Hostname: page-component-cd9895bd7-gxg78 Total loading time: 0 Render date: 2024-12-26T04:02:45.319Z Has data issue: false hasContentIssue false
  • English
  • Français

Four decades of Groningen production and pricing policies

Published online by Cambridge University Press:  01 April 2016

A.F. Correljé  and
P.R. Odell
A.F. Correljé*
Affiliation:
Erasmus University Rotterdam, Applied Economics / Erasmus Centre for Environmental Studies, P.O. Box 1738, 3000 Rotterdam
P.R. Odell
Affiliation:
Emeritus Professor, Erasmus University Rotterdam, Applied Economics
*
1Corresponding author; e-mail: [email protected]

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

This paper deals with production and pricing policies for the Groningen gasfield. It will provide an evaluation of the past and a view to its future in a liberalized European gas market. The lifelong production potential and high productivity of the Groningen gasfield is unique. The extremely low-cost field is also unique in the sub-optimal manner in which it has been exploited over the whole of its forty year life to date. Its initial monopolistic situation in the West European energy economy created an opportunity for its development to be limited to production levels, whereby super-normal profits were generated on high value sales at the cost of consumers’ welfare.

The breach in the monopoly, through competition from Soviet gas, readily able to undercut Groningen prices, posed a serious threat both to unit values and market expansion. Fortunately, the fortuitous 1973/4 international oil supplies and pricing crisis restored Groningen’s fortunes. Following the upward price adjustments for foreign sales, the stage was set for achieving high company profits and massive government revenues. Dutch society in a broader sense benefited only indirectly through government tax expenditures. Again, energy consumers’ welfare gains were ignored.

This remains the essence of the situation, pending agreement on the introduction of the liberalized market to meet EU directives. Currently the Dutch gas regime and policy objectives are being adjusted to the requirements of operating in a liberalized market. These changes recognize: first, the invalidity of the government’s long-held fears for gas scarcity in such a way, that the earlier steps to restrict both foreign and national sales have been abandoned, and second, the need to reinstate Gasunie as an active, rather than a passive, player in the European gas market, in which other participants have subverted Gasunie’s earlier dominance.

The second part of the paper will examine, whether and how these changes can be reconciled with the core elements of the Dutch gas policy, i.e. state and private revenues, co-ordination of supply and production, the ‘small fields policy’ and the balancing role of the Groningen field. The liberalization of the European gas market, together with changes in the pattern of supply and demand and stated Dutch policy objectives of energy policy may give rise to conflicts between the interests of the Dutch State, the owners of the field and, again, the consumers.

Keywords

Groningen gaspricing policyenergy economyDutch societyliberalization
Type
Conference papers
Information
Netherlands Journal of Geosciences , Volume 80 , Issue 1 , April 2001 , pp. 137 - 144
Copyright
Copyright © Stichting Netherlands Journal of Geosciences 2001

References

Algemene Energie Raad, 1998. Liberalizatie van de gas sector.Google Scholar
Correljé, A.F., 1998. Hollands Welvaren: De geschiedenis van een Nederlandse bodemschat, TeleacNOT, Hilversum.Google Scholar
Energie Nederland, 1998. Nummer van 8/12/1998: 8.Google Scholar
Energie Nederland, 1999. Nummer van 18/3/1999: 9.Google Scholar
EZ (Ministry of Economie Affairs), 1996. Third White Paper on Energy Policy.Google Scholar
EZ, 1997. Gasstromen. Ministerie van Economische Zaken, Directoraat-Generaal voor Energie, Den Haag.Google Scholar
EZ (Ministry of Economie Affairs), 1998. Regels omtrent het transport en de levering van gas (Gaswet): MEMORIE VAN TOELICHTING en VOORSTEL VAN WET.Google Scholar
Gas, 1997. Krant van Juni 1997, 13.Google Scholar
Gasunie, 1997. Jaarverslag Gasunie.Google Scholar
Het Financieele Dagblad, 1998. Krant van 3//11/1998.Google Scholar
Kunneke, R.W., Arentsen, M.J., Manders, A.M.P. & Plettenburg, L.A., 1998. Marktwerking in de gasmarkt, Beleidsstudies Energie, Den Haag, DGE, Ministerie van Economische Zaken, 19: 105.Google Scholar
NRC, 1999. Krant van 5/1/1999.Google Scholar
Odell, P.R., 1969. Natural Gas in Western Europe: a Case Study in the Economic Geography of Resources, De Erven F., Bohn, Haarlem.Google Scholar
Odell, P.R., 1973. Het Nederlandse Aardgastekort: onbeantwoorde vragen en een alternatieve hypothese. Economisch Statistische Berichten 58e Jaargang, no.2900: 422–426.Google Scholar
Odell, P.R., 1975. The Western European Energy Economy, Challenges and Opportunities, Athlone Press, London.Google Scholar
Odell, P.R., 1979. Constraints on the Development of Western Europe’s Natural Gas Producing Potential in the 1980s. OilGas 5/3:21–30.Google Scholar
Odell, P.R., 1984. Constraints on the Development of Natural Gas resources with Special Reference to Western Europe. In: Watkins, C. Campbell and Waverman, L. (eds): Adapting to Changing Energy Prices. Oelgaschlager, Gunn and Hain, Cambridge.Google Scholar
Odell, P.R., 1988. The West European Gas Market: the Current Position and Alternative Prospects. Energy Policy 16/5: 480–493.Google Scholar
Odell, P.R., 1991. Global and regional Energy Supplies: recent Fictions and Fallacies Revisited. EURICES, Rotterdam 1991.Google Scholar
Odell, P.R., 1992. Prospects for Natural Gas in Europe. The Energy Journal 13/3:41–62.Google Scholar
Odell, P.R., 1995. The Cost of Longer-Run Gas Supply to Europe. Energy Studies Review 7/2: 94–108.Google Scholar
Odell, P.R., 1997. Europe’s Gas Consumption and Imports to Increase with Adequate Low Cost Supplies. Energy Exploration and Exploitation 15/1: 35–54.CrossRefGoogle Scholar
Schweppe, F., 1999. Groningen Long Term: project van lange adem. PetroChem, 2/feb: 16–21.Google Scholar
Volkskrant, , 1996. Krant van 8/5/1996;Google Scholar
Verberg, G., 1998. Comments. Het Financieele Dagblad 3/11/ 1998.Google Scholar