Gas has been an inextricable part of the European energy supply in general and the Dutch energy supply in particular for more than half a century. Since its discovery in 1959, the Groningen Gas Field, the largest gas field in the world at the time, has produced over 2,000 billion m3 of natural gas. More than 95% of Dutch households use natural gas for heating. GasTerra has the exclusive right to sell Groningen gas. A major share of it is sold on the domestic market and a significant proportion is supplied to customers in Germany, Belgium and France.

In addition to the Groningen gas, which is low-calorific gas (i.e. it has a relatively low calorific value), GasTerra also sells a large volume of high-calorific gas. Most of this gas comes from the smaller fields in the North Sea or is imported from Russia and Norway. The high-calorific gas is used by industry and is also exported to the countries named above, as well as to Switzerland, the United Kingdom and Italy. Unlike the Groningen gas, producers can offer the gas from the small fields to other gas traders, but GasTerra has a legal obligation to buy this gas at the going market price if asked to do so.

Gas has played a crucial role in the energy supply for decades. In a period of structural and radical change, in which the trade in gas and the transport of gas have been split off from each other and the market liberalised, gas has retained its pre-eminence in the energy supply. All the same the era when that could be taken for granted is over. The position and the image of gas have come under pressure. The positive characteristics of our product, such as comfort, cleanest fossil fuel, flexibility and versatility, are at risk of being pushed into the background. The most important reasons for this in our region have been the earthquakes, which have reinforced the idea among many people that gas is at best a necessary evil, and the crisis involving Russia and Ukraine, which has strengthened existing doubts about the security of the gas supply in Europe.

The earthquakes have had an indirect effect on our business strategy, as the production ceiling imposed by the cabinet since 2014 has not only restricted the producer of Groningen gas, NAM, but also the seller, GasTerra.

The developments outlined above have obviously had a negative impact on the image of gas. Although no-one in Europe denies the importance of gas in the energy mix, not only now but in the longer term, a sizeable group have difficulty seeing our product as part of the solution rather than part of the problem. It is our job therefore to improve the reputation of gas. The reality is that gas is indispensable worldwide, in Europe and in the Netherlands and will remain so for decades to come, from the perspective of both security of supply and responsible climate policy. With regard to the latter, natural gas will over time have to meet stricter CO2 emission standards, which is perfectly possible with the application of CCS. The high economic and social value of this mineral resource cannot be ignored. Fifty years after the discovery of the Groningen Gas Field, the Netherlands still has over 600 billion m3 of conventional natural gas. The responsible production of this gas will also benefit society, both economically and environmentally, in the future.

Chain management

GasTerra attaches great importance to responsible chain management. Our primary focus in this area is on the use of our product (downstream), because we consider it important that the society uses gas as efficiently as possible. However, it emerged from the stakeholder dialogue that stakeholders are unclear about GasTerra's role upstream, especially with respect to the earthquake problems and the purchase of gas from Russia. To gain more insight into these themes, GasTerra decided to specify chain management as a material issue.

The chain

All activities from production to the use of natural gas are part of the chain. GasTerra is responsible for the trading activities. We buy and sell gas and provide related services, dealing with various national and international parties. Naturally we deal with producers, suppliers and customers but also, for example, with network operators for transporting the gas, and with market regulators and authorities that are responsible for controls required by legislation and regulations. In addition, we have the public service obligation to implement some provisions of the Gas Act, in particular the purchase of gas from the small fields, taking and selling gas from the Groningen Gas Field and, where necessary, supporting GTS in carrying out its statutory duties.

We participate in various partnerships within the chain, in pursuit of goals such as knowledge-exchange, the development of sustainable energy applications, publicising the benefits of gas in the transition toward a sustainable energy supply and improving regulations. In the context of the last two goals, we are active in The Hague and, mainly through the trade association Eurogas, in Brussels. We are also affiliated to the national organisation Vereniging Energie-Nederland that promotes the interests of the energy industry.

As a trading company, we have limited influence over chain management upstream, partly because our statutory public service obligation does not allow us a free choice as to which producer we do or do not buy gas from. Moreover, it is not possible to find out exactly where the gas we buy comes from on the free gas market. When it is clear where the gas comes from GasTerra refrains from bringing political or social debates into its contractual relations with suppliers and customers. However, we are part of the Project Delta Group partnership which shares best practices on gas extraction. We also support our customers in making their production processes more sustainable through the Environmental Plan for Industry (MPI).

The Netherlands

There has been a ceiling on gas production from the Groningen Gas Field since 2014. This became necessary because of the increasing frequency and strength of earthquakes in the extraction area. Under the first decision, no more than 42.5 billion m3 of natural gas was to be extracted from the field in 2014 and 2015, followed by 40 billion m3 in 2016. In addition, extraction at five production sites in the heart of the area around Loppersum where the earthquakes occurred had to be reduced by 80% to a maximum of 3 billion m3.

This first decision has since been followed by new limits with eve lower ceilings. At the beginning of 2015, the cabinet decided that no more than 39.4 billion m3 of natural gas was to be produced from the Groningen Gas Field. This decision was followed by an amending decision in June to the effect that no more than 30 billion m3 was to be extracted in the past year. In addition, a further 3 billion m3 of additional gas became available from the Norg Groningen gas storage facility once only in the 2015 calendar year.

