XOM

Dutch limit gas production at Groningen despite energy crisis

Credit: REUTERS/MICHAEL KOOREN

AMSTERDAM, March 14 (Reuters) - The Netherlands on Monday said output from the Groningen gas field would be only a last option to secure its energy needs in the wake of Russia's invasion of Ukraine, as it cut its production forecast for the facility this year.

Extraction in the year to the end of September is now expected to be 4.6 billion cubic metres (bcm), the government said in a letter to parliament, versus an outlook for 7.6 bcm released in January.

A main source of Europe's gas for decades, the Groningen field operated by a joint venture between Shell RDSa.L and Exxon Mobil XOM.N hit peak output of 88 bcm in 1976 and was still close to 30 bcm only five years ago.

The Dutch state announced in 2019 that Groningen output would end by October 2022 to limit seismic risks in the region, with gas only to be extracted thereafter in the event of extreme weather or unforeseen circumstances.

"The events are unsure, also because of the Russian invasion in Ukraine," the government said.

"We continue to stress that the Groningen field will only be an option of last resort, to guarantee supply of energy to households."

The government said it would stick to its plan to shut down the field completely in 2023 or 2024, depending on how fast gas reserves can be filled with the low-calorific gas typical of Groningen.

It said that in order to limit dependence on Russian fuels it will look to increase its capacity to import liquefied natural gas (LNG).

For this it could expand an existing LNG terminal in Rotterdam by 5 to 8 bcm, or build a new floating facility with a 4 bcm capacity in the Groningen province, the government said.

(Reporting by Bart Meijer, Toby Sterling and Anthony Deutsch; Editing by Jan Harvey)

((Bart.Meijer@thomsonreuters.com; +31 20 504 5006; Reuters Messaging: bart.meijer@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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