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Question-mark over NAM Groningen Earthquake Damage Guarantees

Printed below is an English translation of an article published today by the Dutch Financial Times, Financieele Dagblad. NAM is the Shell/Exxon Joint Venture company responsible for the earthquake blighted Groningen Gas Field and consequential potential bill for untold billions to deal with damaged residences.

Nijboer wants reaction from cabinet to NAM guarantees

Carel Grol • Entrepreneurship

Member of Parliament Henk Nijboer (PvdA) wants a response from the government to the message in the FD that Shell and ExxonMobil offer limited security with the NAM agreement. Lawyer and professor Steef Bartman of Leiden University wrote in an opinion piece in this newspaper on Monday, in which he wondered whether NAM can fulfill its obligation to damage and strengthen at any time.

A week ago Minister Eric Wiebes of Economic Affairs concluded a deal with Shell and ExxonMobil. The oil companies said they stood surety for ‘Groningen’. However, a number of provisions leave room for Shell and ExxonMobil to renegotiate in the future the guarantees issued and the financial distribution of gas revenues.

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Nijboer, the member of parliament in charge of the Groninger gas case, now wants the minister to ‘respond urgently’ to the message from Bartman. Last week there was a debate about the Wiebes deal with Shell and ExxonMobil, each with a 50% interest in NAM. Nijboer’s view in that debate: this deal should never have been closed.

Shell Nederland has reacted to the FD on Bartman’s piece. NAM is financially strong and is expected to reimburse all damage itself, according to Marjan van Loon, CEO of Shell Nederland. ‘If NAM cannot compensate the damage unexpectedly, Shell and ExxonMobil stand surety.’

According to her, Bartman makes a fallacy: the Shell Nederland guarantee does not only consist of the equity of Shell Nederland, but refers to the balance sheet value of Shell Nederland, which is much higher than equity. ‘And in the unlikely event that even this is not enough, Shell Netherlands can also borrow money from the Shell Group. On top of the Shell Nederland guarantee, of course, the financial resources of ExxonMobil and the State will come ‘, says Van Loon. ‘The guarantees give the certainty that is needed.’

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