Parallel to this decision-making, an appeal to the Council of State was brought by 40 interested parties, including the Groningen Provincial Executive, various municipalities in Groningen, two water authorities, the Groningen Security Region and a number of private individuals who demanded further restrictions on gas extraction in Groningen. The Administrative Jurisdiction Division of the Council of State announced on 18 November 2015 that it had decided to annul both the decision of January 2015 and the amending decision of June 2015. In their place the Council decided in a provisional ruling that NAM was not to extract more than 27 billion m3 of gas in the 2015/2016 gas year (that runs from 1 October 2015 to 1 October 2016). Exceeding this up to a maximum of 33 billion m3 would only be permitted if the 2015-2016 gas year turns out to be a relatively cold year.

On 18 December we learned that the cabinet would uphold the provisional ruling of the Council of State. Thus gas production from the Groningen Gas Field is limited in the 2015/2016 gas year to 27 billion m3 with the possibility of increasing this to 33 billion in a relatively cold year to guarantee security of supply. We will also be working hard over the coming years to reduce dependency on Groningen gas. One of the measures to achieve this will be the construction of a new nitrogen plant that can convert high-calorific gas into what is known as pseudo-Groningen gas. Finally, the plan is to take a new decision on the longer term future of gas extraction based on the new extraction plan before October 2016.

In 2015, GasTerra purchased 29.4 billion m3 of Groningen gas (2014: 42.4 billion m3). In accordance with the production decision, NAM produced 28.1 billion m3 from the Groningen Gas Field in that year (2014: 42.1 billion m3). The difference between the volume produced and the volume purchased is accounted for by NAM's own consumption, e.g. gas for fuel, and the net extraction from underground storage facilities.

As well as gas from the Groningen Gas Field, GasTerra buys Dutch gas from the small fields. GasTerra boosts the production of this Dutch gas by gearing the contract terms for the small fields to the needs of producers where possible. This is how GasTerra implements the small fields policy, under which production from the small Dutch fields can be prioritised. GasTerra has the statutory duty to purchase this gas on market terms if the producer offers it to the company.


In addition to Dutch gas, GasTerra purchases a relatively small volume of gas from Norway and Russia. This gas is purchased on the basis of long-term purchase contracts. Since 2014 trade relations between the Member States of the European Union and Russia have come under pressure as a result of the crisis in Ukraine. However, gas trading activities have remained outside the scope of the sanctions and commercial relationships have not been affected. Around 5% of the gas that GasTerra purchases comes from Russia.

Security of supply

In 2014 in response to the crisis in Ukraine, the European Commission performed stress tests to test security of supply in the European Union. Two scenarios involving supply problems with Russian gas were simulated and two responses to those simulations (cooperation versus non-cooperation) were analysed. The aim was to measure the short-term effects and to obtain input for the negotiations on gas transit and supply between Russia, Ukraine and the EU. The results led the European Commission to review the Regulation concerning measures to safeguard security of gas supply The emphasis was on intensive regional cooperation. In any case the simulations found that the Netherlands would not experience any interruptions in the gas supply.

We will adhere to the wishes of the Minister of Economic Affairs by not concluding any new long-term contracts. This also means that the existing long-term contracts will not be renewed or amended to increase volumes.

Market trends

Since the Minister of Economic Affairs announced his first production decision in January 2014, GasTerra has adapted its strategy to the new circumstances. The introduction of a production ceiling translates into a purchase ceiling for us. We cannot buy more gas from the producer NAM than the maximum set by the Minister. Since it is GasTerra's job to add as much value as possible to Dutch gas, we try to get as close to the ceiling as possible. Before the first production decision, GasTerra worked with a 10-year flexible purchase ceiling. Purchases below the annual average in one year could be compensated by higher purchases later. The current production limits mean that GasTerra has to plan more carefully than before.

We already knew that GasTerra would have to reduce the volume of gas it purchases in phases before the Dutch cabinet decided to reduce production. Both the Groningen Gas Field and the majority of the small fields are in the mature phase of their production cycle. Future production will be influenced by the production limit on the Groningen Gas Field. It is GasTerra's job to keep the sales obligations in step with decreasing supplies. This means matching the portfolio – total sales obligations – to the supply of gas as well as possible. The company is currently looking at how it can make best use of its supply and how to manage the associated costs. We have choices to make. Supply side changes, the focus on costs and efficiency and, finally, the smaller margins due to substantial competition in the market means that contracts to supply clients with low volumes no longer cover costs. We only consider the pros and cons differently for the purchase of green gas, the volumes of which are relatively small, but which can play an important role in greening the energy supply.

At the time that the Minister takes a decision on the level of the production ceiling, agreements on future supplies have already been concluded. GasTerra can count on a sufficient supply of gas to meet its contractual obligations. This is in part made possible by the Dutch government's gas roundabout strategy, through which more gas can be imported and exported. As a result of this an effective liquid gas exchange, the Title Transfer Facility (TTF), has been developed over the past 10 years. All in all, despite the production limit on the Groningen Gas Field, we were still able to meet all of our contractual obligations in 2015. The production ceiling has meant that we have had a smaller volume of gas available for sale on exchanges and we have even bought gas from there.

Demand for gas in Europe (EU28) was higher in 2015 than in 2014. This was because the average temperature, especially in the first half of the year, was lower than in the exceptionally warm 2014, boosting demand for gas for heating. Some countries used more gas for generating electricity but in general the low price of coal and CO2 emission allowances are obstacles in this sector. Since demand for natural gas in Asia was below expectations, while global LNG capacity increased, more LNG was available for the European market. At the same time the virtual exchange, the TTF, flourished: never has so much gas been traded as in 2015.

