The Nederlandse Aardolie Maatschappij (NAM) is starting arbitration proceedings against the state because of the costs it has to pay for the consequences of gas extraction in Groningen. This is evident from a Friday published letter to parliament by State Secretary Hans Vijlbrief (Mining, D66).
The NAM, a joint venture of Shell and ExxonMobil, is not directly involved in the settlement of the damage in Groningen and the reinforcement of houses. However, the state largely charges the costs of this to NAM.
It appears from the letter to parliament that NAM has submitted two arbitration requests, because it disputes the costs of both the damage and reinforcement proceedings.
Vijlbrief writes in the letter that the cabinet is “disappointed” that the NAM legally disputes the costs.
So far, NAM has paid all damage costs charged to the gas company. But the bills for the reinforcement of houses, which NAM also partly has to pay, were only 60 percent paid by NAM for the third and fourth quarters of 2020 and the first quarter of 2021.
Clarity about costs
The NAM says in a press release that it would like to get “clarity” about the costs. But although NAM has formally started the arbitration process, the company “preferably wants to come to new agreements with the government”. According to NAM director Johan Atema, this “could even be done in the form of a commutation scheme”. It is not clear how high that amount should be. But such a lump sum would probably amount to billions of euros.
Shell also says it wants to buy off NAM’s liability for the consequences of gas extraction in Groningen in one go. This is stated by Marjan van Loon, CEO of Shell Netherlands, in an interview with Het Financieele Dagblad. “I can see from the bills that the government imposes on NAM that passing on costs has become too complex,” says Van Loon. “A commutation arrangement would be a better solution.”
Already in the spring of last year it became clear that NAM did not want to pay the full bill. In an interview with NRC said NAM director Johan Atema not to avoid a legal battle over the account. The NAM believes that it only has to pay the costs that are directly related to the consequences of gas extraction. “The NAM cannot pay for everything the government promises,” Atema said.
‘Reinforce less than 50 houses’
First of all, NAM has doubts about the necessity of the reinforcement operation in Groningen. In the area, 27,000 houses may need to be reinforced so that people can leave their homes in the event of a major earthquake. The NAM disputes this high number, because the gas tap is closed. This would reduce the risk of severe earthquakes and also reduce the need for reinforcements.
Atema said in NRC that “according to the latest calculations, fewer than fifty houses need to be reinforced for security reasons.” That statement came in for a lot of criticism. He later said he regretted the unrest his statement had caused. Though he didn’t take back his words.
In addition, there is another point of contention between NAM and the state, about the specification of the loss account. According to NAM, the specifications of the invoices that the state sends to NAM are too unclear. Atema said in NRC that “even in the supermarket with the groceries, people get a receipt with what you have bought, the number of units, the VAT and the total amount”.
The NAM wants to have the costs specified at address level, while the Ministry of Economic Affairs believes that it does not have to provide that specification, a spokesperson for the ministry said earlier. NRC.
NAM boss Johan Atema: ‘We cannot pay everything the government promises’