In a study for the Dutch Ministry of Economic Affairs, Agriculture and Innovation Brattle principals Dan Harris and Coleman Bazelon, with Dr. Brad Humphreys of the University of Alberta, quantified the investments that could be made under a successful government strategy to stimulate the Dutch gas sector – the so-called ‘Gas Hub strategy’. The Brattle study estimates that the Dutch gas sector currently contributes about €10 billion per year in government revenues (or 6 percent of all Dutch central government revenue), supports over 66,000 jobs and contributes about 3 percent to GDP. Gas exports from the Netherlands had a value of €14 billion and €10 billion in 2008 and 2009 respectively, which represented approximately 3 to 4 percent of the value of all Dutch exports. The authors estimate that a successful Gas Hub strategy could attract an additional €7.7 billion of infrastructure investment from private parties and Gasunie, the Dutch Transmission System Operator, and result in an additional 13 bcm/year of transit flows across the Netherlands. The investments would also create approximately 136,000 job-years or employment, equivalent to 13,600 jobs for 10 years, and result in €21.4 billion of additional goods and services. The study finds that demand and supply developments in the UK gas market are key to demand for Dutch transit capacity. To gain insight into the perceptions of Dutch gas market players, the authors undertook interviews with several large multi-national firms that are active in gas trading in the Netherlands, other European markets and worldwide. The authors found that market participants like the excellent range of options that the Netherlands provides for both buying and selling gas through its connection to multiple markets and gas sources. Market participants noted that the Netherlands remains an attractive place for gas trading, and is perceived at present as being one of the most important and investor friendly gas markets in the EU. Ensuring that the gas transport tariffs remain as transparent and competitive as possible will be key in promoting Dutch gas transit volumes. In addition, building the liquidity of the Dutch gas trading facility (the Title Transfer Facility or TTF) will be important in giving the Netherlands the edge as a destination for LNG imports. The study recommended that the Netherlands capitalize on existing gas R&D initiatives and the geographic nexus of industry expertise and university-based research by focusing on a growth area such as biogas, which could be used as a platform for future exports and growth. “As Europe’s indigenous gas production declines and market liberalization increases, gas imports and trading will increase. The Netherlands is in a strong position to claim a share of the growing markets in gas transit, LNG imports and gas trading,” Mr. Harris noted. “However, as our analysis demonstrates, this ambition will not go unopposed. Belgium, Austria and Italy all have plans to develop their own gas hubs.” The study identifies a number of proposals that could increase the success of the Dutch gas sector, including enabling Gas Transport Services (GTS) to sell ‘open season’ capacity under long-term, multi-year tariffs, and maximizing the integration between the TTF intra-day market and the new Dutch balancing market. The ultimate aim is to create a single intra-day market that will maximize liquidity. The Dutch Ministry of Economic Affairs, Agriculture and Innovation will send the Brattle report, “Economic Impact of the Dutch Gas Hub Strategy on the Netherlands,” to Parliament on Wednesday, 8 December, and it will also be distributed to the participants of the Dutch Ministry’s expert gas group, the Gas Hub Consultative Forum. The report is available for download below.
Coleman Bazelon|Dan Harris|Brad Humphreys