Energy targets

A number of social parties signed the Energy Agreement for Sustainable growth on 6 September 2013. One of the things agreed is to reduce energy consumption in the Netherlands by making houses more energy efficient among other measures. Many housing associations are putting this into practice. Improved energy efficiency means in principle that households will use less gas. GasTerra therefore expects the total volume of sales to decrease in this segment in the long term.

The Council for the Environment and Infrastructure (RLI) published its advisory report “A Prosperous Nation without CO2” in the autumn of 2015. This set out a policy to reduce energy consumption or to make consumption more sustainable. The built environment is the primary target. The advice in this report served as input for the cabinet's Energy Report that was published in mid-January.

In 2014, the European Union adopted a framework for climate and energy policy going forward to 2030. It sets out three energy targets for 2030: 1) at least 40% reduction in emissions from 1990 levels with the allocation per Member State to be agreed later; a 27% improvement in energy efficiency at European level compared with 1990; and finally 3) a 27% share of renewable sources in the energy mix. Preparations were made in 2015 to adapt various aspects of the current European regulations on climate and energy policy with a view to achieving these targets. Strengthening the CO2-emissions trading system (ETS) is the key to this. Moreover the framework was enlarged in 2015 with the addition of more targets, for instance for the reliability and affordability of the energy supply. The European Commission has set out these and other matters in a strategy for a (European) Energy Union. As climate and energy are particularly good examples of cross-border issues, GasTerra supports this plan and the central role that it gives to the ETS for the climate aspects.

The UN climate conference, COP 21, was held in Paris from 30 November to 12 December 2015. The Paris Agreement was presented on the last day of the negotiations. The Agreement set the target of limiting global warming to a maximum of two degrees above pre-industrial levels. The 197 parties (196 countries plus the EU) went further than that by agreeing to pursue efforts to limit the temperature increase to 1.5 degrees. What was new compared with earlier UN climate agreements was that agreement was reached on the need to phase out the use of fossil fuels within an undefined period of time. The Convention, that relates to the period after 2010 and takes effect as soon as 55 countries that together emit more than 55% of greenhouse gases have ratified it, requires member states to draw up ambitious national climate plans. The rich countries are expected to support developing countries financially to reduce their emissions.

GasTerra finds it encouraging that agreement was reached in Paris on the ambitions, targets and direction of climate policy. We will have to see how the positive outcome of what was regarded beforehand as an extremely difficult negotiation process can be translated in practice into effective, concrete measures. It is essential that these measures are result-oriented, i.e. that they tackle the main problem through the step-by-step reduction in greenhouse gases. Which resources will be deployed for this – energy saving, renewable energy sources, replacement of the most polluting fossil fuels by cleaner fossil fuels combined with CCS – is in fact secondary. The environmental return from the climate policy must ideally be the prime consideration.

Virtual Trading Points

Trading on the Dutch virtual trading point, the TTF, rose to a record height in 2015 with a traded volume of 1,708 billion m3. With this volume of trade the TTF continued to hold on to the top position that it had taken over a year earlier from the British National Balancing Point (NBP) in the Over-The-Counter trade (OTC). Using this trading method parties do business with each other directly. The popularity of the TTF is due to the Netherlands' long history as leading player in the European gas sector. The fact that the TTF trades in euros rather than the pounds sterling on the NBP works in its favour as it means that continental parties are not exposed to any currency risk.

The TTF and the British NBP are the two largest virtual trading points for natural gas in Europe. The volume traded on the NBP in 2015 was similar to the year before. The TTF showed a strong growth and by the end of 2015 was approaching the NBP in terms of total traded volume per month. Despite the strong position of the NBP and the TTF, the German trading points NCG and GasPool and the Italian PSV also grew in 2015.

The TTF remains the most important price marker for long-term contracts and for gas on the other trading points in continental Europe. The churn rate of the TTF rose again in 2015. The churn rate is the ratio between the traded volume and the physically delivered volume. In 2013, the average churn rate was 18.5; in 2014 it had risen to 31 and in 2015 to 37. The physical volume was low in the summer months leading to a ratio of around 50. The storage facilities were relatively empty in the spring of 2015 and so parties had to buy gas on the TTF to fill them ready for the winter.

Traded volume

Physical volume


The volume of liquefied natural gas (LNG) available to the European market is increasing. The most important reasons for this are decreasing demand in Asia, while LNG production capacity has increased. On top of that the LNG price in Asia has fallen sharply due to the drop in the oil price. As a result Northwest Europe has become an attractive sales market and Europe is currently functioning as the global LNG balancing market.

Whether this trend will continue in years to come will be closely connected with economic growth and the energy choices that the most important purchaser countries in Asia make. Japan, for instance, has decided to re-start a number of nuclear power stations that were switched off in response to the disaster at the Fukushima power station in 2011. Over time this will affect the demand for LNG in Japan. China is also an important growth market. This growth could still be given a major boost if decisions are taken to close coal-fired power stations and replace them with gas-fired stations but this will also depend on competition with pipeline gas from Russia.

Partly thanks to the construction of LNG terminals in Australia and America, analysts believe that the production capacity of LNG will increase by 180 billion m3 over the next four years. Australia has documented contracts for an estimated 97 billion m3 of LNG exports for 2018 and America has 60 billion m3. A large proportion of the American gas has been contracted by European parties. Contracting LNG does not in fact provide any certainty that this gas will actually be delivered to the destination country. The contracts increasingly offer the seller the option to sell the LNG to whoever they want on the world market. It is also possible to ship on LNG delivered in Europe to other markets.

