London — The winding down of Dutch gas trader GasTerra -- due to the early phase-out of production at the giant Groningen field -- is likely to be completed before the expiry of all of its long-term supply contracts, a company spokesman said.
That means that the Netherlands will likely need to come up with alternative arrangements for meeting its long-term gas supply obligations to traditional Groningen gas buyers elsewhere in Europe once GasTerra ceases to operate.
GasTerra has historically been the marketer of gas produced by Shell/ExxonMobil joint venture NAM at Groningen, but following the decision by the Dutch government last month to halt production from the field by mid-2022, the GasTerra shareholders have decided to wind down the company's operations in the coming years.
GasTerra is a 50-50, public-private venture between the Dutch government -- through state-owned EBN (40%) and the economic affairs ministry (10%) -- and Shell and ExxonMobil (each with 25%).
It has long-term supply contracts with gas buyers across Europe, including in Germany, Belgium, France, Switzerland and Italy, the spokesman said.
While some contracts will expire during the GasTerra wind-down process, others could continue past the end of GasTerra's operational life.
"We don't communicate the expiry dates of contracts, since we regard this as commercially sensitive information," the GasTerra spokesman told S&P Global Platts.
"But you can safely presume that GasTerra won't survive the end of its own long-term obligations," he said.
In a letter sent by economy minister Eric Wiebes earlier this month to the Dutch parliament, it was laid out that a plan would be drafted to meet GasTerra's outstanding supply obligations.
"Phasing out activities is a complex process that will take a number of years," Wiebes said in the letter.
"The guiding principle here is that the company can meet all its long-term obligations," he said.
"If, even after implementation of the joint phasing-out plan, there are still some obligations that cannot be completed in time, we will, over the next few years, in consultation with the management, determine how these will be carried out."
Wiebes said he would provide more information on the next steps to be taken in the spring, but stressed that it had been agreed that GasTerra's core activity would "no longer exist" once gas production from Groningen ended.
"The shareholders' preferred scenario is to phase out GasTerra's operations gradually within the foreseeable future," he said.
Groningen production has been significantly lowered in recent years due to the risk of earthquakes triggered by production drilling at the field.
The quota for the current gas year that started on October 1 is just 11.8 Bcm, well down on the most recent Groningen production high of 54 Bcm in 2013.
GasTerra also buys gas under long-term deals, such as a 20-year deal with Russia's Gazprom originally signed in 2000 by Gasunie, as well as being an active participant at European gas hubs.
GasTerra CEO Annie Krist said in a statement that the company's activities had reached their "final stage." "But they will be just as essential in the years to come as they were in the past," Krist said.
"We now have our most important task of defining the planned phase-out responsibly, taking the interests of our staff members and all other stakeholders into account," she said.
--Stuart Elliott, firstname.lastname@example.org
--Edited by Alisdair Bowles, email@example.com