April 17, 2024

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While America's most important gas supplier, Russia still plays a significant role

While America's most important gas supplier, Russia still plays a significant role

The nature of natural gas entering the Netherlands has changed drastically in the last two years. Imports from Russia have been significantly reduced, but certainly not yet reduced to zero. The US will be the most important supplying country in 2023.

The Netherlands consumed 30 billion cubic meters of natural gas last year, 5% less than in 2022. In that year, gas consumption was a quarter lower than in 2021. This is evident from the figures released by the Central Bureau of Statistics (CBS). This Tuesday.

The gate terminal at the Port of Rotterdam receives the LNG and regasifies it. (Photo: Peter Hills/ANP)

The tables CBS provides for the origin of gas are interesting. The Netherlands has been a net importer of natural gas for many years. It remains the same: Gas extraction has stopped in Groningen, and CBS figures show smaller fields are also in decline. In 2023, offshore gas extraction was less than 7 billion cubic meters, down 19% from 2022. A plan by outgoing Secretary of State Hans Wilbreef (Mining, D66) to increase extraction from small Dutch fields has yet to bear fruit. Off.

The Netherlands is therefore highly dependent on foreign countries for gas consumption. CBS has analyzed where this gas is coming from in 2021, 2022 and 2023 (see the box below for more information on CBS's research methodology). Accountants have made a distinction between natural gas entering the Netherlands in gas form, i.e. gas that comes in liquid form via pipelines, and LNG import terminals. It is about the form of gas crossing national boundaries; Gas that arrives in liquid form at the Belgian port of Zeebroek, where it is regasified and then transported by pipeline to the Netherlands, is counted as gas originating in Belgium.

The figures above show some of the significant changes that occurred between 2021 and 2023. Norway's decline as a source of gaseous natural gas is as striking as the rise of the United States as a major supplier of liquefied natural gas.

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Both of these things can be easily explained, gas market expert Gilles van den Buekel says by phone. “All gas flows in Europe have adapted to the new situation.” As for the Norwegian gas shortage, van den Buegel says it will continue in Germany. Germany's LNG import capacity is much lower than that of the Netherlands. So the new situation is that Germany is now buying a large share of Norwegian gas at the expense of the Netherlands. This is not a problem for the Netherlands due to LNG import capacity in Rotterdam and Emshaven. Leftover Norwegian gas in Germany is converted into liquefied gas from the US. The United States is now the number one supplier to the Netherlands.

Another notable finding is that Russia is still a significant gas supplier. Although the share is declining, in 2021, according to Statistics Netherlands, 8.9% of gas entering the Dutch gas system from elsewhere will be of Russian origin. In fact, the Russian share will be even higher due to the aforementioned method of recording the CBS source. Russian LNG received and regasified at the port of Zeebrugge is counted as Belgian pipeline gas when it enters the Netherlands.

It was reported that it was not about small beer Energy In January, Belgium was grappling with a long-term contract it says it cannot avoid, which meant that more than half of the LNG that arrived at Zeebrugge last year came from Russia. A large part of this will be transported immediately, including to the Netherlands.

Van den Buegel is surprised by the high share of Russian gas in the Dutch system. “Why is it increasing again?”, asks the expert, referring to the growing volume of pipeline gas of Russian origin. In 2022, 2.9 billion cubic meters of Russian gas entered the Netherlands through the pipeline, and in 2023 it was 3.6 billion cubic meters. Van den Buegel: “I expected it would all be in Germany.” He points out that total Russian supplies, meaning LNG and pipeline gas combined, show a decline.

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The question is who will buy that gas. Inquiries to Statistics Netherlands, the Ministry of Economic Affairs and Gasunie did not provide an answer to that question. “I could imagine that long-term contracts continue and that the parties don't want to make too much of an announcement about it,” van den Buegel says. He points out that LNG and pipeline gas can act as contact vessels, so part of the gas that entered the Netherlands as Russian LNG in 2022 was purchased through a Russian pipeline gas contract in 2023.

Meanwhile, natural gas consumption in the Netherlands continues to decline. “Natural gas consumption was lower than the previous year in most key sectors of the economy,” Statistics Netherlands notes. Agriculture alone saw a growth of 9%. Gas was used 6% less to generate electricity and gas consumption in industries decreased by 4%. In the built environment, gas consumption has decreased by 10%, and if we look specifically at homes, the decline was even 11% per year – although the statistics show that winter in the Netherlands is comparable in terms of temperature.

Monitoring of gas flows

For energy statistics, the transboundary of physical flows is decisive, according to Statistics Netherlands, in the explanation of how it achieves its statistics. The (International) Convention on Statistics is basically 'following the molecules'. It's not always easy, as Peter Hein von Mulligen asked. “Of course there are assumptions, where things can change. That's why we don't know everything for sure,” he said.

Trade does not play a direct role in determining the origin of natural gas – although trade certainly affects physical flows. CBS clarifies this with an example: “Suppose a Dutch company buys natural gas from a Norwegian company. This Norwegian company can meet this obligation by allowing Norwegian gas to flow to the Netherlands, but by buying Danish gas, and that flows to the Netherlands. In the first case, the source country is Norway, In the second case Denmark, it is also possible for the Norwegian company in question to buy natural gas in the Netherlands or on an (anonymous) stock market abroad.In this case, trading companies cannot determine where the gas comes from.

Statistics Netherlands notes that physical flows of natural gas through trade cannot therefore be monitored. “Information about this trade is very relevant to what happens in the international gas market and what happens if supply channels are closed, but CBS has very little information about it.”

To determine the origin or destination for energy statistics and statistics on international trade, Statistics Netherlands uses a transboundary gas flow and an estimate of the origin of a transboundary gas. For gaseous natural gas, the starting point is the border crossing figures obtained from the gas network operator GTS.

The distribution of each border crossing country was then determined based on available information. CBS: “For Belgium, we use information from the Belgian Statistics Office on gas flows within the Belgian gas network. For Germany, we use estimates from GTS. For a pipeline with the United Kingdom, we assume that all gas comes from that country. For liquefied natural gas, we have recently started using data from CBS Transport and Transportation Department Customs. These data are in good agreement with data later made available by GIIGNL, the international trade association for LNG traders.