Competition from coal

The price of coal and the price of CO2 emission allowances are still relatively low. For existing power stations, therefore, it is still cheaper to generate electricity by burning coal than by burning gas. For this reason number of energy companies in Northwest Europe have already closed their gas-fired power stations or announced plans to do so. In Belgium gas-fired power stations have been shut down because they were no longer profitable. However, some of these power stations were taken back into use in 2015 because problems with nuclear power stations threatened to lead to shortages on the Belgian electricity market.

Closing gas-fired power stations has consequences for security of supply and our climate targets. Burning coal may be a cheaper alternative at this moment but it releases more CO2 than burning gas. Furthermore, older coal-fired power stations in particular cannot be switched off and fired up again as quickly as gas-fired power stations, so in the transition to a sustainable energy supply they are less suitable as a back-up to the frequently unpredictable renewables. A number of European countries are taking measures in this context to secure their supply. These 'capacity mechanisms' mean that energy companies are paid for the reserve capacity that they have to retain to guarantee that the electricity stays on.

Discussions are taking place at European level about improving the trading system for CO2 emission allowances. This should lead to higher CO2 prices and therefore encourage industry to invest in measures that reduce emissions such as the use of gas. It should also improve the competitiveness of gas-fired power stations compared with coal-fired power stations.

Under the Energy Agreement, the Netherlands has agreed to close its five oldest coal-fired power stations in 2016. They will be replaced by three new, more efficient coal-fired power stations that are already in use (two at Maasvlakte and one at Eemshaven). Despite this agreement there is increasing social and political pressure to also close down these power stations eventually.

GasTerra shares the view that reform of the European Emissions Trading System (ETS) is the best way to improve the competitiveness of gas-fired power stations. The CO2 price needs to be high enough to make it attractive to companies to invest in the cleanest technology and so to operate as energy-efficiently as possible.

Energy Report

In the Energy Report, published in January 2016, the cabinet presents a complete vision for the future energy supply in the Netherlands. The cabinet is pursuing a low CO2 energy supply at the international level that is safe, reliable and affordable. In this vision natural gas is confined as far as possible to the energy functions for which there is no alternative available. Space heating, for example, should be provided where possible by means of low CO2 solutions. The cabinet announced that the Energy Report is to be taken as the basis for the Energy Dialogue, in which various stakeholders are to exchange ideas on the transition to a sustainable energy supply.

Shale gas

The cabinet decided in 2015 not to go ahead with commercial exploration and extraction of shale gas in the next five years. It is not yet known whether this position will change over the longer term. It will depend on all kinds of future developments, including developments in the technical field. The Energy Report does not rule out the option to extract shale gas in the future. The cabinet believes that sustained international research is needed before a decision can be taken on granting permits for the exploration for and extraction of shale gas for commercial purposes. Ultimately test drilling under government responsibility could form part of the research programme. There will be no drilling for shale gas during the present government's term of office.

Supply and Sales

In 2015, GasTerra supplied 70.3 billion m3 of gas. That is 11 billion m3 less than in 2014. This decrease can be explained mainly by the production ceiling on the Groningen Gas Field. The winter of 2015 was mild, which reduced market demand. Prices fell. The average gas price in 2015 was 20.8 eurocents per cubic metre compared with 23.9 eurocents in 2014. 

Supply to the connection

In 2015, GasTerra supplied 1.4 billion m3 of gas at the connection to energy companies, power stations and industrial customers (2014: 1.8 billion m3). Thus the supply to this market segment remains slightly behind expectations. The high average temperatures in 2015 were responsible for this. However, the lower sales volume in this sector was largely compensated for by additional resales, where the gas was still supplied in the same year.

The positive effects of continuous product development was expressed in the sales contracts for the next few years. Just like last year, GasTerra took advantage of the marked increase in the number of smaller, often local, energy companies. These parties are contracting more gas every year, because they see their customer portfolios growing. The company benefits from this because of the higher sales. 

In 2015, GasTerra supplied 3.9 billion m3 of natural gas to its industrial customers (2014: 3.5 billion m3). This was below expectations. Various reasons can be given for this. First, the economic conditions affected industrial production processes, resulting in reduced demand for gas. Second, customers are making less use of their combined heat and power plants (CHPs) which generate heat and electricity at the same time. For many customers, the purchase of electricity was cheaper than domestic production with lower demand in these installations as a result.

Product improvement

Despite these trends, GasTerra is working hard to retain its customer portfolio. We consult our customers to ascertain whether our terms and conditions and our products are still competitive. We made a number of product improvements in this area again in 2015. These were mainly changes to cater for our customer's wishes and requirements. We also have to make choices to do with marketing lower volumes.

Customer satisfaction

In 2015, GasTerra gave its industrial customers access to the customer portal. Customers can look at their contracts and invoices here. This portal was developed in response to an earlier customer satisfaction survey, in which customers indicated that they needed more information, especially about market trends and prices. To meet this need we also issue a periodic digital newsletter. In addition, the company organised a well-attended customer event in September with lectures on the gas market and a visit to the Gate terminal at Maasvlakte. 

