GasTerra

Foreword

New realities

The energy sector is probably facing the biggest challenge it has ever had to face. The world has definitely started out on a new path with the COP 21 Climate Conference that was held in Paris in 2015. The fact that all EU Member States have committed themselves to the two degrees target is a real breakthrough but, in order to achieve that target, we have to curb the rise in temperature and therefore the emissions. This means that we share a common responsibility to ensure a smooth transition to a CO2-neutral energy supply. Gas can make a constructive and effective contribution to this now and in the future. This Annual Report contains various examples of this.

In the Netherlands, the debate about the future of the energy supply has been dominated by the earthquakes caused by gas extraction in Groningen. What also needs to be said about this is that this changes the existing order fundamentally. There is no business as usual in the Dutch gas sector and, in my opinion, never will be again. The earthquakes have had a huge impact. Furthermore, millions of households in the Netherlands, Germany, France and Belgium, who are dependent on natural gas from Groningen to heat their homes, must be able to continue to rely on the gas they use to keep their houses warm. All in all a balancing act will be required to keep the interests of all parties involved in equilibrium.

What do these new realities mean for GasTerra? It was and is our mission to maximise the value of natural gas reserves in the Netherlands. Our strategy therefore remains essentially the same: to sell the gas offered to us at the highest possible price. Since 2014, however, the volume has been tied to an annual production maximum: the Groningen ceiling. An overview of the years 2013–2015 clearly shows how much recent events in the Groningen Gas Field have affected us, the seller of Groningen gas. GasTerra's turnover was substantially higher three years ago than in the year under review. Income fell from €24.3 billion in 2013 to €19.5 billion in 2014 and €14.7 billion in 2015: a downturn of approximately 40%. This decrease is firstly the result of the maximising of production from the Groningen Gas Field and the steadily decreasing production from the small fields but, in addition to that, it is due to low gas prices.

The falling volumes and sales have not left the organisation of GasTerra unscathed. In last year's Annual Report I stated that we were embarking on a process of reorganisation and cost savings. The accompanying organisational changes were completed in the autumn of 2015. The aim is to reduce costs by around 30% by 2018. Fortunately we are able to do this without compulsory redundancies. Still it is inevitable that employees are facing uncertain times. Departments have merged and are becoming smaller and positions have become redundant. Despite this new reality for GasTerra, our staff have worked hard again to achieve the goals that we have set for ourselves at the beginning of the reporting year. In that light they deserve to be complimented warmly for their unwavering motivation and undiminished efforts.

Gertjan Lankhorst,
CEO

About GasTerra

GasTerra B.V. is a trading company operating internationally in natural gas and has its registered office at Stationsweg 1 in Groningen. The company operates on the European energy market and accounts for a significant share of the Dutch gas supply. The company also provides services related to gas trading. GasTerra has more than 50 years of experience in natural gas procurement and sales.

Mission

GasTerra's mission is to maximise the value of Dutch natural gas. We fulfil a public role with regard to the implementation of the Dutch government's Small Fields Policy. This policy aims to promote natural gas production in the smaller gas fields in the Netherlands.

GasTerra translates its mission of maximising value into practice by pursuing four goals:

  • Volume: we endeavour to sell the full volume offered to us;
  • Price: we endeavour to achieve the going market price with as high a margin as possible;
  • Anticipation: we anticipate a changing market, so that we can continue to fulfil our mission of maximising value in the future;
  • Costs: we undertake to achieve the right balance between diligent and efficient business practices.

Vision

The economic value and social importance of natural gas underscore GasTerra’s significant role in the utilisation of domestic gas reserves and energy supply in the Netherlands and the European Union. GasTerra promotes the safe and efficient use of gas and is active in the development of innovative applications for gas. The company attaches great importance to making the supply of energy sustainable and initiates projects in this area. Gas remains indispensable to this energy transition if we wish to both secure energy supplies and curb CO2 emission levels. The Netherlands can continue to be a major producer of natural gas for decades to come.

GasTerra seeks to achieve a responsible transition to sustainability, i.e. with a view to both economic and environmental interests. We are guided by the principles of corporate social responsibility (CSR). We have translated the three fundamental principles of CSR – People, Planet, Profit – into our own three target areas – Gas, Green and Groningen – where Gas stands for the operating result, Green stands for our ambition to establish a responsible energy transition, and Groningen stands for the community that we are part of.

A focus on customers, a focus on results and a focus on improvement are GasTerra's three core values. These are the values that our staff adopt as a starting point for all their business dealings, working in conformity with a code of conduct in which integrity and respect serve as guiding principles. The company seeks to build long-lasting business relationships with market operators and to enter into agreements that reflect the value of natural gas and its associated services.

Strategy

The company implements its mission and vision by capitalising on its position on the European market to the fullest extent possible - specifically in those market segments where demand for natural gas goes hand in hand with demand for supplemental services. This way, use is made of both the volume and the flexibility of gas from Dutch sources. Gas from other sources is procured if it fits into the overall supply and demand portfolio. As a proponent of a free energy market, GasTerra is continuously developing new products and services. In this context, we seek to be a reliable and competitive gas supplier to our customers, aiming to contribute to the strengthening of the position of natural gas within the overall energy mix.

Management information

GasTerra embarked on the GasTerra 2018 reorganisation process in 2014. Its most important aim is to put the organisation into a position where it can continue to maximise the value of Dutch natural gas even in a changing business environment. This project covers a number of themes, including strategy, efficiency, organisation and personnel. Various changes will be implemented in the coming years to achieve this objective.

The first phase of the project has been completed and received a positive recommendation from the works council. The implementation has begun with the 'switch' to a new organisational structure.

CEO

  • G.J. Lankhorst
    1. G.J. Lankhorst
    2. Chief Executive Officer

Directors

  • M.W.J. de Wilde
    1. M.W.J. de Wilde
    2. Director of Finance, Projects and ICT
  • R.E. van Rede
    1. R.E. van Rede
    2. Commercial Director
  • A.E.M. Broenink
    1. A.E.M. Broenink
    2. Director of Portfolio

* As of 18 January 2016, Mr Broenink stepped down from his position. Mr Lankhorst has taken care of his duties since then. 

