Oil companies start arbitration case against State for compensation for gas extraction

Shell and ExxonMobil started an arbitration case against the Dutch State on December 4. The parties have not agreed on compensation for lost income from gas extraction in Groningen. If the oil companies are proven right, the State may have to pay billions of euros.

The two companies have a perpetual agreement to extract gas from, among other things, the Groningen field. However, in 2018, Minister Wiebes of Economic Affairs decided that gas extraction would come to an end in 2030. That decision was made because there were increasingly serious earthquakes in the area.

And so the State and the companies sat down with each other to terminate the contract surrounding gas extraction. The gas storage in Norg was also part of that contract. There was an agreement in broad terms about this dissolution, until Minister Wiebes announced that he wanted to stop gas extraction in 2022. This caused bad blood among Shell and Exxon, which filed new claims.

And so there is still no agreement on financial compensation for the oil companies. This is also evident from the letter to Parliament that State Secretary Vijlbrief sent to Parliament today. According to Vijlbrief, an attempt was already made in 2020 to jointly submit a request for arbitration. Both parties could not reach an agreement.

“Subsequently, lengthy and intensive discussions at various levels took place with Shell and ExxonMobil about new replacement agreements,” Vijlbrief writes. “Shell and ExxonMobil informed me on December 4 that they will unilaterally initiate arbitration proceedings on this subject.”