Making processes more sustainable

We assist our industrial customers in their efforts to make their production processes more sustainable through the Environmental Plan for Industry (EPI). Through this programme GasTerra supports industrial customers in improving their energy-efficiency, reducing their emissions and making their production processes more sustainable. An EPI project was carried out with four customers in 2015. At the same time Energy Matters, commissioned by GasTerra, researched the possibility of flexible use of CHPs. Based on these research results, six industries have carried out their own individual studies into these possibilities. These scans were performed by Energy Matters and paid for by GasTerra.

GasTerra also supports the production of and trade in green gas by purchasing this sustainable gas from various producers on attractive terms.

For an overview of all of the projects, please go to our Green section.

Supply to the gas hub

Trade on the TTF is mainly conducted through standard framework contracts. This means that only the price, volume and delivery period are agreed for each deal. A deal may be made direct via the exchange, via a broker with a customer, or bilateral with a customer. GasTerra prefers the first option. As many market operators trade through brokers, we also use this channel a great deal. The number of brokers increased again in 2015. This gives market operators more freedom of choice.

Trends in physical and traded volumes TTF

In 2015, GasTerra supplied 22 billion m3 of gas via the virtual trading point (2014: 29 billion m3). However, the supply to these target groups was below expectations. This can be explained by the relatively high temperature in 2015, resulting in fewer temperature-dependant contracts being agreed. A total volume of 46 billion m3 was physically supplied via the TTF in 2015.

Average prices on the TTF were lower than in 2014. The annual average day-ahead price fell by 1.1 €ct/m3 compared with 2014, the annual average month-ahead price fell by 1.6 €ct/m3 in 2015. The relatively warm year, lower oil price and sufficient supply of gas depressed prices on the gas hubs.

Trends in average monthly month-ahead prices

Trends in average monthly TTF prices


In 2015, GasTerra exported 43.0 billion m3 of gas (2014: 47.0), mainly through long-term contracts with a few large international energy companies. This decrease can be explained mainly by the relatively low demand for gas in Europe because of the mild winter months.

Renegotiations took place on a number of export contracts in 2015. The most important theme remains the transition in the market from oil-indexed to gas-indexed prices. As a result of this the roles of various parties in the value chain have been redefined. Issues, apart from price, that play a role here include greater contractual flexibility and the supply point. The parties come close to each other's positions in many cases but this takes a great deal of time and effort. If it proves impossible to reach agreement, an arbitration procedure will follow. There were two arbitration procedures in 2015, one of which has been completed. The other is still going on.

Conversion from L-gas to H-gas

Due to falling production volumes from the Groningen Gas Field, users of Groningen L-gas will have to switch to H-gas as of 2020. The conversion from L-gas to H-gas is an important issue in Germany, France and Belgium. In Germany, because of the decrease in the country's own L-gas production, a start has already been made with the conversion and this will be intensified from 2020 onwards when the imports from the Netherlands decrease. By 2030 there will be no more exports to Germany. Similar preparations are being made in Belgium and France, where the conversion process will start no later than 2024. The Netherlands is not expected to convert before 2030. However, from 1 January 2017 only gas appliances that are able to run on both low- and high-calorific gas will be sold in the Netherlands.

Virtual storage service

GasTerra provides market operators with options to contract virtual storage space via the gas and electricity exchange ICE Endex. This virtual storage service (VSS) is offered in the form of Standard Bundled Units (SBUs) and it allows market operators to inject or extract gas from the virtual storage facility. GasTerra provides this service on the TTF. ICE Endex auctions the volume as an independent party on instructions from GasTerra, so that purchasers remain anonymous to GasTerra.

In November 2013, market operators contracted 3.7 million SBUs in the form of a one-year product (2014/2015 storage year). In addition, GasTerra started to offer a five-year product in November 2013 (2014–2019 storage years) and 4.1 million SBUs were contracted. Finally, the remaining 5.4 million SBUs were sold at auction as one-year product in February 2014.

The first auction for the 2015/2016 year took place in November 2014, at which 4.5 million SBUs were sold in the form of one-year product. The remaining capacity was auctioned again as one-year product in February 2015. At this auction, 4.5 million SBUs were sold for the 2015/2016 year. Another auction was held on 18 November 2015 for the 2016/2017 one-year product and 1,757,577 SBUs were sold at this auction. The last auction for the 2016/2017 one-year product took place on 10 February 2016. The remaining 7,341,324 SBUs were sold at this auction.


In 2015, GasTerra purchased 70.3 billion m3 gas from the Groningen Gas Field, small fields, trading points and through imports.

Groningen Gas Field

In 2015, GasTerra purchased 29.4 billion m3 of Groningen gas (2014: 42.4 billion m3). Within the limits of the decision on the Groningen Production Plan, NAM produced 28.1 billion m3 from the Groningen Gas Field in that year (2014: 42.1 billion m3).

Small fields

GasTerra purchased 22 billion m3 from the small fields in 2015, 2.2 billion m3 less than the previous year. In the past decade, the purchase of gas from small fields decreased by about two billion m3 per annum. This is because the reserves in the small fields are becoming depleted, resulting in reduced pressure in these fields and a steady decline in production. Although reserves are still being found in new small fields, this does not fully compensate for the fall in production. The outlook for the coming years shows a further decrease. These projections are based on statements from the producers. It is not certain whether the levels of investment on which these projections are based will be maintained. Returns and the resources available for investment in the oil and gas sector are under pressure because of the low oil and gas prices. This has led the gas production companies, through their trade association NOGEPA, to urge the Dutch government to reduce the high tax on the profits from this activity. This would make investment in new gas production more attractive. It could also prevent the loss of existing infrastructure.

