Ottawa Citizen: Poverty amidst Dutch gas wealth

Wednesday 17 January 2007

Natural gas transformed the agriculture- based economy of the Netherlands into a European powerhouse, but those closest to the wealth are not benefiting, writes FRED PALS in Groningen.

BLOOMBERG NEWS

Marga Robbes, a mother of four, stands in a food line each month in Groningen, the poorest province in the Netherlands. Beneath her feet lies Europe’s biggest deposit of natural gas, the largest source of the country’s wealth.

“ It is strange that so much money comes from this region and we don’t see the effects of it,” said the 37- yearold former chef, who lives in a tworoom apartment and hasn’t worked in a decade because of a disability. She has $ 129 a month to feed her family.

Groningen sits atop the Slochteren field, which has generated about half of the $ 245 billion in gas proceeds The Netherlands has received since its discovery in 1959.

Only one per cent of projects funded by gas revenue from 1994 through 2004 went to Groningen and neighbouring Friesland and Drenthe provinces, according to a study by the Leiden, Netherlands- based consulting firm IOO.

“ Groningen province has been systematically ignored when it comes to the handing out of projects,” said Jan Oosterhaven, a professor of urban planning at the University of Groningen. In its 2007 budget, the government pledged $ 2.8 billion from gas revenue to 43 projects. Only three are in Groningen.

Most of the rest will go to the densely populated west, home to the country’s four largest cities — Amsterdam, Rotterdam, The Hague and Utrecht. Groningen has fewer than 600,000 residents, or four per cent of the nation’s 16 million people.

The Slochteren field yields an average of 40 billion cubic metres of gas a year, about half of Dutch production. It contains about a third of the proven gas reserves in the European Union, according to Royal Dutch Shell Group Plc and Exxon Mobil Corp., which operate the field.

The government uses 58 per cent of gas proceeds to pay debt. The rest goes for projects such as high- speed trains to Paris and dams to prevent flooding in the southern Zeeland region.

“ Past governments have always considered that the reserves should be seen as a national resource and not regional,” said Jan van Diepen, an economy ministry spokesman.

“ Revenue coming from the port in Rotterdam is not only for the province of South Holland, but also for the nation.”

As gas income transformed the Netherlands from an agricultural nation into Europe’s sixth- largest economy, Groningen was left behind.

Companies moved out, the North Atlantic Treaty Organization closed a weapons depot, farms shut down, and a promised $ 4.1- billion high- speed train linking the region to Amsterdam was never built.

The province’s poverty rate is 11 per cent, more than the 6.7 per cent nationwide, according to the provincial government’s latest report.

The Partij van het Noorden, a party that holds two seats in Groningen’s provincial parliament, wants 25 per cent of annual gas revenue to go to the region. This year’s proceeds are estimated by the finance ministry at $ 11 billion.

“ We are smart enough to distribute the money ourselves and help the economy grow,” Teun Jan Zanen, the party’s leader, said in an October interview.

Some money might flow toward Groningen and its two northern neighbours this year. Shell, the world’s fourth- largest oil company by market value, and Exxon Mobil, the largest, start pumping gas this month from a wetland that they say may contain at least 20 billion cubic metres of the fuel.

The provinces neighbouring the 9,800- square- kilometre area, which is home to seals and a transit stop for 10 million migratory birds, will receive about$ 1.2 billion over 20 years to compensate for the loss of fishing caused by the project.

The government predicts that a new energy plan will bring investment to the region. Energy Valley, a five- yearold initiative of the University of Groningen, authorities and companies, aims to transform Groningen into the “ Houston of Europe” in 20 years, said Gerrit van Werven, its director.

Companies have earmarked about $ 15 billion for projects, including biofuel plants and an extension of a pipeline to transport Russian gas, Mr. Van Werven said.

The pipeline built by Nederlandse Gasunie NV, the nation’s gas- network operator, will create about 1,000 jobs, said Pieter Trienekens, a board member. Groningen- based Gasunie is among the region’s largest employers, with annual sales of $ 1.9 billion and 1,390 employees.

The area government predicts that about 18,000 energy- related jobs will be created in the three northern provinces, with Groningen getting the most.

Residents aren’t convinced that they will benefit.

Less than three kilometres from where Ms. Robbes lives, a $ 1.5 billion real estate project is being developed, funded by the province, property companies and area communities.

The 1,400 houses will be priced starting at $ 450,000, and developers hope to lure retired people to the area. The region’s average house price was $ 285,000 in November, according to the Dutch Land Registry Office.

The development will create at least 500 jobs and make “ a meaningful contribution to the economy in Groningen,” said Bieneke Drenth, the project’s spokeswoman.

In her kitchen, Ms. Robbes can only shake her head: “ It is hard to believe that all this money is used to build houses for people that have a lot of money.”

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