Heads of Department

A.J.P. Buijs, Communications & Public Affairs Manager

B.A. Westmaas MA, Personnel & Organisation Manager

H.J. van Zijll de Jong, LLM, Legal Affairs & Regulation Manager and Secretariat

Message from the Board of Supervisory Directors

Composition of the Board of Supervisory Directors

The Board of Supervisory Directors oversees the policy of the Board of Management and the general business performance at GasTerra. The Board of Supervisory Directors comprises eight members, one of whom is appointed by the Minister of Economic Affairs. The Board appoints a chairperson from among its midst; this appointment has to be approved by the Minister of Economic Affairs.

The Board of Supervisory Directors appoints from among its midst a College of Delegate Supervisory Directors, comprising five members, one of whom is appointed by the Minister of Economic Affairs. The Board may delegate its powers to the College, in so far as this delegation does not infringe the duties and powers of the Board of Supervisory Directors.

The company's Articles of Association lay down that two members of the Board of Supervisory Directors are to step down each year at the General Meeting of Shareholders according to a rotation schedule determined by drawing lots. The members who step down may be re-elected or reappointed immediately. Successive members of the Board of Supervisory Directors take the place of their predecessors on the rotation schedule.

As of 1 November 2015, Mr J.D. Bokhoven resigned from his post as CEO of EBN B.V. He is succeeded as a member of the Board and the College of Delegate Supervisory Directors by Mr T.W. Starink. In addition, Mr D.A. Benschop was succeeded by Ms. J.M.W.E van Loon on 1 January 2016. There has been a vacancy on the Board since 1 June 2013. This vacancy is filled with effect from 15 February 2016 with the appointment of T.W. Langejan, LLM, as a member of the Board of Supervisory Directors.

Name Term of office Capacity Date of appointment
C.W.M. Dessens LLM Re‑electable in 2017 Delegate Supervisory Director 1 January 2006
D.A. Benschop MA
(to 1 January 2016)
- Delegate Supervisory Director 1 May 2011
J.D. Bokhoven MSc
(to 1 November 2015)
- Delegate Supervisory Director 1 November 2007
P. Dekker MSc Re‑electable in 2017 Member of the Board of Supervisory Directors 1 July 2005
M.E.P. Dierikx MA Re‑appointable in 2018 Delegate Supervisory Director 2 July 2011
T.W. Langejan LLM
(from 15 February 2016)
Re‑electable in 2016 Member of the Board of Supervisory Directors 15 February 2016
J.M.W.E. van Loon MSc
(from 1 January 2016)
Re‑electable in 2016 Delegate Supervisory Director 1 January 2016
F.A.E. Schittecatte MSc Re‑electable in 2019 Member of the Board of Supervisory Directors 15 February 2014
T.W. Starink MSc
(from 1 November 2015)
Re‑electable in 2019 Delegate Supervisory Director 1 November 2015
J.M. Van Roost MSc Re‑electable in 2018 Delegate Supervisory Director 1 Juli 2005

Meetings

The Board met twice in the presence of the Board of Management. At one of these meetings all members of the Board were present. At both meetings the Audit Committee was also represented by its chairperson. At the invitation of the Board, the external auditor was present at the meeting, in which the Annual Report and Accounts relating to 2014 were dealt with. One further written procedure took place in lieu of a Board meeting. The College met seven times in the presence of the Board of Management. In addition, six telephone meetings were held and there were three written procedures in lieu of meetings.

Attendance at face-to-face and telephone meetings

Attendance at face-to-face and telephone meetings
  Board of Supervisory Directors College of Delegate Supervisory Directors Audit Committee
C.W.M. Dessens LLM 2/2 13/13  
D.A. Benschop MA 2/2 13/13  
J.D. Bokhoven MSc
(to 31 October 2015)
1/2 8/13  
P. Dekker MSc 2/2 n/a  
M.E.P. Dierikx MA 1/2 13/13  
T.W. Starink MSc
(from 1 November 2015)
1/2 5/13  
F.A.E. Schittecatte MSc 2/2 n/a  
J.M. Van Roost MSc 2/2 13/13  
A.J. Boekelman MA     3/4
T.P.K. Huysinga     4/4
A.J. van der Linden     4/4
B.E. Westgren MA     4/4

* The first number shows the number of meetings attended, the second number is the number of meetings that took place this year. 

Strategy and Objectives

The developments relating to the Groningen earthquake dossier had an emphatic impact on the company and constituted an important item for consideration in the meetings of the Board and the College of Delegate Supervisory Directors. The cabinet's decisions since the beginning of 2014 on how much of the potential gas in the Groningen Gas Field may be extracted had no impact on GasTerra's strategy but they had a major influence on how the company was able to implement this strategy throughout 2014 and 2015. Maximisation of the value of Dutch gas remained our top priority. In this context the extent was discussed to which the objectives for 2015 had been achieved and the objectives for 2016 were decided on. Particular attention was requested for management that enables NAM to comply with the production ceilings that have been set. This will continue to be necessary in the coming years, and GasTerra will work closely with NAM and Gasunie Transport Services (GTS) to that end. GasTerra continues to work to draw attention to the role of natural gas in the transition to a completely sustainable energy supply. 

After the cabinet had set a maximum production ceiling of 39.4 billion m3 for Groningen gas for the 2015 calendar year in January 2015, it decided in June 2015 that total extraction from the Groningen Gas Field in the 2015 calendar year should not exceed 30 billion m3, in addition to the one-off extraction of 3 billion m3 from Norg. Both of these gas decisions were overturned in a judgment of the Council of State. In a provisional ruling, the Council of State decided that in the 2015/2016 gas year (that runs from 1 October 2015 to 1 October 2016) no more than 27 billion m3 of gas is to extracted from the Groningen Gas Field. Exceeding this up to a maximum of 33 billion m3 is only permitted if the 2015-2016 gas year turns out to be relatively cold and if at least 15 billion m3 of gas is produced with the aid of the GTS nitrogen plants. The Council of State also decided that gas production will only be allowed after 1 October 2016 after the Minister of Economic Affairs issues a new production decision.

