Annie Krist stepped in as the CEO of Dutch natural gas wholesalers GasTerra on the first of January. In our interview with her, we look ahead at how declining production from the Groningen gas field will affect the North West European market in the years to come, and explore the challenges involved with balancing a portfolio of L-Gas and H-Gas supplies.
“The idea that the field where the whole European gas market started will go to zero production – of course that’s a very important issue.”
Dare I ask how many Flame events you’ve now been involved in?
Well, several. Over ten probably.
And you’ve been in the industry a long time?
Let me say decades.
So when you look at the market now, with everything that has happened over the last 12 months, what’s your assessment of the market?
I suppose there’s always good news, and always bad news of course. If we specifically take a look at North West European gas market, or at the TTF market area, we see a very resilient market place, very high liquidity of several products, a hub that has been able to cope with the decline of production from Groningen – the continuous decline of production from Grongingen – so that’s the good news I would say. The bad news, if you can put it that way, at least for us as a Dutch wholesale gas company, is the fact that we will at a rather quick decline the production of Groningen for ever, to around 5 bcm probably around 2022 – 23, to around zero probably by the end of the 20’s, and for us of course that means that we have to rethink our business model, and we’re simply glad that we have the Dutch gas roundabout enabling additional import gas to come in – because that definitely has to be the case – and we are dealing with some operational issues in the next five years, in which we of course will not see a dramatic decline in L-Gas demand.
You’re talking about it very pragmatically, but I imagine this was a situation that you certainly didn’t foresee.
No, that’s right. I think that on the one hand you can say that the gas industry in general tends to be rather pragmatic, and the Dutch perhaps tend to be rather pragmatic. So it’s a way of acting perhaps. But no, of course for us, and also for the Dutch and the TTF gas market, it’s quite a big thing. And the idea that the field where the whole European gas market started will go to zero production – of course that’s a very important issue.
Do you think it’s being done at the right speed?
I suppose so. I mean, some would say that it should have been done earlier because of the earthquakes and the damage it has already done. Some might say well, you can prolong it a bit further, produce more gas. The decision has been made by the policy makers in this country, and that’s what we are dealing with.
So what you are dealing with operationally, a lot of things changing. You are looking at the future and I imagine there are a lot of challenges.
Absolutely. Both short term and a bit longer term.
Okay, well let’s start then with the short term.
Well the system gets a bit tighter of course. And we are a very important, big portfolio player on the TTF market area. We are balancing not only the L-Gas portfolio, but also our H-Gas portfolio. And that gets difficult every year, and almost every month I would say. So that’s the big challenge for the next gas year, and a couple of gas years ahead, where we see the decline in demand not really going that fast. And of course for the longer term, we still have obligations, both on the sales side and on the purchase side. We buy some offshore gas from the small fields for example in the Netherlands, we do import gas… but an important backbone in our portfolio will most likely be gone by then. So that’s a challenge as well.
So what will be the next backbone?
The gas system as a whole will be the backbone I suppose. And with that I mean the gas around about the hub that has been created on it, that has to be the backbone. And in the end, not only the backbone for the gas system, but for all of the energy system at least in the Netherlands.
Do you see that emerging as actually a more balanced and maybe even a healthier system because it doesn’t have that one particular backbone?
Well in our portfolio over the last year Groningen production was around one third.So it was already quite diversified I must say. But it will go down, and we have to deal with it. And it’s better to take the pragmatic view on it, I would say, and see where that gets us [laughs]
Your CEO, so you come into your office in the morning – actually I imagine that you work all the time anyway – but when you come in there in the morning, what is sitting there in the morning? What is there that’s on your desk that you have to first deal with?
At this moment we are dealing with all the challenges for the next gas year and the next couple of gas years thereafter. That’s our prime activity for now. And of course when I’m home, I do a bit of thinking, and I think further ahead as well.
Well let’s you and I are standing here one or two years from now, what will we be talking about? What shape will Gasterra be in then?
There will not be much change until 2023 I think.
Well let’s take it then to 2022. So just before – what shape will Gasterra be in? And then let’s take it to 2024 as well?
I’ll tell you that when we’ve finished our project Gasterra: Five Years Ahead.
Ooh, ouch, okay. And you are confident for the future though?
I’m confident that the group of people we are with will manage the portfolio and the balancing of the system now – not only now but also in 2020, also in 2023, and even in 2029 if it’s necessary.
