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Interview

with Maria van der Hoeven, Minister of Economy, Ministry of Economic Affairs – Netherlands

08.01.2010 / Energyboardroom

As the Minister of Economic Affairs of the country that coined the term ‘Dutch disease’, how do you assess the way your national government has historically used the revenues from the oil and gas industry and how is the current government investing these resources?

When the Netherlands discovered the giant Groningen gas field 50 years ago it used most of its revenues to finance current expenditures, which naturally wasn’t very wise to do. However, that doesn’t change the fact that the country changed considerably its policy about 20 years ago.

From that moment on, a considerable proportion of the oil and gas revenues are used for investments to strengthen our economic position in the long term. Infrastructure projects were for a long time a top priority, but since the last cabinet knowledge and education have also come up as the national priority.

When we look at the footprint that the oil and gas industry has left in the Netherlands we can see an important impact not only in governmental revenues, but also in jobs creation, technology, infrastructure and so on. Anyhow, the Netherlands will very probably become a net importer of natural gas in the next ten to twenty years. How is the country adapting to this new reality?

The Netherlands is re-inventing itself when it comes to energy. In order to speed up this process the government is reinforcing the Small Fields Policy so that companies can explore the full potential available in the country.

The first thing we are doing is to enforce the Small Fields Policy. The government is offering some fiscal incentives to induce our companies to operate the small fields and the government also guarantees that the gas these companies produce will be sold at reasonable prices. When talking about financial incentives to the marginal fields we refer to extra fiscal measures that encourage the further exploration of these assets.

Secondly, we are investing in the realization of the European Gas Roundabout. Since the Netherlands has depleted gas fields, it means that the country can offer an incredible natural gas storage capacity and it already has the infrastructure necessary to distribute this gas throughout North-Western Europe.

The assets of the Netherlands to become the European Gas Roundabout are evident. Together with the unique infrastructure already in place we have the accumulated knowledge of more than 50 years of exploration and production of oil and gas; our geographic position is at the heart North-West Europe and at the continental entrance to all the gas produced in the North Sea and elsewhere thanks to the Port of Rotterdam. Last but not least, the Netherlands will continue to be a large producer of gas in the decades to come, independently from becoming a net importer.

But the fact that we might soon become a net importer has the significance of its own. It means that the Netherlands has to diversify its energy sources. Naturally, Russia is an important source of gas, but it is not good for the country to only look east. We have to look also for other suppliers. This is why we are investing considerably in LNG terminals, for instance in Rotterdam.

To conclude, we need more pipelines to bring natural gas from different sources and routes. This is why the Netherlands is a big supporter of the Nord Stream pipeline. As a result, GasUnie is participating actively in the project and at this moment some decisions have been made by Scandinavian countries, meaning that the realization of Nord Stream gas pipeline is coming closer. The sum of all those measures will guarantee the safety of energy supply the Netherlands needs for generations to come.

The Dutch government has companies like GasUnie and GasTerra as important pillars of its energy policies in the country. How can you guarantee the profitability of these companies when using them also to the public good?

It is important that the Dutch government applies a stable and long term policy for the future of the national gas industry. This means that we need to make sure that our investment climate is the climate needed for them to be competitive and that’s what we are doing for all companies, GasUnie and GasTerra included.

In the wake of the Copenhagen meeting, how is the Dutch government balancing the interests of a very well established sector such as the oil and gas industry with the political will to curb carbon emissions and promote renewable energies?

The Dutch government clearly supports all measures necessary to guarantee an environmentally sustainable future. However, this is not to say that the market for oil is over – although clearly the era of cheap oil and gas is indeed over.

Even if we really achieve the 20% of renewable energy in 2020, there is still an 80% that has to come from fossil energy – gas being the cleanest one is in the top of the bill. Oil is very important for the Netherlands as well, not only for our own supply but also for our economic positioning. The Port of Rotterdam is known as the oil port of Europe and it concentrates more and more the Western European refinery industry. Thus, it is a very important sector for us from an economic and strategic point of view.

In regards to the Copenhagen meeting, what are your main ambitions and expectations for this meeting and for the following compromises that should be settled in the years to come?

I see the Copenhagen meeting as a first step towards compromises. First a political agreement must be settled so that countries can actually deliver real offers and binding agreements. I believe the world is willing to give this political gesture in Copenhagen and the Netherlands will do its best to facilitate this process.

Besides, every compromise has to take into account that we are still a fossil fuels society. Our aim will be to move as quickly as possible towards renewable resources in a stable and constructive way. The Netherlands is investing considerably in technologies and projects related to wind energy, biomass, solar energy and many other sources and technologies such as tidal energy, thermal energy, electric cars and so on.

If you stimulate innovation and deliver the right incentives for people to make a business out of it, they will. And for that, simply handing subsidies is not enough; the government has to make sure that these activities will be economically sustainable in the long term. After all, the future of our planet and our economies is at stake.

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