Improved conditions

The Seller's Nomination Regime has been in place for the sale and purchase of small fields gas for a few years now. It means that supply is not demand-driven as it used to be, i.e. at the request of GasTerra, but production-driven. As a result producers are better able to adjust the supply to the technical facilities of the fields. They have to nominate what volumes of gas they expect to supply a month in advance. They can nominate a small proportion of the volume the day before they supply it.

In 2015, a new improvement to the supply conditions was rolled out, whereby the whole of the volume can be announced one day ahead. In introducing this commercial approach GasTerra takes the wishes of producers into account. The producers for their part provide GasTerra with non-binding production projections for the short, medium and long term. Meanwhile all producers can provide automated projections in accordance with the new conditions.

Procurement from Virtual Trading Points and Imports

GasTerra procured 18.9 billion m3 of gas in 2015. This was done both through virtual trading points (12 billion m3) and through imports from Norway, Russia, Germany and the United Kingdom (a total of 6.9 billion m3). Due to the long-term nature of the import contracts, there was little change from previous years.

Around 5% of the gas that GasTerra purchases comes from Russia. This gas is purchased based on a long-term procurement contract, in which the rights and obligations of both parties are set out. The trade relations between the Member States of the European Union and Russia remained strained in 2015. The sanctions imposed by the EU after the outbreak of the crisis in Ukraine in 2013 remained in force. However, gas trading activities fall outside the scope of the sanctions and the relevant commercial relationships have not been affected. Gazprom supplied less gas to GasTerra under its long-term contract; according to the Russian producer this was because it needed extra gas to fill its storage facilities.

Renegotiations took place on a number of import contracts in 2015 just as in 2014. The most important theme is the transition in the market from oil-indexed to gas-indexed prices. As a result of this the roles of various parties in the value chain have been redefined. Issues, apart from price, that play a role here include greater flexibility and the supply point. The parties come close to each other's positions in many cases but this takes a great deal of time and effort. The ultimate goal is to bring the contracts up-to-date so that they do justice to the existing agreements but are also in keeping with current market reality. If parties cannot reach agreement by renegotiating together, they can bring their dispute to an arbitration tribunal. There were two arbitration procedures in 2015, one of which has been completed. The other is still going on.


In the Netherlands, GasTerra purchases the transmission capacity from Gasunie Transport Services B.V. (GTS), operator of the national gas transmission network. In addition, GasTerra books transmission capacity with various international transmission system operators (TSOs), such as BBL Company, the British National Grid and various German operators. The costs of procuring transmission capacity in 2015 were €532 million. This was €37 million less than in 2014 [€569 million], mainly due to substantially reduced volumes of Groningen gas and a decreasing need for transmission capacity for the Dutch small fields.

The earlier trend under which transmission bookings were mainly made for the short term continued in 2015. The Prisma booking platform has further strengthened its position as the most important intermediary for obtaining transmission capacity.

GasTerra also made use of the option to return capacity that is surplus to requirements to GTS, so that GTS can put it on the market again. Only if GTS actually puts the capacity on the market, do GasTerra's obligations for this capacity cease. This only applied to a small proportion. Finally, GasTerra actively offered its surplus transmission capacity on the secondary market in 2015. This resulted in a number of successful transactions, although GasTerra finds this market to be not especially liquid.

Risk management

A thorough risk policy is a prerequisite for the company to achieve its objectives in a controlled manner. Risk management, carried out at strategic, tactical and operational levels, is an integral part of the Management Control System at GasTerra. This means that risk management is an explicit component of GasTerra's day-to-day management.

Through periodic risk analyses at strategic, tactical and operational levels, we identify the principal risks and uncertainties that are facing GasTerra. We look at strategic, operational and financial risks and at risks in the areas of financial reporting and legislation and regulations (compliance).

In the Business Risk Analyse (BRA), we analyse potential risks that could prevent us from achieving our strategic objectives. The strategic objectives for 2015 were volume, price, anticipation and costs. The BRA allows us to frequently monitor whether the risks are being adequately managed and to take suitable measures if necessary.

For each risk GasTerra determines the chance of it occurring and what the impact would be on the company if it occurred and on that basis decides which are the most important risks. The table below shows the most significant risks in 2015 that could prevent the achievement of these objectives and the measures that have been taken.

Risk Chance Impact Measures Status Notes
1. Groningen production ceiling H H Various planning measures so that GasTerra is always able to meet the demand. Mitigation See Gas > Procurement
2. Credit-worthiness H H Trends in buyers' credit-worthiness are permanently monitored. Mitigation See Financial instruments
3. Image of natural gas M H Increase knowledge and awareness of the energy question and the essential role of gas through PA and PR activities and various projects. Mitigation See Gas
4. Margin L H Intensive consultation with various internal actors to decide how we can add as much value as possible to our products and services. Mitigation See Gas
5. Decision-making on Groningen L H Respond to detailed information from the Minister. Tailor communication policy and plan to this. Mitigation See Gas
6. Financial regulation L H Consultation with internal and external stakeholders to ensure compliance with amended legislation and regulations. Mitigation See Gas

Financial instruments

The company uses financial instruments during its normal business operations that expose the company to market risks, including currency risk,­ interest rate risk, credit risk and liquidity risk. This is described in the Financial Instruments section of the Annual Accounts.


