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Toespraak | 21-03-2011

Speech by the Dutch Director-general of Energy, Telecom and Markets, Hans Vijlbrief, on behalf of the Deputy Prime Minister and Minister of

Economic Affairs, Agriculture and Innovation, Maxime Verhagen, at the opening of Gastech, on 21 March 2011 in Amsterdam

Your Excellency/Your Excellencies, ladies and gentlemen,

Today, Holland is only one LNG tanker away from Qatar.

Gas is as old as the earth itself, yet it never ceases to amaze us. Over the last decades, gas has turned from a local commo dity into a global

commo dity. It is increas ingly connecting all of ou r countries into a world wide ga s web. A web in which Holland is becoming the central hub fo r Northwest

Europe.

Ladies and gentlemen, these are words that should have been spoken to you by the vice prime minister of the Netherlands Maxime Verhagen, who is

also the minister responsible for energy. But as you know, the European ministers of energy were all called to Brussels today for a special Council

meeting about the dramatic events in Japan. On behalf of the Dutch government, I want to present all my sympathy and support to the Japanese

government and the Japanese people.

And I will now read to you the address that Minister Verhagen wanted to de liver personally.

Ladies and gentlemen,

It is my pleasure to welcome you all to Amsterdam. And its a rare privilege to have such a large high-level audience from all over the world and from

all segments of the gas world. I would like to thank the organisers, and in particular our host sponsor Shell, for making it possible.

I realise that promoting gas to people from the gas world is like preaching to the converted. Yet that is exactly what I plan to do, before telling you

what you can expect of me, and what I expect of you.

Market trends favour gas


Will the 21s t century be the Go lden Age of Gas? T hat, in any event, is what the In ternational Energy Agency believes. A lead ing institute that will soon

be led by the previous Dutch minister of Economic Affairs, Maria van der Hoeven.

Notwithstanding the uncertainties about our energy future, there is a growing consensus among policymakers, business leaders and energy experts

that the outlook for natural gas is bright.

And with good reason.

Both gas demand and supply have increased dramatically in recent years. And they are expected to increase by over 40 per cent by 2035 (IEA, World

Energy Outlook 2010). Of course, you all know why. In its most recent five-year plan, China aims at doubling its domestic consumption of natural gas

by 2015.

Meanwhile, European gas consumption is also expected to increase substantially in the next two decades (Eurogas expects European demand to rise

by 43% between 2005 and 2030. Source: Long-term Outlook to 2030, 16 November 2007.). as more and more power plants rely on gas. In the

Netherlands, for instance, no less than 60 per cent of all electricity is generated by gas-fired power plants. Gas also adds flexibility to coal-fired and

nuclear power plants and serves as a back-up for wind and s olar ene rgy production. Gas prices could have s oared in line with dema nd. But they

havent. Companies are investing heavily to mee t present and future de mand.

I accompanied Queen Beatrix of the Netherlands on a State visit to Qatar, the worlds number one producer of liquefied natural gas. We were

impressed by the scale of LNG and gas-to-liquid operations at Shell Pearl. The company has invested som e 20 billion euros in the past se ven years in

what is pos sibly the largest industrial complex in the world.

As a result of su ch heavy investme nts, global ga s supplie s have increas ed dram atically. LNG production is growing fast. Europes LNG imports went up

22 pe r cent last year. The worlds LNG capacity is ex pected to triple be tween 2012 and 2 015. And LNG should account for one-third of sup ply growth by

2035 (IEA, World Energy Outlook 2010).

Unconventional gas might be another game changer. The United States is leading the way: it has seen a mind-boggling twenty-fold increase in

Holland as gas hub why and how

Holland as gas hub why and how | Rijksoverheid.nl http://www.rijksoverheid.nl/onderwerpen/gas/documenten-en

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unconventional ga s output in the p ast de cade (IEA Chief Economist Fatih Birol in Power-Gen, 10 Novem ber 2010). Man y other countries a re following its

lead.

We recently granted a licence to the British company Cuadrilla Resources for test drilling of shale gas near the Dutch town of Boxtel.

In short, while demand is increasing, gas prices are becoming more competitive worldwide. The trend is likely to be further enhanced by environmental

regulations. Such as stricter standards for coal-fired power plants. Or demands to reduce CO2 pollution through an improved emission trading system.

Holland is a gas country

These bright prospects for gas, ladies and gentlemen, are good news for the Netherlands and for Europe. We have been a gas-producing country forover half a century, following the discovery of gas ne ar the no rthern village of Slochteren. At that time, Slochteren was the largest field in the world;

nowadays, it still is the 10 th largest, but it will be dep leted within a generation. Ye t paradoxically, our future as a ga s country is only ge tting brighter.

In the ten years from 2005 to 2015, no less than 20 billion euros will have been invested in the Netherlands in the exploration and production of gas,

in transport infrastructure and in gas-fired power plants. In busine ss, in po litics and a mong the Dutch public, support for gas is widespread . We b elieve

that gas is h ere to stay. And we want it to stay. For three clear reasons:

its a crucial sector of ou r economy;

it can help us mee t our climate goals;

it can help guarantee energy supplies for the future.

Let me briefly elaborate.

First, gas equals income and jobs. Holland is the largest gas producer in the EU and 8th largest worldwide. The industry provides jobs to some 66

thousand people, represents 3 per cent of our GDP and exports and some 8 per cent of central government revenues (Figures from Brattle Group

report, December 2010). Gas is in every household, as almost all households are connected to the gas grid. The share of gas in the Dutch energy mix

is 40 pe r cent - comp ared with an ave rage of 25 p er cent for the EU as a whole.

