GasTerra Sees 2016 Sales Down 10% on 2015

Dutch gas marketer GasTerra reported March 6 a 10% decline in the volume of gas sales compared with 2015, down from 70.3bn m³ to 63.9bn m³, the difference being split between domestic (-4.2bn m³) and export sales (-2.2bn m³).

Also, the average price fell to €0.153/m³ ($162/'000m³), from €0.208/m³ in 2015. This means that turnover was €9.9bn, compared with 2015's €14.7bn).

The company noted in its statement that the perception of gas, once a cornerstone of the Dutch economy, has been "damaged as a result of the earthquakes in Groningen, concern over dependence on Russian gas, discussions on shale gas and methane emissions. The positive aspects, such as comfort, the cleanest fossil fuel, flexibility and versatility risk being pushed to the background of these debates."

Interim CEO Robert van Rede said that while GasTerra has a role to play in the responsible implementation of the move towards a low-carbon future, "success or failure of this depends to a significant degree on whether enough support can be gained for what are sometimes far-reaching measures. After all, the transition will take a long time and place heavy demands on people and businesses. Support is not automatic whether it comes to gas extraction, the construction of wind farms or a rise in energy bills."

As well as the well-publicised cut in production from the Groningen gas field, gas extraction from small fields is also under pressure, it said. "Low gas prices, difficult permit trajectories and a decline in social and political support for natural gas are making existing gas production more difficult and stand in the way of the realisation and profitability of new projects. This might eventually mean that supply from small fields declines more rapidly than is allowed for in the current forecast."

Among its difficulties last year were unusually public disputes over two long-term supply contracts, one with Italian Eni and the other with French Engie; and new regulations on capacity bookings. Transmission system operators (TSOs) can only offer unbundled capacity on the Prisma platform if there is a mismatch between the available capacity on both sides of the border. This bundling obligation makes it more difficult to purchase unbundled capacity that is needed to match its own capacity that was booked in the past. Problems arise especially when TSOs on both sides of a border point are working under different technical conditions, it said.

There is also the continuing trend from last year of credit risk as the financial position of its clients worsens. "GasTerra has drawn up guidelines which must be met by clients, with most of whom there is a long-standing relationship. These guidelines limit the risk associated with possible credit concentrations and market risks. The guidelines form part of GasTerra contracts," it said.

(Credit: GasTerra)

GasTerra has also taken the decision to develop green gas. As a whole, the country must make sure that 14% of its output comes from renewable sources. This mostly applies to electricity, "but the sector believes that green gas also has an important part to play. GasTerra considers it important to stimulate this development." Green gas production stands at about 100mn m³/yr but the company expects it will be possible to produce a few billion m³ a year from Dutch sources.

On the positive side is the reduction in tariffs imposed by the regulator on its former sister company, Gasunie, which is now wholly owned by the state. Last year it spent €501mn on transport.

Van Rede was replaced by Annie Krist (pictured above) from the start of the month.

William Powell