GasTerra attaches a great deal of importance to safeguarding the quality and integrity of the staff's actions. One of the tools that the company uses for this is a code of conduct with norms and values. New GasTerra employees sign the code of conduct at the beginning of their employment. Attention is also regularly drawn to the code of conduct within the organisation, for instance via the intranet and the annual compliance programme. A Compliance Officer has been appointed who is responsible for implementing this programme. The objective of this is to make staff aware of the importance of the duty to adhere to legislative and other regulatory requirements applicable to GasTerra. This programme is obligatory for all employees. In 2015, 99% of employees followed the annual compliance programme.

The internal auditor regularly screens each department to check on whether they are complying with all procedures. The results of the audits are discussed with the Board of Management, the auditor and the Audit Committee. No employees were reported in 2015 for failure to comply with the code of conduct and supplementary procedures. GasTerra continually assesses whether the code of conduct and procedures need to be adapted or supplemented. No fines were imposed on the company in 2015.

Information security is vitally important for the operations of a trading company such as GasTerra. The company therefore pays a great deal of attention to raising awareness of this issue. An unannounced action was conducted in the autumn in which staff had to deal with telephone requests for information about the company, phishing emails and USB sticks left lying around. We also looked at how staff deal with confidential information and an attempt was made to get into the building without authorisation. The exercise had a positive outcome. Staff are attentive to unusual requests and behaviour. The unauthorised entering of the GasTerra building by the campaign group GroenFront! on 26 January 2015 alerted staff to the risks. The campaigners were protesting against the extraction of gas in Groningen. A number of security measures have been taken in response to this.


GasTerra is faced with more and more regulation at national and European level, especially in the areas of energy and finance. We note that the rules that are relevant to GasTerra are becoming increasingly fragmented. This leads to inefficiencies in the business operations because of the obligation to comply with all of the applicable national and European regulations.

We manage this risk in two ways:

  1. By closely monitoring regulatory developments at European and national level. We try to influence these developments where possible. When new regulations come out, we make sure that we comply with these obligations in a timely manner.
  2. In meetings with senior government figures and EU leaders, GasTerra stresses the need for a clear European energy policy to reduce the fragmentation between EU Member States.

The European Parliament adopted the Regulation on wholesale energy market integrity and transparency (REMIT) for the energy sector in 2011. This sector-specific regulation prohibits insider trading and market manipulation. If GasTerra has information that may be regarded as insider information, we immediately cease all trading activities to be on the safe side. Only once the information has been publicised on our website, trading activities will be resumed. In 2015, GasTerra made such a disclosure 16 times on its website. Under the REMIT provisions, market operators have had to report all deals closed on 'organised market places' such as exchanges since 2015. GasTerra has implemented the necessary procedures to comply with this. We are currently making the necessary preparations to comply with the obligation to report the other contracts – deals closed outside the organised market places – in 2016 as well.

Another relevant piece of European legislation is the Markets in Financial Instruments Directive (MiFID). MiFID has been in existence since 2004 (MiFID I) and was amended in 2014 (MiFID II). The relevant secondary legislation is currently being developed. The new regime will take effect on 3 January 2017. MiFID I contains a general exemption for energy companies that does not exist under MiFID II. As a result certain obligations, e.g. reporting and record-keeping obligations, will apply to energy companies that trade in financial instruments. Additional obligations will apply if GasTerra is obligated to obtain a license under the new regime (e.g. rules of conduct, capital requirements, etc.) For GasTerra and other energy companies, a mandatory MiFID II license could adversely affect the liquidity of gas trading exchanges – which could restrict GasTerra’s opportunities to trade. GasTerra hopes to be able to use the 'ancillary activity exemption'. The European financial regulators and the European Commission are currently working on the definition of 'ancillary activity'. Further decision-making is expected in 2016.

Transmission regulations

With effect from 1 November 2015, the Network Code on Capacity Allocation Mechanisms (CAM) came into force. The code has been in force for the most part in the Netherlands since 2014 as it was implemented ahead of schedule. CAM means that at border points bundled capacity is offered via the Prisma Platform wherever possible. The TSOs can only offer unbundled capacity if there is a mismatch between the available capacity on both sides of the border. This bundling obligation makes it more difficult to purchase unbundled capacity that is needed to match our own capacity that was booked in the past. Problems arise especially when TSOs on both sides of a border point are working under different technical conditions. GasTerra has been active in bringing this issue to the attention of the relevant authorities. Unfortunately a concrete solution has not been found yet.

Another development that has come out of CAM is that, since 1 November 2015, within-day transmission capacity has been auctioned at border points. Year, month and day capacity has been auctioned at set times on the Prisma platform for some time but now within-day transmission capacity can be auctioned continually.

In the field of regulation, further work was done in Europe in 2015 on the network code tariffs (TAR NC). The purpose of this code is to create a harmonised tariff structure. GasTerra has been following these developments closely and thinking about their content and implementation. Our company takes the view that transmission tariffs should reflect costs and be transparent and predictable. As far as predictability is concerned, GasTerra advocates the possibility of agreeing transmission tariffs for the duration of a transmission booking.