Second, gas is the cleanest of all fossil fuels. We are aiming for a low-carbon society by 2050, as agreed in the EUs Roadmap 2050. Sustainable

energy alone will not do the trick; there is enough evidence that green energy cannot fully replace fossil fuels in the foreseeable future. But switching

from more polluting fossils to gas will help us reach our short-term and long-term climate goals. Gas can help us make the transition to an almost

carbon-free society in a cost-effective way.

Third, gas will help us ensu re security of supply. Po litical uncertainty [and natural disasters] in different pa rts of the world remind us o f the wisdom of

not relying on supplies from a single source. We need to diversify our sources of supply, our supply routes and the types of fuel we use.

Gas will be availab le in the Netherlands and Northwest Europe for decade s to come . Not only from o ur own fields bu t also from nu me rous foreign

sources. Our regional gas market is one of the most liquid and well-functioning in the world. Clearly, gas is and should remain a central component of

our energy mix.

Enhancing the role of gas: what the Dutch government will do

So, what will I do to enhance the role of gas in the future energy mix? First of all, ladies and gentlemen, the Dutch government will continue to seek

cooperation within Europe and beyond. To increase the share of gas in the Northwest European energy mix. To develop the European energy market.

To meet climate goals. And to improve interconnections.

I can assure you the Dutch government is highly motivated in this area: we aim to firmly anchor gas in our present and future energy system. We

believe countries should focus on what they do best, and work hard to do it even better. This is why I decided to go the extra mile for energy as one of

the top sectors of the Dutch economy.

Former Shell CEO Jeroen van der Veer now leads a lean and mean team that will shortly be advising me on how to strengthen the energy sector. I see

three priorities we will certainly agree on.

First, develop our gas hub strategy and at the same time comply with emission targets. Second, further improve the business climate, cut red tape and

stimulate investment in new technologies. Third, foster cooperation and innovation. Our commitment to strengthening Hollands position as the gas

hub of Northwest Europe means that we will continue to develop a sound and stable legal and regulatory environment. It also means we will promote

investment in LNG facilities and gas storage.

Gas storage allows us to meet increased demand in wintertime and if supplies are disrupted. It also stimulates trade and the further development of

the European ga s m arket. Tha t is why I am convinced tha t we m ust push fo rward with the Bergermeer gas storage project near the city of Alkmaa r. The

government will take a decision on the 8th of April.

Fostering game-changing innovation is an essential part of our policy for the top sectors. New technologies will allow us to explore and exploit new

fields an d new varieties o f gas. To create new applications fo r gas. And mo re econom ic activity. This is why I will be supp orting a range of current

initiatives. Like a n ew energy institute in no rthern Holland to strengthen o ur knowledge infrastructure. Like new and stronger ene rgy clusters such as

Energy Valley. Like exploring the opportunities for unconventional gas and LNG, such as the use of LNG by ships in the North Sea and on domestic

waterways.


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Enhancing the role of gas: what the industry should do


Challenges have helped us become what we are today. Our struggle with water has made us experts in water management. Surmounting the

limitations of o ur territory has m ade us a le ading country for agriculture a nd food. I n terms o f size, we are the worlds 134th larges t country. Yet we a re

the second largest exporter of agrifood.

The secret of our success? Its not just innovation. Above all, its cooperation. Between business, research and government.

This is why fostering cooperation among these three players, and with stakeholders outside the industry, is an essential part of my policy for theenergy sector. This brings me to my final point: what do I expect from the energy industry? We can only be successful if you in the industry commit to

doing your part, too. According to the Brattle Group report presented late last year, the gas hub strategy requires market investment of 7.7 billion

euros. This should pay off handsomely, for this investment is expected to generate over 21 billion euros in additional economic activity!

You are in the driving seat. You are making the investment decisions. You can effectively increase the share of gas in the Dutch and European energy

mix. Yo u can make gas greene r and cleane r. You can help us m ake the case for gas within the EU. You can let us know what governments should do

to ease barriers, lift obstacles and pave the way for gas.

I have every reason to believe that you will do your part. The industry is fully engaged in the Gas Hub Consultative Platform that we launched a year

ago. It has already drawn up valuable recommendations. Now is the time to implement them! I also welcome the recent report by the European Gas

Advocacy Forum, which includes Shell and e ight other compan ies. The y rightly stress that gas can he lp us m ake the transition to a low-carbon society in

the quickest, cheapest and most pragmatic way possible. I am eager to see follow-up on that report.

Conclusion - Vision 2050 - gas as a destination fuel


I belie ve the ne xt few days will provide you with new insights into the crucial issues fa cing the global ga s industry. Above all, I hop e they will give you

new incentives to team up with partners and research institutions and innovate to meet the challenges of the future.

I believe that 50 years from now we will still need fossil fuels; gas is our smartest and cleanest bet. It may be evanescent, but gas is here to stay.

Both as a transition fuel and a destination fuel. Because gas is fairly clean, readily available and highly flexible. The Dutch government is firmly

committed to securing Hollands position as the gas hub of Northwest Europe. That includes developing possibilities for gas storage. Creating an

excellent business climate. And promoting enhanced cooperation at European level.

But you in the industry call the shots. As long as you continue to invest and inn ovate, the future o f gas will be even brighter than it is today. And its

benefits to our societies even greater.

Thank you.

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erantwoordelijk ministerie

Ministerie van Economische Zaken, Landbouw en Innovatie [/m inisterie s/ele ni]


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20110321-holland as a gas hub - speech

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