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London — Natural gas output at Europe's largest onshore gas field, the Netherlands' Groningen, continued to fall sharply in December following the Dutch government's tightening of the production quota, with volumes down 43% year on year.

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The rapidly declining output at the field has eaten away at Dutch gas stocks, which have now fallen below Gas Year 2018 levels and are well below the European average.

A production cap has been put in place to prevent earthquakes linked to gas extraction at Groningen and the Dutch government plans to phase out gas extraction at the field completely by mid-2022.

Natural gas production at the two remaining active fields totaled 1.06 Bcm in December, down 43% year on year and 3% on the month, data from operator NAM showed.

December's output included volumes of 574 million cu m at the Zuidwest gas field and 481 million cu m at the Oost field. Month on month, production at the Zuidwest field climbed 17%, which was offset by a 20% drop at the Oost field.

Total output remains on track to meet Groningen's ever-decreasing production quota.

The Gas Year 2019 quota was revised down to 11.8 Bcm starting October 1 last year, sharply lower than 19.4 Bcm in 2018 and 21.4 Bcm in 2017.

Production will need to fall below 1 Bcm/month in the summer to hit the current quota, with cumulative gas production in the current gas year of 2019 totalling 2.79 Bcm by the end of December, NAM data showed.

Output at the other two Groningen fields has now ceased, with Loppersum stopping in March 2018 and Eemskanaal ending the following month.

Conversion rises

To compensate for the loss of L-cal gas from Groningen -- which produced close to 54 Bcm in 2013 prior to the introduction of quotas -- the Netherlands has increased conversion of H-cal gas into L-cal gas, achieved by adding nitrogen at blending stations.

Total Dutch H-cal to L-cal conversion in December was 2.431 Bcm, up 10% year on year from 2.201 Bcm, data from the Dutch grid operator Gasunie showed.

The rapid decline in production of L-Cal gas from Groningen will continue to make the Netherlands increasingly dependent on LNG and pipeline gas imports from Norway and Russia.

Weaker stocks at Dutch storage facilities mean they are currently 73% full at 9.384 Bcm, data from Gas Infrastructure Europe showed, compared with with 76% at the same time last year and 80% a month earlier on December 15, 2019.

Despite the healthy level of European natural gas supplies, low Groningen production output has resulted in a quick ramp up in storage withdrawals from Dutch storage facilities, which are sharply lower than the European average of 82% and its neighbour Germany's 94% full stocks, GIE data showed.

Traders have also reported that Gazprom Export is making a dent in their storage volumes in Central and Eastern Europe, which may too have resulted from quicker withdrawal rates.