This week, the Dutch queen Beatrix visited the former beet field where geologists discovered in 1959 the Slochteren natural gas field. The event earmarked the start of festivities to celebrate fifty years of natural gas production in the Netherlands. To my many Dutch contacts: my sincere congratulations.
Some of you might respond: what is there to congratulate? The Dutch just happened to be lucky enough to live in a country where geophysics created the right conditions for natural gas formation in their soil. Moreover, when the gas was formed, there was no such thing as a Dutch people. Having natural gas or other energy prizes such as oil or coal in your soil, is a matter of pure luck. If you take a look at the map of Europe's gas fields, you realize that having gas or not is like a geological lottery. Some of the Dutch gas fields in the North Sea lie not too far from the Belgian waters. A bit more luck and Belgian King Albert could have visited gas fields also!
I congratulate the Dutch because they had the political clout to turn the natural resources which they had been blessed with into a real blessing and not a curse. The Netherlands sells its gas - at home as well as abroad - at prices that are comparable to those in the surrounding countries. Hence, they acquire money which is saved for the future. Thanks to this, the Netherlands is one of the few countries of Europe that is not facing a budgetary catastrophe as the ageing population starts to retire. And that such rational policies are far from evident, is obvious if you consider the fate of other countries 'blessed' with hydrocarbon riches, Nigeria, just to name one. The Dutch have also avoided another cliff: i.e. 'subsidizing' its own industry by giving them access to this gas at prices that are far lower than in other European countries. Such policies only breed energy spilling behavior. At present, the Dutch industry excels in its energy efficiency. From a macro-economic perspective, this is a very sound policy. Any MWh of gas that is not spilled at home can be sold abroad and brings in money for the future.
50 years of natural gas production obviously means that one should start thinking about the after-phase. Dutch policymakers are doing this. They want to transform the Netherlands into 'the gas roundabout of Europe', i.e. playing an important role in the distribution of gas to the different European countries. The combination of its geographical position and the presence of empty gas fields that can be transformed into massive storage, makes the Netherlands an excellent candidate for this. The development of the TTF Hub proves that the country is moving in that direction.
But there are still some important hurdles that should be taken. To start with, it would be a good idea if the Dutch started charging gas by MWh and not by the normalized cubic meters that they alone use. Also, the Netherlands will have to invest in interconnection capacities with Germany and Belgium. It is a pity that all too often, Belgium and the Netherlands are presented as competitors for becoming Europe's most important gas transit country. I think that the combination of the Belgian transit grid and Zeebrugge Hub with the developments in the Netherlands make for a strong combination. Lastly, the home market in the Netherlands will have to move away from its dependence on one party, Gasterra. More gas will come in from abroad. How will Gasterra behave towards this unprecedented competition? The Dutch gas market presently is dull. It is a single-source market with everybody re-selling gas bought at the same price from one party: Gasterra. The result is that we see price offers that are all very close to one another in Dutch gas tenders. In other countries we see bigger price differentials as different suppliers have different sourcing possibilities.
As the Netherlands celebrates 50 years of gas production, there is good reason for reflection. My main reflection is: in which direction(s) will the gas flow in 2059?
