Energy Minister Jetten does not see any acute consequences for companies and households due to the Gazprom supply stop. Do you think so?
‘I am very surprised at the laconic reaction from The Hague. The Netherlands is a very important player in the European gas market, with our transit port for LNG, our storage facilities and the gas roundabout. So if we are tackled, the market will see it as a message from the Kremlin to other European countries: you are on our list too. Germany, Belgium, United Kingdom may be shut down next. The market sees this as a substantial risk, certainly because other gas is not readily available.
‘Due to the supply stop, there is a gap in the supply. So prices are going up, it’s that simple. Why don’t we notice that? The Netherlands will notice, Europe will notice, the Third World will notice. Take fertilizer. This requires a lot of natural gas, which makes it more expensive. So potatoes become more expensive. So our fries are getting more expensive. That we won’t feel this is a political lie, which eventually returns like a boomerang.’
What should Jetten say then?
‘Dear people, this is the choice we are making. We don’t pay in rubles and this is how Putin reacts. So prices are going up.
“It’s a dangerous political game to pretend there are no consequences. I think the public is quite behind this decision. But tell the honest story.’
Gas trader Gasterra says it has already purchased gas elsewhere.
‘It is quite possible that Gasterra has concluded deals with Norway, or that it is counting on extra LNG via the terminals. Of course they don’t give that information. There is always an alternative, that’s not the point. But that has a price tag. If you pay what the market demands, you get gas.’
It is now uncertain whether we will get the gas stocks filled enough.
‘We like to insult the Poles, who have been closed off before, but their gas stocks are completely full. How is that possible? Because they are assertive in the market. They have aggressively bought gas and have thought ahead. They saw that Putin would use energy as a weapon.
‘The situation we are in is the result of ten years of not reacting. We went for the cheapest gas and the rest would be solved by wind and sun. That did not work.’
And now?
‘I have to laugh when I read in the newspapers that politicians say: we’ll arrange LNG from Qatar, Australia, Mozambique and the US. Then a letter of intent is signed. But such an agreement means nothing. And it’s 2025. We’re in 2022.
‘We are lucky that American companies are willing to send LNG to the Netherlands. But that takes a month for the midterms (mid-term elections in November, red.) on. Because energy prices are also spiraling out of control in the US. So you’ll see Biden end up picking eggs for his money and keeping the gas for himself to bring prices down. Otherwise he will lose the election.’
Less gas from Russia, soon less from the US. What must we do?
“We are still only looking a few months ahead in the hope that gas prices will fall. What we need are long-term contracts. The guys with large gas reserves want long-term agreements. Not because prices are nice and high right now, but because huge investments are needed to bring that gas onto the market. Money for new wells, in terminals, in ships. That’s tens of billions of dollars.
‘The Netherlands and Europe are now asking these countries to make investments and in six months’ time we will say coolly that we want to get rid of gas. Europe again announces that it wants to use much less gas by 2030. I hear in the United States: we have more gas than we can use in forty years, but we are not investing based on the current demand from Europe.’
How long should those contracts run? The world must also get rid of fossil fuels.
‘Gas countries are willing to take the risk that things will be different in fifteen years’ time. But they also want to be able to earn back their investments. So you have to have security for at least fifteen years, otherwise they won’t invest. That also applies to Shell and Exxon and Equinor, by the way. They do not invest on the basis of a gas shortage in 2022 and 2023. Then they will soon have billions in LNG ships that they can do nothing with’
So long-term contracts?
‘New gas countries such as Egypt are now selling everything on the spot market (the daily market for natural gas, red.† If you just say to them: we will take everything you have for the next fifteen years. Then the door opens and you stabilize the gas market here and also in the region. Egypt can deliver more than the Netherlands and Belgium need. You use the rest to fill your supplies. Countries such as Mozambique, Nigeria and Algeria can quickly supply more gas.
‘But you have to follow the merchant’s approach. Make it a European trade mission. Invest in those countries. Help them with their energy transition. Remove trade barriers. Then everyone wins and the price can drop considerably.’
These are not the nicest countries to do business with.
‘We always point the finger first and then we want a deal. This has always been the case in Egypt until now. Do you think it’s crazy that they say: check it out. Things have happened there that I don’t agree with. But it is now time to act.’
Will we get gas again at old prices?
‘The price will be substantially lower than it is now, and substantially higher than what you paid in a normal market. There is realistically no other option. We have to do this for energy security.’