According to Shell, the agreements that the state made in 2018 with the oil companies about gas extraction are no longer tenable due to the changed current situation. Because of the gas crisis, the cabinet wants to keep gas extraction on the pilot flame for longer, says Shell.
The oil company therefore wants to make new agreements as soon as possible and believes that the state is wrongly hesitating. That said Shell Netherlands director Marjan van Loon on Thursday morning in The Hague to the parliamentary inquiry committee investigating gas extraction. She found it “frustrating” that this is not happening.
In 2018, then minister Eric Wiebes (VVD, Economic Affairs) announced that gas extraction would be reduced to zero before 2030. From that point of departure, agreements were made in that year with the oil companies about the distribution of the declining gas revenues and the payment of the increasing costs of damage and reinforcement. “A lot has changed since we concluded the Outline Agreement in 2018,” said Van Loon in the interrogation room.
pilot light
For example, in 2019, after the earthquake of 3.4 at Westerwijtwerd, it was decided to close the gas tap even faster, so that more gas remains in the ground. Van Loon also referred to last week’s cabinet decision to keep gas extraction on the pilot flame. “I have agreements with the government that really no longer match where we are now.”
Also read: How Wiebes lost the confidence of the Groningers
In June 2018, the Rutte III cabinet and the oil companies concluded the so-called Agreement on Main Lines after months of intensive negotiations. In this, the oil companies received a considerably larger share in the profits from gas extraction. The state also promised to take over responsibility for dealing with earthquake damage and fortifying houses. In return, the oil companies guaranteed that they would reimburse the costs to the state. The oil companies would also not submit a claim on the gas that would remain behind after the gas extraction under Groningen had been phased out.
At the time, it was agreed, Van Loon stated, that the parties would reconvene if the situation changed. Shell wants to discuss, among other things, the compensation for the underground gas storage in Norg, Drenth. But also about ‘appropriate guarantees’ for all parties – such as the guarantees that the oil companies give that there will be enough money left in Groningen for damage and reinforcement if the gas field really closes completely.
Recent attempts by Shell to restart the conversation have come to nothing, according to Van Loon. That is why there are now two arbitration cases of the oil companies against the state. “I don’t want that arbitration at all, I think we should work it out together,” said Van Loon. “The solution is within reach.”
Public support
According to her, this solution lies, among other things, in creating a single fund from which the Groningen Mining Damage Institute and the Groningen National Coordinator can jointly draw on for repairing damage and strengthening houses. But the House of Representatives, among others, is afraid that the oil companies want to ‘buy off’ their responsibilities, while the problems in Groningen may continue for a long time.
Van Loon swore to the committee of inquiry that that is not what Shell wants.
She acknowledged that until about 2017 her company’s priority was indeed to make maximum use of the Groningen gas field. But that has changed, she says. The company’s priority is now to improve the situation in Groningen. The company has now realized that it cannot develop economic activities without social support, she argued. “As far as we are concerned, all the money goes to Groningen and does not end up with the shareholders. We put it in damage and reinforcement. We would like to invest what is left in projects.”
This is in sharp contrast to the attitude of ExxonMobil, the other shareholder in gas extraction company NAM. Filip Schittecatte, who was commercial director of the Dutch division of the American company for many years, called it “a pity” during his interrogation on Wednesday that the entire gas field under Groningen cannot be emptied, especially now that gas prices have become so high. “I found it difficult to see that value go to waste.” ExxonMobil also said it is “constantly concerned” about the cost of the damage and reinforcements.
A version of this article also appeared in the newspaper of October 7, 2022