast period, from 81.5bcm in 2013 to 53.6bcm in 2016. On the demand side, gas consumption in the Netherlands over our forecast period will mostly stagnate, at around 40bcm.