In December 2015, the cabinet decided to uphold this provisional ruling and to make a new decision in the third quarter of 2016 based on a new extraction plan from NAM.

As part of the GasTerra 2018 project that started in 2014, the company developed a vision for its commercial activities and work processes in 2015 and at the same time also looked at the efficiency of its support processes. A new organisational structure – in keeping with the vision – has also been determined based on the developed vision. The project was completed in 2015 and the new structure has been implemented. This project's approach and the findings have been discussed with the Board at the set times.

Risk Management

In 2015, the Board discussed the risks associated with the company and the results of the management's assessment of the set-up and operation of the internal risk management and control systems (the document of representation). Attention was also paid to the management letter from the external auditor, and the social aspects relevant to GasTerra were taken into consideration too. The Board concludes that GasTerra has a robust risk management and control system, that this functions effectively, and that it could be further improved on certain points. Work is on-going to improve it.

Staffing Matters

Each year the Board of Supervisory Directors and the management together discuss potential successors present within the organisation who could fulfil management functions. Remuneration policy is approved in the form of the Collective Labour Agreement mandate.

Where applicable, the Board gets involved in updates relating to ancillary positions held by members of the Board of Management and other members of GasTerra's management team, and once a year discusses the complete overview of these ancillary positions. The overview of ancillary activities of members of the Board of Supervisory Directors is also reviewed once a year.

Audit Committee

The Board of Supervisory Directors has one standing committee: the Audit Committee . This oversees the workings of the internal risk management and control systems, all financial affairs, relations with the external auditor and the application of Information and Communication Technology (ICT). At one of the meetings of the Supervisory Board, the Audit Committee reported to the Board on the activities it had undertaken.

The Audit Committee met on four occasions during the reporting year.

The composition of the Audit Committee did not change in the reporting year and at year-end 2015 consisted of the following members:

A.J. Boekelman MA (Chairperson)
T.P.K. Huysinga
A.J. van der Linden
B.E. Westgren MA

Self-Evaluation

The Board of Supervisory Directors decided in 2015 to conduct a self-evaluation in 2016. The Board will see to it that the recommendations made in the course of this process are implemented. The Audit Committee conducted a self-evaluation in 2014, and the recommendations resulting from this have been taken up.

Contacts with the employees

With a few exceptions, the Board of Supervisory Directors always meets in the company's building. At set times, members of the Board have informed employees of the progress of affairs in informal conversations. In addition, members of the Board attended one of the consultative meetings between the management and the Works Council in 2015. The subject of GasTerra 2018 was on the agenda at this meeting. The management and the Works Council agreed that it was not necessary for members of the Board of Supervisory Directors to attend their meetings more often.

Annual Accounts

The recommendations from the Board of Supervisory Directors to the General Meeting of Shareholders, to be held in Groningen on 18 February 2016, are as follows:

We have examined the Annual Accounts for 2015, prepared by the Chief Executive Officer in accordance with Article 23 of the Articles of Association. We concur with these Annual Accounts and recommend that:

  • the net profit for 2015 - set at €36 million - be entirely appropriated for payment to the shareholders;
  • the 2015 Annual Accounts be adopted without alteration.

The Board of Supervisory Directors wishes to express its appreciation for the results attained in 2015 and is grateful for the way in which the Board of Management and employees devoted themselves to the objectives of the enterprise during the financial year, and for the results that were achieved. The Board wishes success to everyone working at GasTerra in their endeavours to achieve the objectives set for 2016.

The Board of Supervisory Directors 

C.W.M. Dessens LLM, Chairperson
P. Dekker MSc
M.E.P. Dierikx MA
J.M.W.E. van Loon MSc
F.A.E. Schittecatte MSc
T.W. Starink MSc
J.M. Van Roost MSc

Governance

GasTerra B.V. is a private limited company with registered offices in Groningen, the Netherlands. The company was founded on 1 July 2005 when N.V. Nederlandse Gasunie was legally split into a transmission system operator and a trading company. In the process, the infrastructure (the gas pipelines) and all transmission-related activities remained with Gasunie while the newly formed GasTerra continued with all gas trading activities.

GasTerra B.V.'s authorised share capital is €180 million, split into 40,000 shares of €4,500 each. All shares have been subscribed, fully paid up and registered, and can only be transferred by unanimous approval of the General Meeting of Shareholders. The shares are held by the State (10%), EBN B.V. (40%), Shell Nederland B.V. (25%) and Esso Nederland B.V. (25%). No depositary receipts are issued.

GasTerra is not a listed company, as a result of which the Corporate Governance Code does not apply to the organisation. However, where possible and relevant, GasTerra is guided by the principles of the code and takes the best practice provisions as a guide. In this chapter, we report on the appropriate principles of the Code.

These are to be implemented primarily when it comes to the principles and provisions included under the task and manner of working of the Board of Management. The tools that the Board of Management uses for this consist specifically of the annual activity plan, the budget, monthly and quarterly reports and the Business Risk Analysis (BRA) tailored to the organisation. The structure and operation of risk management at GasTerra are described in these documents (see also the ‘Gas' chapter, which contains a description of the most important risks. Risk management has been delegated to the line management. Reports are made to the Board of Management concerning implementation. The Board of Management reports at least once a year to the Audit Committee via the BRA. The external auditor assesses the compliance of this system to the extent relevant in the context of the audit of the accounts.

The Board of Management of GasTerra consists of a Managing Director, nominated on the recommendation of the Supervisory Board and approved by the Minister of Economic Affairs. The Managing Director is appointed for an indefinite period. In addition to the Managing Director, the Board of Management also consists of three further Directors/holders of a general power of attorney: the Financial Director, the Commercial Director and the Portfolio Director. The remuneration of the Managing Director is set by the Board of Supervisory Directors and, in addition to a fixed remuneration, it also has a variable component that is dependent on the financial and general performance of the organisation. The Board of Supervisory Directors decides whether the Managing Director is eligible for a variable remuneration and its amount. The variable remuneration may not exceed 30% of the Managing Director's fixed salary. In view of government policy on state shareholdings, it has been decided that the maximum variable remuneration in 2015 may not exceed 20% of the fixed salary. The amount of the Managing Director's remuneration is given elsewhere in the Annual Report (see Annual Accounts). With regard to the Managing Director, the provisions relating to the maximum number of allowable supervisory board memberships in the Management and Supervision Act are observed.