Summary of financial results

  2015 2014
Income and expenditure in millions of euros    
Net turnover 14,740 19,501
Gas purchases 14,119 18,820
Transmission costs 532 569
Profits in millions of euros    
Profit before tax 48 48
Net profit 36 36
Dividend 36 36
Other financial information    
Investments in millions of euros 3.2 6.3
Liquidity ratio 1.1 1.1
Balance sheet data in millions of euros    
Total assets 2,353 3,747
Shareholders' equity 216 216
Current liabilities 2,137 3,531
Volumes sold in billions m3    
Total sales 70.3 81.3
The Netherlands 27.3 34.3
Rest of Europe 43.0 47.0
Personnel year-end in full-time equivalents    
Company staff 169 179
Health and safety    
Sickness absence (in %) 2.1 2.1
Average absenteeism rate 1.1 1.1
Interview with Professor Catrinus Jepma, Professor of Energy and Sustainability

Interview with Professor Catrinus Jepma, Professor of Energy and Sustainability

Since 1977, Professor Catrinus Jepma (1953) has held various positions at Groningen University (RUG), the Open University and the University of Amsterdam. He has held a variety of professorial positions at these universities since 1988. Since 2005, he has held the Chair in Energy and Sustainability at the Faculty of Economics and Business at the RUG. He was also scientific director of the now completed Dutch gas research programme, EDGaR. Jepma, a graduate in economics and law, is also employed as scientific director of the Energy Delta Institute. The main focus of his research has been energy transition. He has a large number of publications to his name and has supervised many PhD students. He was lead author of the Intergovernmental Panel on Climate Change (IPCC).

Read the interview with Catrinus Jepma

Interview with Professor Catrinus Jepma, Professor of Energy and Sustainability

A second life for gas

Catrinus Jepma

The gas sector is under pressure. The product's image has suffered terribly in Netherlands, mainly as a result of the problems around the extraction of gas in Groningen. The European Union is ambivalent about gas. On the one hand, the European Commission's policy aims to expand and reinforce the infrastructure to secure the long-term supply; on the other hand, natural gas is treated as an energy source that we should dispense with as soon as possible for geopolitical, economic and environmental reasons. Professor Catrinus Jepma, an eminent scientist in the field of energy transition and the role of gas in the energy mix, looks at it all with a heavy heart.

‘The importance of gas for Europe's future energy supply is consistently underestimated. What are the facts? Doubts remain about whether we'll be able to use nuclear power in the future. The position of coal is worse than ever; the phasing out of coal-fired power stations in Europe seems to me inevitable. In other parts of the world too, such as Asia, people are realising that they need to stop burning coal in order to improve air quality in their cities. Only gas can fill that gap. I also think that oil has had its day for the same reason and so gas, including hydrogen, has huge potential in the transport sector. I would strongly advise the oil companies to do some serious work on this. In short, there is a second life for gas'.

Can't renewable sources replace all fossil fuels, including gas, soon?

‘No, they can't. Renewables are growing but by no means fast enough. Too expensive. You can't solve that with subsidies. Operational subsidies for renewables cannot be maintained. Only the policy of subsidising investment, research & development and innovation can continue to hold out for a while. Renewables may have the full wind in their sails at the moment but it cannot last. The costs of greening the energy supply are simply too high.'

Won't the political climate and social pressure to make the energy supply climate-neutral force the companies to invest to the maximum in renewables despite the financial risks?

'It does have to be affordable. Sustainable energy can only continue to grow if the energy companies are able to provide a base load with their conventional power stations to set off the unreliability of renewable sources such as solar and wind. That requires a different business model that would secure the continuity of those companies. We would have to pay to retain reserve capacity for when the wind is not blowing and the sun is not shining. Gas, that is relatively clean, will have to be the backbone of this system and so I'm convinced that it will continue to be indispensable for at least 30 years.’

Couldn't innovative storage systems make the role of the energy companies redundant?

‘Eventually yes, but we are nowhere near that yet. We need cost-effective transmission and storage systems. Gas has the best credentials on this. Storing energy in the form of gas is the best option from a cost perspective, despite the high price of conversion to hydrogen, methane and syngas. As a matter of fact I think that conversion can get much cheaper. Like solar panels. The cost of solar panels is coming down all the time.'

You base your position on scientific facts but nevertheless more and more opinion formers seem to want to get rid of gas as soon as possible.

‘The simplification of the energy debate is worrying, especially in the Netherlands. Gas is earthquakes; earthquakes are bad, so gas is bad. Renewables on the other hand are good. And electricity is clean. Few realise that only a quarter of our energy needs are supplied by electricity and that we still rely on non-sustainable sources to generate most of our electricity. This is true even of those who could and should know better. A car that runs on green gas is cleaner than an electric car but the perception is otherwise.'

What is the solution?

‘To begin with the gas sector should go on the offensive more. The media are pretty well going along with the one-sided narrative. We also need to give up the national capacity thinking, the idea that a country such as the Netherlands should have just enough capacity to provide for its own electricity needs. That has also played a role in the debate about closing down modern coal-fired power stations. The Netherlands has over-capacity, so we can shut those power stations. The fact that we are part of an ever further integrating European gas and electricity market and that those new power stations were built mainly to serve the German market is ignored because it's just not convenient. The integration process is continuing, with new interconnections, more liquidity on the markets.'

But all the same the EU Member States have agreed that they have to achieve emission reduction targets. That forces them to pursue national policies too.

‘I know but then do it where it is cost-effective. And understand that thinking in terms of self-sufficiency is nonsense in this context. Climate change is a global issue. It doesn't matter where you reduce the emissions. It's best to do it where it costs the least and has the most effect; this was a key element of the Kyoto Protocol. However, it seems that we've given up on that idea. Why don't we help Africa to modernise its energy system? Why should we have to set a good example here? That doesn't make sense.'