August 2016, Vol. 243, No. 8


Dutch-owned Gasunie at Heart of ‘Magic Gas Roundabout’

By Nicholas Newman, Contributing Editor

Gasunie, the Dutch state-owned gas infrastructure company worth more than 10 billion euros, lies at the heart of Northwest Europe’s gas transmission network.

The system consists of a gas transmission grid in the Netherlands and parts of northern Germany. Its interconnected pipeline network links customers in northwestern Europe with gas fields in the United Kingdom, the Netherlands Norway and Russia. Gasunie’s LNG terminal in the Rotterdam port provides an entry-point for worldwide gas supplies to Europe. In addition to its transmission and distribution services, the company stores and trades natural and green gas.

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Where Gasunie Operates

Gasunie’s 15,600-km, high-pressure gas pipeline network is operated by geographically distinct subsidiaries, Gasunie Deutschland and Gasunie Transport Services (GTS) of the Netherlands, responsible for 3,600 km and 12,000 km of pipelines, respectively.

Owing to its strategic location, Gasunie’s infrastructure is a crucial part of the “gas roundabout” of northwestern Europe into which gas flows from Russia via the Nord Stream pipeline, from the UK via the subsea gas pipeline, BBL, and from around the world into the Gate terminal. It is here that natural gas is switched and traded via the Dutch Trading Exchange (TTF) and the UK. It is from this “magic roundabout” that natural gas and LNG are transported to Germany, Belgium and France from offshore gas fields in Norwegian and Danish waters (Figure 2).

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Figure 2: Gasunie Dutch and German high-pressure gas pipeline network.

Source: Gasunie

As part of the Dutch government’s economic policy, Gasunie has been used as a tool to turn the country into a gas roundabout, or hub, for trading. Gasunie has invested in pipelines, storage and LNG capacity to let gas traders switch deliveries across Europe, via the Netherlands.

“Gasunie’s challenge revolves around providing the proper infrastructure and services for our clients,” said Hans Fennama, CEO of Gasunie.

As a result, the Netherlands is becoming the leading gas trading hub in Europe, overtaking the UK, according to MJMEnergy analyst Nico Cottrell. One of its expanding services is the conversion of imported high-calorific gas from Norway, Russia and the Middle East into low-calorific gas, which the majority of domestic appliances in the Netherlands and Germany use.

Gasunie has also developed the title transfer facility, a virtual marketplace where customers are given the opportunity to trade gas that is already in the Gasunie pipeline system.

Expansion, Diversification

Following the discovery of gas in Groningen in 1959, Gasunie was established in 1963 by the Dutch government (50%), Exxon (25%) and Royal Dutch Shell (25%) to transmit and deliver Dutch gas production to industrial and domestic customers in the Netherlands and neighboring countries.

In 2005, the company split into two parts: The gas transmission operator kept the original name Gasunie while the gas trading arm was renamed GasTerra. As a result, Gasunie is 100% owned by the Dutch government while ownership of GasTerra is shared as it was originally.

In 2007, Gasunie extended its geographical reach with the purchase of BEB Erdgas und Erdoel GmbH, the German natural gas pipeline network operator from Royal Dutch Shell and ExxonMobil, to secure cross-border pipeline connections with the Netherlands, Danish, Norwegian and Russian gas pipeline networks. The 440-km Nordeuropäische Erdgas Leitung (NEL) system gives Gasunie direct access to Siberian gas production via the 55 Bcm/y 1,200-km Nord Stream subsea pipeline in which it has a 9% stake.

Intercontinental Exchange

In 2013 Gasunie, in conjunction with Intercontinental Exchange, a leading operator of global markets and clearinghouses, launched a European gas spot and derivatives exchange, known as ICE Endex.

It provides a liquid, transparent and widely accessible continental European trading hub for natural gas and power derivatives, gas-balancing markets and gas-storage services, including the Title Transfer Facility (TTF) virtual trading point in the Netherlands, the UK On-the-Day Commodity Market (OCM) and the Belgian Zeebrugge Trading Point (ZTP). This strategic development marked a further reinforcement of the Netherlands position as a center for gas trading in Europe.

Gate LNG Terminal

Gasunie predicts an increase in European gas imports of 10% by 2035 owing to a combination of declining North Sea gas and rising demand.

“The main sources of gas to close the anticipated import gap for northwest Europe are likely to be additional LNG and Russian gas, but the exact combination cannot yet be known,” according to Gasunie.

Mindful of this long-term trend, in September 2011, Gasunie purchased a 42.5% stake in the Rotterdam-based LNG import and export Gate (Gas Access to Europe) Terminal, owned by Royal Dutch Shell and Royal Vopack.

This 800-million euro purchase gives Gasunie direct access to the world’s supply of LNG including North American LNG. Annually, Gate receives, stores, re-gasifies and distributes up to 12 Bcm and can accommodate 180 LNG tankers.

Gate also has a truck-loading facility to supply Shell’s network of seven LNG truck-refueling stations within the Netherlands. Its break-bulk capabilities enable smaller quantities of LNG to fuel ships or distribute LNG via Europe’s extensive coastal and barge shipping networks to customers throughout the continent.

The demand for LNG as a fuel is increasing in importance due to tighter European Union legislation requiring tougher emission regulations for shipping in the North and Baltic Seas.

Gas Storage

Gasunie officially opened its underground gas storage facility on Jan. 27, 2011 at Zuidwending, near Veendam. The Zuidwending natural gas buffer is the first gas storage facility in the Netherlands where natural gas is stored in salt layers at a pressure of 180 bar. It is designed to meet additional peak demand for gas at a moment’s notice. There are five caverns from which a maximum of 1.8 MMcm of gas per hour can be produced and a maximum of 1 million cubic meters per hour can be injected.

The first four caverns are about 300 meters high and 50-60 meters across. The fifth cavern is 500 meters in height and 80 meters across. The Eiffel Tower would fit into the most recently completed cavern one-and-a-half times. The storage facility involves an investment of over 600 million euros.

The Future

Gasunie faces an interesting future as part of the solution to meeting northwestern Europe’s gas needs. On the domestic front, the company plans to begin the long-term conversion of its gas pipeline network to accommodate high-calorific gas in order to adjust to Europe’s increasing dependence on gas imports.

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