Supervision of the Board of Management of GasTerra is exercised by the Board of Supervisory Directors, which consists of eight members. One member is appointed directly by the Minister of Economic Affairs, the remaining members are appointed by the Annual General Meeting of Shareholders on the recommendation of the individual shareholders. The number of Supervisory Board memberships that one person may hold is limited to ensure the proper performance of the duties. The Supervisory Board has appointed its own secretary, who is supported, where necessary, by the Company Secretary.

The Management and Supervision Act came into force on 1 January 2013. This Act includes a provision on the equal representation of men and women on management and supervisory boards. This provision expired on 1 January 2016. The distribution of seats on the company's Board of Supervisory Directors did not comply with the relevant provision. GasTerra has a positive attitude toward the appointment of women at all levels in the company.

There was one vacancy on the Board of Supervisory Directors in the reporting year. This vacancy is filled with effect from 15 February 2016 with the appointment of T.W. Langejan, LLM, as a member of the Board of Supervisory Directors. The duty and manner of working of the Supervisory Board are in accordance with the Code set out in its own regulations. It is standard procedure that the Annual Report contains a report from the Supervisory Board . A (brief) profile of the members of the Supervisory Board is included in the Annual Report. The provisions relating to the supervision of the Board of Management by the Supervisory Board are effected at the regular meetings of the Supervisory Board. Furthermore, at least once a year without the Board of Management being present, the Supervisory Board discusses its own performance (and desired competencies) as well as that of its own individual members and individual members of the Board of Management.

The Articles of Association stipulate that decisions which are important to GasTerra must be approved by the Supervisory Board or the College of Delegate Supervisory Directors. The College of Delegate Supervisory Directors is a corporate body. The College is formed by members of the Supervisory Board and consists of five supervisory directors including the supervisory director who has been appointed by the Minister of Economic Affairs.

The Supervisory Board has established an Audit Committee. The Audit Committee is a non-corporate body composed of four members appointed by the Supervisory Board. The Supervisory Board or the College of Delegate Supervisory Directors may refer matters for the consideration of the Audit Committee. Whether requested to do so or not, the Audit Committee advises the Supervisory Board or the College of Delegate Supervisory Directors on matters within its remit and prepares the decisions of the Supervisory Board in relation to those matters. The Audit Committee generally meets four times a year, and did so in 2015.

The duty and method of working of the Audit Committee are set out in regulations that essentially follow best practice provisions mentioned in the Code. Thus, the duties of the Audit Committee include supervision regarding the financing of the company, operating expenses and capital expenditures in relation to the agreed budgets, the provision of financial information, the operation of the internal risk management and control systems, compliance with recommendations and observations of internal and external auditors, the role and functioning of the internal audit department, and maintaining the relationship with the external auditor. Matters covered in particular by this latter topic are the independence of the auditor, remuneration and the potential provision of work that is not audit-related.

The (system of) remuneration of the Board of Supervisory Directors is approved by the Annual General Meeting of Shareholders. The total amount of remuneration of the Board is stated in the Annual Report.

With regard to the powers of the shareholders, the Articles of Association stipulate that resolutions of shareholders may only be adopted by a majority of three-quarters of the votes cast. For certain resolutions, in particular the transfer of shares, suspension or dismissal of the Managing Director, amendment of the Articles of Association and dissolution of the company, unanimity is required.

As regards disclosure of information to shareholders and the potential impact on the share price, it should be noted that the 'GasTerra share' is not traded on the financial markets.

With regard to financial reporting, several times a year (at regular meetings), the Supervisory Board, the College of Delegate Supervisory Directors and the Audit Committee supervise compliance with the internal procedures relating to the preparation of the quarterly reports and the preparation and publication of the Annual Report and the Annual Accounts.

The Annual General Meeting of Shareholders appoints the external auditor. It is standard procedure for the Audit Commission to interrogate the external auditor with regard to his declaration on the accuracy of the financial statements. Furthermore, the Board of Management and the Supervisory Board report to the Annual General Meeting of Shareholders on the independence of the external auditor and a recommendation is issued for the appointment of an external auditor For this purpose, the Board of Management and the Supervisory Board assess the functioning of the external auditor periodically, at least once every four years. From the 2015 financial year, EY (Ernst & Young) will be GasTerra’s auditor.

In connection with the audit of the financial statements, the external auditor is involved in the Internal Audits working plan. Findings concerning the internal audit function are included where necessary in the external auditor’s management letter, which is discussed at a meeting of the Supervisory Board. The external auditor reports anything it wishes to bring to the attention of the Board of Management and the Supervisory Board in relation to its audit of the financial statements and the related audits. This gives effect to the provisions pertaining to the principle in the Code on the relationship and communication of the external auditor with the company's organs.

CSR and governance

CSR is an integral part of the strategy at GasTerra and has thus been embedded into our day-to-day operations. Since 2013, GasTerra has integrated the CSR matrix and associated objectives and activities into the Business Plan which is approved by the Board of Supervisory Directors, the governance body with the highest degree of responsibility. Monitoring of progress is included in the regular reporting cycle. The quarterly reports are discussed by the College of Delegate Supervisory Directors and the Audit Committee.

Personnel and Organisation

The title New realities also applies to GasTerra's personnel policy. With developments in the gas market in mind, GasTerra has found it necessary to contract and operate with a flexible workforce. Gas volumes will fall in the future and market conditions are changing, so the size of the workforce has to be able to anticipate changing circumstances. This is the reason behind the GasTerra 2018 reorganisation process that we started in 2014. We are preparing the organisation so that it can continue to maximise the value of Dutch natural gas. The themes strategy, efficiency, organisation and personnel are the key to this.

