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Gas-rich Netherlands little help to Europe if Russia cuts supplies

Wednesday, 2 April 2014 - 9:58pm IST | Place: Mumbai | Agency: Reuters

The EU's largest gas producer, the Netherlands, could not cover for any loss of Russian gas imports to Europe, a Dutch official said, because the low calorific value of its gas means it cannot be widely used.

Russia's Gazprom provides a third of Europe's gas, and between 30 and 50 percent of its gas exports to the EU pass through Ukraine. Price rows between Kiev and Moscow have halted gas flows to Europe in the past decade.

Some politicians in Europe have called for the Netherlands to step up supplies should Russia cut exports through Ukraine.

But the Dutch government says increasing its supplies would be of little use, since gas from its giant onshore Groningen field has different specifications to Russian gas and cannot be used in most European household or industrial appliances.

"Gas from the Groningen field has a lower calorific value than Russian gas," said Bart Visser, a spokesman for the eonomics affairs ministry, referring to the field's high nitrogen content.

Groningen - one of the largest gas fields in Western Europe - accounts for roughly three-quarters of its production. Most Dutch appliances are built to use its type of gas.

"On a small scale you can change the calorific value of natural gas, but it means that if there's a disruption in gas supplies the Netherlands would not be able to compensate for the rest of Europe."

Visser said ramping up production at the country's North Sea fields, which have a higher calorific value, would make little difference to Europe's short-term supply needs, since the gas fields were too small.

Norway's pipeline operator Gassco told Reuters last month it could only offer EU members limited help for one or two days in the event of a Russian supply cut.

 

DIVERSIFYING SUPPLIES

Talk of a disruption to EU gas supplies over the Ukraine crisis has injected renewed urgency into efforts to diversify the bloc's energy mix.

At a summit in Brussels last week, EU leaders met with United States President Barack Obama and cited U.S. exports as one way to source alternative gas supplies.

But importing liquefied U.S. gas in large volumes would be far costlier than receiving Russian gas by pipeline, and efforts to boost the share of renewables and tap shale gas reserves have failed to break Russia's gas supply dominance.

Visser said that while a Russian supply cut would not hurt the Netherlands immediately, it was seeking alternative sources of energy.

Elsewhere in Europe, healthy gas stocks following an unusually mild winter would help cushion the impact of a sudden drop in Russian flows.

"The Netherlands is basically self-sufficient for its gas because of Groningen," Visser said, despite government promises to cut production at the field by about a quarter over the next three years due to earth tremors in the area.

"But we are trying to make our energy supply more diversified. Recent developments in Ukraine confirm this is an important thing to do."




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