LNG

Dutch utility Gasunie, whose network and assets include over 17,000 kilometres of pipelines in the Netherlands and northern Germany as well as stakes in Dutch and German LNG import facilities, has explained its energy security plan now that the Groningen gas field in the Netherlands is no longer active and imports of Russian gas have almost ceased.

Gasunie noted that global demand for LNG also currently exceeds supply, which means security of supply is no longer a given.

The utility said that Gasunie Transport Services (GTS) was being assigned the statutory duty to give annual advice on the security of natural gas supply and has drawn up a plan that was being presented to the Dutch Ministry of Economic Affairs and Climate Policy.

“The GTS vision emphasises the importance of proactive measures to guarantee the security of natural gas supply in the short and long term, while factoring in the challenges presented by the current market and changing climatic conditions,” Gasunie explained.

“The vision still features an important role and responsibility for market parties, but does propose several extra market rules allowing for intervention if deemed necessary to guarantee security of supply,” the report added.

Gasunie has LNG import facility stakes in the Dutch Gate terminal in Rotterdam and the Eemshaven import hub in Groningen,

The utility is additionally involved in the German natural gas market and in developing the onshore LNG terminal in Brunsbüttel on the Elbe.

Guarantees

“A continuous sufficient gas supply and well-filled gas storage facilities for the winter periods are needed to guarantee security of supply,” said the report.

“The Netherlands currently depends on imports for 75 percent of its gas consumption,” it noted.

“Given the closure of the Groningen field and declining domestic production, this dependence will become even greater,” Gasunie stated.

“The Netherlands would therefore benefit from a well-functioning European internal gas market as would other EU member states,” the utility added.

There are also now likely to be additional statutory measures in the 27-nation EU to fill gas storage facilities.

As of mid-2022, supply from Russia to northwest Europe ceased almost entirely.

This is being compensated for by maximum pipeline gas imports from Norway and maximum LNG supply through the Gate terminal and the EemsEnergy Terminal throughout the year.

“This supply covers basic demand, but can barely make an additional contribution in winter,” said Gasunie.

“Since LNG supply is stable over the course of the year, it is not sufficient to allow for seasonal flexibility. All in all, this means that seasonal storage facilities will be the primary source of seasonal flexibility in the years to come, even more so than in previous years,” Gasunie declared.

Gasunie explained that although market parties determined the flows of gas flows, commercial motives were sometimes at odds with guaranteeing security of supply.

Statutory measures

Several additional statutory measures are, therefore, proposed such as establishing a statutory standard filling level for seasonal storage facilities that market parties need to adhere to.

This could also see the government designate a party to act as back up in the event that the market parties do not meet their obligations on time.

“To create sufficient supply for the long term, expanding LNG import capacity, as is currently happening at Gate and the German terminals, remains crucial for security of supply. Existing LNG plants will also need to remain available,” said Gasunie.

Gasunie warned that if the coming winters were colder than average, seasonal storage facilities would be empty quicker and that would mean that there would be “a realistic chance” of insufficient supply capacity volumes to fill seasonal storage facilities back up to the standard filling level.

“In close collaboration with the Ministry of Economic Affairs and Climate Policy and other relevant stakeholders, GTS is making every effort to create a sustainable and reliable gas supply for the Netherlands,” Gasunie concluded.

European natural gas prices have failed to be influenced by continuing attacks on shipping in the Red Sea in 2024 as weak fundamentals push natural gas price forecasts lower amid soft demand and record storage.

Italian oil and gas company and LNG project developer Eni said on July 11 that the Russian pipeline gas company Gazprom was further reducing its supplies.

Italian natural gas network operator Snam, one of Europe’s leading energy infrastructure companies and operator of two LNG import terminals, reported an almost 4 percent rise in nine-month revenues to €2.03 billion ($2.40Bln) even as natural gas demand dropped because of Covid-19 lockdowns.