The GasTerra 2018 project had already resulted in a new process-oriented organisation by 2015 and is expected to lead to a reduction in staff from approximately 200 FTE in 2015 to approximately 160 FTE in 2018. This is a massive change in the organisation, which is why GasTerra is taking time to do this properly and without compulsory redundancies. The Works Council has advised in favour of this process. In addition, a social charter has been agreed with GasTerra's trade union VPG2.

The environment in which we are trading is changing radically. On the one hand, this offers the employees opportunities to anticipate this, as the results of the last year again make clear. On the other hand, career development opportunities are limited and so we feel that it is important that employees give some thought to their careers with GasTerra or elsewhere. We will support employees who are considering a career outside GasTerra with a package of measures, including secondment, career guidance, coaching, courses, training and a conditional guarantee of a job to come back to.

GasTerra will continue to work on the new organisation in 2016. This will mean actually achieving the planned efficiencies and the necessary staff departures, cost reductions and the business culture that goes with that.

Staffing

As at 31 December 2015, 186 people were working at GasTerra (169 FTE) (2014: 194 people (178.6 FTE)), of whom 51 were women and 135 were men. There were 182 employees with a permanent position and 4 on fixed term contracts. To further flexibility, we have only taken on new staff via the 'payrolling system' since 2014. This means that the staff are employed by the payroll firm under similar conditions of employment as GasTerra employees.

Management

GasTerra’s management team consists of four directors, including the CEO. Until 18 January 2016, A.E.M. Broenink sat on the Board of Management. Since he stepped down, the CEO G.J. Lankhorst has taken care of his duties.

Internships and work experience positions

We feel that it is important to offer internships and work experience positions. Firstly, because we want to give students and recent graduates the chance to gain some work experience and, secondly, because they can enrich the organisation with their fresh eyes. Most of the interns are recruited locally, especially from the Energy Academy Europe, the Hanzehogeschool Groningen and Groningen University.

GasTerra is a member of Noorderlink. Noorderlink is made up of the 30 biggest employers in the north of the Netherlands that cooperate on P&O.

Training and career development

GasTerra organised the ‘Using your talents for work’ workshops for its employees again in 2015. Different sessions were put on in which employees were encouraged to think about their talents and their career. In this way we motivate our employees to take more responsibility in this area themselves. In addition, the company once again devoted a great deal of attention to regular job and career-oriented training.

Secondment

GasTerra is no longer growing in terms of the number of jobs and few employees leave the company. Career progression can therefore no longer be taken for granted. This is why secondment played an even more important role in 2015. GasTerra encourages its staff to gain experience with other companies. We offer them the opportunity to go and work for another company for one or two years. In 2015, seven employees got temporary jobs with Gasunie, NAM, ExxonMobil, the Energy Delta Institute (EDI), Holthausen and the International Energy Agency (IEA). Sometimes this results in people leaving the company.

From kitchen table to workplace

“I've regularly discussed the challenges for energy transition with the Director of Holthausen BV, a company that specialises in the supply and transport of gases. At the very beginning of GasTerra 2018, I put my name down as a potential ‘leaver’. A secondment gave me the chance to discover whether continuing my career there was something that would suit me. Naturally my friendship with the owner was a factor in this; chatting about energy transition and the opportunities and threats involved around the kitchen table in your free time is not the same as working on it together five days a week.

Happily I can now report that working at Holthausen is just as pleasant as talking about it around the kitchen table. It's going so well that I'll take up employment here on 1 July 2016. Of course, I will miss working at GasTerra. It's an exceptionally well-run organisation with pleasant, well-educated, friendly and sometimes opinionated employees and, of course, fantastic coffee. Still it feels good to follow my dreams by taking this step and I'm grateful to GasTerra that I've been given this opportunity,"

René Brons, Business Developer Holthausen B.V.

No two days are the same

“In the spring of 2014 my interest was aroused by a vacancy at the Energy Delta Institute (EDI), an international business school in Groningen. I've been working in the gas and energy sector in different disciplines since 2001 and I was ready for a new challenge. After various discussions, I took the secondment route to go and work at EDI as Managing Director.

My role as Managing Director varies from determining strategy, financial and ICT policy to HR policy, in short a wide range of duties in the dynamic energy world. Together with a young team of enthusiastic, single-minded people we're working on optimising what we have to offer; we organise events and give training courses at far-flung locations such as Rio de Janeiro and Russia. No two days are the same.

With the experience I've been able to gain at Gasunie, GasTerra and now EDI, I see a positive future ahead of me. Thanks to this secondment, I've been able to develop my leadership skills. The energy sector is becoming more dynamic and with my experience I believe that there are still attractive challenges over the horizon. So I'm keeping all my options open, whether with GasTerra or another organisation. I've no doubt that when the time comes another interesting job will cross my path. That's how it's been for more than 25 years!"

Anja Hulshof, Managing Director EDI B.V.

Collective labour agreement and pension

GasTerra has its own collective labour agreement and the company's staff are actively involved in the sectoral trade union, the VPG2. Over 80% of the employees belong to the union. In 2015, 161 employees were covered by the collective labour agreement. This agreement expired on 1 January 2016. and new negotiations began at the end of 2015. In response to the previous collective labour agreement, GasTerra announced a benchmark study in 2016 to determine whether the company's employment conditions are still competitive.

The GasTerra employee pension agreement was amended on 1 January 2014. Under the new pension scheme the company has undertaken to pay a fixed contribution that is set in advance. This contribution is based on a conditionally indexed career average system. GasTerra has an administration agreement with GasUnie's pension administrator (Stichting Pensioenfonds Gasunie) that runs until 31 December 2017.

Health and safety

There were no workplace accidents resulting in time off work in 2015. Illness-related absenteeism was similar to previous years, i.e. 2.1% (2014: 2.1%).

GasTerra's occupational health and safety policy identifies the following risks: traffic, stress, RSI and minor accidents. To make employees aware of these risks, in 2015 presentations were given, messages put on the intranet and a training course was organised on fire prevention and fire extinguishing equipment. Finally, two evacuation exercises were carried out successfully during the year.

