Nederlands
Oil and gas
Joint Ventures
EBN participated in 125 production joint ventures in 2009 (22 onshore and 103 offshore). EBN also participated in 47 offshore oil and gas exploration joint ventures and has interests in 5 offshore gas-gathering pipelines (including extensions) and 4 gas-storage facilities. Over the past few years, there has been a sharp rise in the number of joint ventures in which EBN participates, mainly because of a number of licences being subdivided. The number of operators has also increased, especially those that are not part of globally operating companies. The smaller companies usually operate differently from large oil companies. In general they are also structured differently, both technically and financially. The arrival of these new players relates to a reduction in interest among larger players, who prefer to invest in large-scale projects with high ‘risk and reward’ ratios. In the next few years, the main focus in the Netherlands will be on marginal and unconventional prospects, which can be developed more efficiently and cost-effectively by smaller operators.
Exploration
Under the Mining Act, companies intending to explore for mineral resources (hydrocarbons) in the Netherlands need an exploration licence. Under Section 5.2.1, Articles 81 to 88, of the Mining Act, EBN can participate in exploration activities at the request of the licence holder. EBN and the licence holder then share the costs and risks of the exploration activities. This is further regulated in a joint-venture agreement between the licence holder and EBN, which is subject to approval by the Minister of Economic Affairs, Agriculture and Innovation.
Licence holders have a 60% interest in the joint venture, with a 40% stake for EBN. EBN is in the same position as the licence holder in terms of risk and return. State participation in exploration licences reduces the financial threshold for drilling exploration wells. Companies wishing EBN to participate in their exploration activities may approach EBN directly.
EBN
Attn. CEO
P.O. Box 19063
3501 DB UTRECHT
After receiving a request, EBN will forward a draft joint-venture agreement for comment. EBN will not formally participate or share any costs until the agreement has been signed by both parties and approved by the Minister.
Production
Once the presence of hydrocarbons has been demonstrated in an exploration licence, the licence holder can apply for a production licence under the Mining Act. Section 5.2.2, Articles 89 to 97, of the Mining Act stipulates that the Dutch State has a right to stipulate State participation by EBN in the production process. As in the case of exploration licences, licence holders have a 60% interest and EBN 40%. These interests are recorded in joint-venture agreements between EBN and the licence holders, which are also subject to approval by the Minister.
The basic rule is that the State participates in the production process. The Minister is entitled to forgo State participation when granting a licence only if production would be financially detrimental to the State or if the risks of that occurring are considered to be too high.
If EBN was not involved in the initial exploration activities that directly precede and relate to a production licence, the production licence agreement will stipulate that EBN will reimburse the licence holder for 40% of the costs incurred in exploration for and appraisal of the prospect, and any further capital investment in production facilities. This is commonly referred to as 'inbrengvergoeding’ (= contribution reimbursement).
If a licence holder performs any additional exploration activities in the area covered by its production licence, EBN will – providing EBN is participating in the production licence – also participate in those additional exploration activities.
Small fields policy
The Dutch Government devised the ‘small-fields policy’ so as to ensure that as much gas as possible would be found and produced. The essence of this policy is that gas should be produced from small fields in preference to gas from the Groningen field. The unique characteristics of the Groningen field enable this field to act as a ‘swing producer’, balancing fluctuations in supply and demand.
The Dutch Gas Act stipulates that GasTerra has to preferentially buy gas from small fields and at market prices. GasTerra buys most of its gas from small fields and sells it (along with gas from the Groningen field) in the Netherlands and abroad.
Although gas and oil companies may obviously also sell to other parties, they have a guaranteed buyer in GasTerra, at market prices and without having to wait. GasTerra also covers the risk of reserves uncertainties, and this makes it attractive for producers to develop gas from small fields. The small-fields policy has proved to be very successful. Many new gas fields have been found in the Netherlands since the 1970s. Although none is anywhere as large as the Groningen field, together they hold about a third of the volume of the Groningen field. Many households in the Netherlands and Europe use gas produced from these fields. The small-fields policy is also ensuring that we can continue to benefit for longer from the very special Groningen gas field.
...and in the future, too
Almost one thousand billion cubic metres of natural gas have been produced from small fields in recent decades. EBN has contributed to this by participating in large numbers of exploration and production joint ventures with oil and gas companies.
Many of the small fields are now starting to become depleted, which makes it more difficult to produce the last remaining gas reserves. It also becomes less attractive for companies to develop the remaining small fields. In the years to come EBN intends to promote the production of as much gas as possible from small fields, even though it is becoming more difficult because of the remaining fields being smaller or technically more challenging. Speed is also essential because the existing infrastructure is ageing and will have to be radically rebuilt or dismantled in the coming decades.
Consequently, EBN’s role is about to change. EBN plans to start being the driving force, more so than previously, in projects aimed at exploring and producing oil and gas from small fields.
