Dutch Failure to Copy Norway on EU265 Billion Gas Gains QueriedFred Pals
The Netherlands got about 265 billion euros ($334 billion) in over half a century in proceeds from Slochteren and other gas fields, and has little to show for it.
That’s the conclusion of the nation’s Court of Audit, which looked into what happened to the money raised from the sale of gas from the Slochteren field, discovered in 1959 in the biggest find on Continental Europe. The investigation traced the spending to some roads, bridges, a high-speed railway and some environmental projects, totaling 26 billion euros.
“The biggest chunk of the money has been spent on general funds,” said the audit report, released yesterday evening.
Had the Netherlands followed the Norwegian example of a sovereign wealth fund, about 350 billion euros would have been available as of January 2014, the court said. The Netherlands can still have 150 billion euros by 2035 if it starts putting money aside now and invests like the Norwegians, the Court said.
The report comes Prime Minister Mark Rutte’s government works on creating a “Future Fund” with which it wants to make up for lower gas proceeds through other investments. The government is being forced to cut gas output by 21 percent this year to 42.5 billion cubic meters in 2014 and 2015.
Earthquakes linked to extraction in the area have led to a public backlash and a new production plan for the field will be presented by July 1, 2016.
The Netherlands produces about 80 billion cubic meters of gas a year and the Slochteren field’s remaining resources are estimated at 740 billion cubic meters, while total estimated reserves are 1.23 trillion cubic meters, the International Energy Agency, or IEA, said in its annual report in April. There are about 235 small fields in production.
No Sovereign Fund
The Dutch Cabinet won’t put natural gas proceeds in a sovereign wealth fund since it wants to save and invest at the same time, Henk Kamp, minister of Economic Affairs, said in a response included in the report.
“The report doesn’t take into account enough the impact on the budget if proceeds were to be brought under a sovereign wealth fund,” Kamp said.
The government will also need to spend about 1.2 billion euros to compensate for houses and buildings damaged by temblors in the area of the field. The strength of earthquakes triggered by gas production where the Slochteren field is located may rise to a magnitude 5 on the Richter scale, according to a study released in January last year by the State Supervision of Mining at the Ministry of Economic Affairs.
An Aug. 16 last year, a temblor measuring 3.4 damaged the properties of about 2,500 people.
The biggest earthquake to hit the Netherlands was in the southern province of Limburg in 1992, reaching 5.8 on the scale.
The Slochteren field is operated by the Nederlandse Aardolie Maatschappij BV, or NAM, the Dutch gas-production venture of Royal Dutch Shell Plc and ExxonMobil Corp.
The venture has set aside 100 million euros for claims and has paid out about 50 million euros so far.
Between 1995 and 2010, 23 percent of the proceeds of about 26 billion euros went to infrastructure projects such as a high-speed railway connecting Amsterdam, Rotterdam and The Hague, the Court’s audit said. The proceeds were also spent on nature, school and environmental projects. The fund that received the proceeds was dismantled in 2010.