Objections, Complaints and Abuses

GasTerra has appointed confidential advisers and the company has a complaints procedure and whistle-blower policy and procedures. If employees have objections or complaints or if they detect abuses and solutions cannot be found with colleagues and managers, they can make use of these procedures. We reviewed these options again in 2015. There were no reports of abuses or discrimination in 2015, no-one file a complaint with the complaints committee and no-one made use of the whistle blowing arrangements.

Stakeholder dialogue

GasTerra has translated the three fundamental principles of CSR – People, Planet, Profit – into its own three target areas – Gas, Green and Groningen, where Gas stands for the operating result, Green stands for our ambition to bring about a responsible energy transition, and Groningen stands for the community that we are part of. Stakeholders are a valuable source of information on what society expects of GasTerra. We have identified the following stakeholders:

GasTerra organises a stakeholder dialogue every six months, for which 'relationship managers' are appointed for each stakeholder group. These people are GasTerra employees who represent one or more stakeholders. They monitor their opinions and preferences. We decided on this internal method, because our employees talk to stakeholders every day and know what issues they think are important (see also the stakeholder table). All relationship managers complete a questionnaire before the stakeholder dialogue meeting, in which they prioritise the CSR topics under the three Gs and have the opportunity to put forward topics themselves. This quantitative input is used as the basis for discussions which go into the most important issues in more depth. This dual quantitative and qualitative approach produces a number of issues that the stakeholders consider to be material to GasTerra.

The findings of the 2015 stakeholder dialogue did not differ substantially from the findings in 2014. Almost all of the stakeholders turned out to consider three issues as relevant for GasTerra.

1. Support for the gas sector

Many stakeholders have observed declining support for the gas sector. They attribute this to a number of factors. First, there is the debate about safety in view of the earthquakes resulting from gas extraction in Groningen; second, the price of gas is relatively high compared with coal; and third, there are the geopolitical risks associated with Russian gas. The commercial stakeholder groups are less worried about declining support, because they observe that there will be a continuing demand for gas in the coming years as Dutch stocks fall.

2. Gas as a transitional fuel

Gas is seen as a transitional fuel that will play an important role in both the short and medium term. It is also emphasised that gas is the ideal partner for renewable energy sources. Some stakeholder groups have no views on the role of natural gas in energy transition. However, the majority of the stakeholder groups believe that natural gas does have an important role to play here. Only a few stakeholders in the knowledge institutes group express negative opinions about the role of natural gas in energy transition

3. Position of gas in the energy mix

The majority of the stakeholder groups believe that GasTerra should obviously work to strengthen the position of gas in the energy mix. The reasons they give for this are:

  • To head off the competition from more polluting fuels;
  • For business reasons – certain stakeholder groups benefit from gas having a strong position in the energy mix;
  • It is simply logical that a gas company defends the position of gas.

According to the stakeholders, there are different ways in which GasTerra can work to strengthen the position of gas in the energy mix. For example, GasTerra could and must provide information about gas and the gas market. Customers and knowledge institutes, in particular, also see gas advocacy as an important role for GasTerra.

The GasTerra management team decides on the material issues, based in part on the outcomes of the stakeholder dialogue. These outcomes are discussed at a session organised especially for this purpose, at which the Board of Management ranks all topics by how important they are. This produces the materiality matrix. The material issues then serve as the basis for GasTerra’s business objectives (see also the strategy table).

The following topics are material according to the Board of Management:

1. Financial results (pillar: Gas)

The financial results are naturally the key data in the Annual Report, given that our core activity is the purchase and sale of natural gas. This material issue comes entirely within the scope of GasTerra's responsibilities. A key focus area in 2015 was maximising the value of Dutch natural gas while remaining under the production ceiling for the Groningen Gas Field laid down by the cabinet. Another key focus area was the renegotiation of long-term purchase and sales contracts. Our approach in view of these matters is set out in the Gas section.

2. Position of gas (pillars: Gas and Green)

The world is facing the challenge of switching from the current energy mix based on fossil fuels to an energy mix based on renewable sources. GasTerra and its stakeholders believe that it is important to facilitate as smooth a transition as possible from fossil fuels to renewables and see an important role for natural gas in this. Given the price differential, electricity producers prefer to generate electricity using coal rather than gas. A number of energy companies in Northwest Europe have already switched off their gas-fired power stations or announced plans to do so. We are not alone in observing this trend, various stakeholders have mentioned it too. This is why this Annual Report identifies the position of gas, over time in combination with CSS, as a material issue. This is a shared responsibility.

We are developing various initiatives whose purpose is to emphasise the importance of gas in energy transition. GasTerra’s approach in this area is described in the Green section.

3. Compliance (pillar: Gas)

GasTerra is having to deal with more and more regulations at national and European level. It is very important that we comply with these statutory and regulatory provisions, which is why we have identified compliance as a material issue. Compliance with statutory and regulatory provisions comes entirely within the scope of GasTerra's responsibilities. We have drawn up conduct rules and procedures to ensure that we comply. We require our employees to take a compliance course every year for example. This objective was achieved in 2015. GasTerra's approach to compliance is described in the Conduct Rules and Procedures section.

4. Responsible chain management upstream (pillars: Gas and Green)

It emerged from the stakeholder dialogue that stakeholders are unclear about GasTerra's role and influence upstream, especially with respect to the earthquake problems and the purchase of foreign gas (especially from Russia). As far as the production of Groningen gas is concerned, the division of roles is as follows: NAM extracts this gas and is responsible for implementing the cabinet's decisions on limiting production from the Groningen Gas Field. GasTerra is solely responsible for selling this gas. The production from the Groningen Gas Field (and the small fields) is subject to strict environmental and safety regulations laid down by the government. GasTerra has no direct influence on this but expects its suppliers to comply with the legal requirements. As the sole seller of Groningen gas, we are directly involved in safeguarding the security of supply. It is low-calorific gas compared with gas from other sources (hence L-gas). Millions of consumers in the Netherlands, Germany, Belgium and France have appliances that can only burn gas of this quality. Their energy companies are therefore dependent on it.

To help secure the supply, GasTerra closely monitors sales in relation to forecasts, working closely with NAM and GTS on this. Thanks to this approach, the production ceilings have not put security of supply at risk for consumers of L-gas.

