Gas Production Cut Causes Row in Dutch Coalition

The ruling Labor Party insists on deeper production cuts even if they would blow a hole in the budget.

Giovanni De Santi of the Joint Research Center of the European Commission speaks with Dutch economy minister Henk Kamp in Amsterdam, September 22, 2014
Giovanni De Santi of the Joint Research Center of the European Commission speaks with Dutch economy minister Henk Kamp in Amsterdam, September 22, 2014 (EU PVSEC)

A debate in parliament on Thursday exposed a rift between the Netherlands’ two ruling parties over the exploitation of northern gasfields a month before provincial and Senate elections are due to be called.

The liberal economy minister, Henk Kamp, defended a cut in natural gas production to 16.5 billion cubic meters in the first half of 2015. Total production this year would then come in just under forty billion cubic meters — still more than double than fifteen years ago but a significant reduction in output from recent years.

However, Labor demanded an even bigger cut in order to reduce the risk of earthquakes in the province of Groningen, saying “as little gas as possible” should be produced during the second half of 2015 as well. The party refused to be pinned down on an exact amount.

Resistance to gas production has mounted in Groningen in recent years, a region struggling with high unemployment and one that has few industries other than energy. Around fifty earthquakes are reported there every year caused by natural gas drilling.

Last year, Kamp made €1.2 billion available to reinforce and repair buildings and infrastructure damaged by the earthquakes. He vowed earlier this week to make compensation for homeowners more readily accessible.

Protest groups in Groningen say the compensation is not enough and they are backed by left-wing opposition parties, including the Socialists who are eating away at Labor’s support in the north.

Traditionally a Labor Party bulwark, support for the social democrats has come down in Groningen from a 46 percent high in the early 1990s to 35 percent in 2012. The far-left Socialist Party is now ahead of Labor in national opinion polls by between seven and nine seats.

Prime Minister Mark Rutte’s liberals were forced into a coalition with Labor after the two parties won almost eighty out of 150 seats in the lower house of parliament between them in the 2012 election. The two-party government has survived many crises, most recently in December when three Labor Party senators unexpectedly voted down health reforms that would have allowed insurance companies to limit their customers’ hospital choices.

Labor tested the liberals’ patience before. The latter were forced to accept changes in immigration policy and one of the same senators who blocked the health reforms last year earlier threatened to hold up a housing bill.

Labor’s trepidation could have fiscal implications at a time when the Netherlands is insisting on budgetary restraint in other eurozone states. Gas production in Groningen is budgeted to raise €9 billion in state revenue this year. Reducing production to the point Labor seems to advocate would blow a €2 billion hole in the public finances.

Production from Dutch North Sea gasfields has decreased in recent years while domestic consumption has been stable around forty billion cubic meters per year since the 1980s. The Netherlands exports roughly half the gas it produces, making it the fifth largest natural gas exporter in the world.

Leave a reply