GasTerra also buys small volumes of gas from Norway and Russia. Production from these foreign sources is subject to the regulations applicable in those countries. GasTerra has no direct influence on this.

To provide more information on this theme and GasTerra's influence, chain management is identified as a material issue in this Annual Report. GasTerra’s approach is set out in the Chain Management section.

5. Education (pillars: Green and Groningen)

As a society we are facing the immense challenge of supplying future generations with sufficient sustainably generated and affordable energy. It is very important that we train energy professionals for this, as GasTerra's stakeholders also emphasise. This is why GasTerra has identified education as a material issue. GasTerra’s approach in this area is described in the Green section. Education is a very important element of the value chain for all parties. We see this as a shared responsibility and we put it into practice by bringing the energy question to the attention of students in schools and in tertiary education.
 

Stakeholder table

The table below shows all of the topics that were put to the stakeholders. Each topic comes under one or more themes: Gas, Green or Groningen. The materiality matrix presents the importance of each material issue to stakeholders versus their importance to GasTerra.

Gas
Green
Groningen
1. GasTerra’s CSR vision
  • Gas
  • Green
  • Groningen
2. Financial results
  • Gas
  • Green
  • Groningen
3. Income from natural gas
  • Gas
  • Green
  • Groningen
4. Energy price trends
  • Gas
  • Green
  • Groningen
5. GasTerra 2018
  • Gas
  • Green
  • Groningen
6. Position of gas
  • Gas
  • Green
  • Groningen
7. Sustainable or more sustainable products
  • Gas
  • Green
  • Groningen
8. Education (sharing knowledge about energy)
  • Gas
  • Green
  • Groningen
9. Efficient gas applications
  • Gas
  • Green
  • Groningen
10. Security of supply (short-term)
  • Gas
  • Green
  • Groningen
11. Security of supply (long-term)
  • Gas
  • Green
  • Groningen
12. Internal business practices/compliance
  • Gas
  • Green
  • Groningen
13. Transparency
  • Gas
  • Green
  • Groningen
14. Personnel and Organisation
  • Gas
  • Green
  • Groningen
15. Sponsorship
  • Gas
  • Green
  • Groningen
16. Sustainable purchasing/internal footprint
  • Gas
  • Green
  • Groningen
17. Responsible chain management upstream (incl. shale gas and Russia)
  • Gas
  • Green
  • Groningen
18. Responsible chain management downstream
  • Gas
  • Green
  • Groningen
19. HSE local residents/environment
  • Gas
  • Green
  • Groningen
Afbeelding met klikgebieden

These material issues are then worked out in detail in objectives in the Business Plan and can be found in the strategy table below.

Strategic programme Material theme KPI Result
Volume Continious management of Groningen in 2015/2016 Reaching but not exceeding the production ceiling set by the minister for Groningen gas GasTerra purchased 29.4 billion m3 Groningen gas in 2015

Price Negotiation of long-term contracts Reaching agreement on the renegotiable years through commercial negotiations or arbitration Confidential
Price Further development of the electronic customer portal as a way to secure loyalty 15 customers on the portal 15 customers gained acces to the customer portal in 2015
Anticipate Promotion of green gas developments 5 green gas contracts. Purchase portolio of 200 million m3. Working power to gas test installation. GasTerra concluded 6 green gas contracts in 2015. Purchase portfolio runs to production of 54 million m3 green gas. High pressure digester installed at EnTranCe which will be used for experiments in years to come
Anticipate Support efficient use of gas Conclusion of 4 new agreements to support industrial customers (EPI) 4 new agreements concluded with industrial customers in 2015
Anticipate Emphasise system functions of gas and the role of gas as ideal fuel in the transition to 100% sustainability > 5000 Hre boilers
45 fuel cells on Ameland,
Demonstration EPC=0 home with and without gas



Only 40 Hre boilers installed despite the government subsidy and widespread publicity. The target of 45 fuel cells on Ameland was achieved. The EPC=0 home has not been completed yet.
Anticipate GasTerra 2018 Reorganising the organisation to make it more efficient and future-proof The new organisation structure was implemented in 2015
Anticipate Vist schools with the "Your energy of tomorrow" truck Visit 120 schools each year with the "Your energy of tomorrow" truck The target of 120 schools per year was achieved
Anticipate REMIT reporting obligations Comply with REMIT reporting obligations The reporting obligations were fulfilled in 2015

In addition to the stakeholder dialogue, GasTerra takes part in various (non-profit) partnerships with a view to promoting gas as part of a sustainable energy supply and monitoring and furthering harmonised market processes.

Dialogue with stakeholders

Dialogue with stakeholders
Level Nature of dialogue Content and effect of dialogue
Global    
International Gas Union, non-profit organisation whose mission is to promote gas as part of an international sustainable energy supply Knowledge exchange, gas advocacy Participation in the World Gas Conference in Paris in June

Exchange of knowledge about the international gas value chain through meetings, joint participation in working groups and giving presentations
Project Delta Group, public-private partnership Monitoring, knowledge-transfer Reduction of our clients' footprint and acquisition of knowledge about best practices
European    
Eurogas, partnership that stands up for the interests of the European gas sector Research, opinion-forming, monitoring, gas advocacy Participation in meetings and working groups, presentations and influencing regulations
European Federation of Energy Traders (EFET) Opinion-forming, monitoring, promotion of harmonised market processes and influencing regulations Opinion-forming through meetings, joint participation in working groups, research and giving presentations
EASEE GAS Promotion of harmonised market and communication processes and influencing regulations Joint participation in working groups, research, designing processes and giving presentations
National    
Clingendael International Energy Program (CIEP) Research and knowledge-transfer Knowledge exchange, influence, opinion-forming,
Shareholders Intensive involvement Adoption of policy frameworks, directors' remuneration, governance, GasTerra's performance, GasTerra 2018 reorganisation project
Customers Knowledge-transfer Customer satisfaction, customer portal, development of new products and services, organisation of events for customers
EnTranCe Intensive involvement, knowledge-transfer Knowledge exchange, promotion of the benefits of gas in the transition to a sustainable energy supply, also by developing and testing sustainable gas applications
Energy Academy Europe and EDI Knowledge-transfer Giving presentations, sharing knowledge and research
Works Council Information provision and involvement in strategy Development and implementation of GasTerra 2018
Dutch Energy Association (Vereniging Energie-Nederland) Intensive involvement, monitoring Knowledge exchange, promotion of the benefits of gas in the energy transition, monitoring and influencing regulations
Energy podium dinners and annual debate Exchanging views and information with stakeholders within and outside the gas sector in an informal setting Cultivating understanding of each other's positions, broadening and deepening of knowledge, search for common interests and positions
Energy podium website Platform for stakeholders to exchange views and arguments Learning about each other's positions and arguments, broadening and deepening of knowledge among interested audiences
GILDE Exchange of views and information with NGOs Development of a common discourse by the gas sector and NGOs in order to make a real and credible contribution to the debate on the energy and climate debate and to policy formation
Interview with B.A. Westmaas, Personnel & Organisation Manager

Interview with B.A. Westmaas, Personnel & Organisation Manager

Bart Westmaas was born in Haarlem on 20 August 1972. He studied Business Administration at Groningen University. He started his career as a management consultant at VDP Management Consulting/Boertien Consulting. Bart Westmaas took up a management consulting post at Gasunie in 2003. Since 1 July 2005, he has been the Personnel and Organisation Manager at GasTerra.

Read the interview with Bart Westmaas

Interview with B.A. Westmaas, Personnel & Organisation Manager

The strength of GasTerra: we can rapidly anticipate changing (market) conditions

Bart Westmaas

In the 2014 Annual Report, Robbert Slob, chairman of GasTerra’s Works Council talked about the ‘GasTerra 2018’ reorganisation process which had just been announced. The Works Council followed this process closely last year and took part in various working groups. After an intensive and turbulent period, the Works Council finally gave a positive recommendation on the outcome. As Personnel and Organisation Manager, Bart Westmaas was intensively involved with GasTerra 2018 and has been given the responsibility of taking it further. He looks back over the past year and forward to 2018.

The theme of this Annual Report is ‘new realities’. Looking back how do you see this from the perspective of staffing policy?

First of all it is a strong and apt theme, that expresses very well where we as an organisation find ourselves at this moment. Not only the changing market conditions, but also the long-term decline in our sales volume are forcing us to take a critical look at the organisation. It is typical of GasTerra that we don't wait to see what happens but take the initiative ourselves. This is exactly what we did with the GasTerra 2018 project last year.

How do you look back on the past year?

2015 was a hectic year, in which learned that we are dealing with a new reality on all fronts. Anyone can change when times are good. But changing an organisation in heavy weather can be pretty tough sometimes. Fortunately GasTerra has proved that it can do this and through good cooperation is able to power ahead to a new reality.

GasTerra 2018 did not proceed without a struggle. What was your experience of it?

Before we started we decided to go for a bottom-up approach, in which employees would be actively involved in organising a more efficient and future-proof organisation. Three working groups considered efficiency, commercial processes and, finally, organisation structure and staffing. The steering group departed from the working groups' proposals in the decision on the new structure for the organisation. The employees saw this as a lack of transparency and many expressed their dissatisfaction about this. The Works Council raised this, after which the steering group took steps to regain the employees' trust.

What are the outcomes of GasTerra 2018?

GasTerra has had a new process-oriented organisational structure since November 2015. In addition, the number of sales teams has been reduced from three to one and from now on there will only be one back-office where there used to be three. Over the next few years we will also reduce the number of staff from approximately 200 FTE in 2015 to around 160 FTE by 2018. This is a massive change for our organisation, which is why we are taking time to do this properly and without compulsory redundancies.

How have the staff reacted?

We are increasingly coming to realise that the environment around us has changed a great deal. This has an impact on the organisation and therefore also on the staff. GasTerra is getting smaller. I've noticed that staff are very well aware of this and are investing more thought into their own careers: what are my qualities and what organisation and job would suit me? Meanwhile we have seen a modest increase in people leaving the company.

Up to now GasTerra has had a low rate of leavers; how do you explain this?

GasTerra is a special organisation with a strong cooperative culture in a very dynamic sector. We offer employees many professional development opportunities and good employment conditions. Put simply, we are a really great company to work for!

Don't you think that developments in the outside world will have more of an impact than this reorganisation without compulsory redundancies?

I hope that we can show the outside world that we are contributing to making the energy supply more sustainable so that our raison d'être is not called into question. But we cannot be sure of that. I have every confidence in our ability to adapt. But if we've learned anything this year, it's that nothing is certain.

How does the P&O Department plan to facilitate employees over the next few years?

First of all let me say that it is always good to reflect on where you are going. What do you want? What is important to you? Where do your talents lie? How do you exercise control over your career at GasTerra or elsewhere? This has not changed. What has changed is that we have set aside a larger budget for training, coaching and secondment. In addition, we are collaborating with companies in the region so that employees can spend time elsewhere to build up experience. Agreements have been made with the trade union in the form of a social charter on how we can facilitate the necessary staff departures. If employees are interested in looking for opportunities outside the company, the agreements in this charter can make it less difficult for them to take that step.

What other challenges do you see for HR policy apart from the staff departures?

How to keep people motivated, how to offer prospects and adequate career progression in a contracting organisation. In short: how can we continue to be a great place to work?

What kind of people do you need to fulfil the company's mission even in changing circumstances?

Employees who take the initiative and can adapt quickly to new circumstances. We offer our staff interesting work and good development opportunities. Career progression opportunities are limited but we give every employee and outstanding basis. I'm proud that our organisation has demonstrated a great capacity to adapt over the past few years, especially the ability to adapt to changing market conditions.

Finally, the energy sector is important for regional employment. What kind of future do you see for the sector?

I see a sector facing many major challenges that is still searching for the right position in this environment. And that in a society where support for our product is in decline in view of the public debate about gas extraction in Groningen. I believe that we can win back public support but in order to do that we will have to be more outward-looking.