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Shell should have quit Groningen gas project in Netherlands earlier -CEO

REUTERS

Shell should have quit Groningen gas project in Netherlands earlier -CEO

AMSTERDAM, Oct 13 (Reuters) – Shell CEO Ben van Beurden told a Dutch parliamentary panel investigating problems relating to natural gas production at the large Groningen gas field in the Netherlands that the company should have pulled out of the project earlier.

Production at Groningen was scaled back sharply over a period of years in the 2010s after the Dutch government and producer NAM, a Shell-Exxon joint venture, realized the earthquakes it caused posed too great a threat to life and property.

“We had to continually ask what makes sense,” as production was dialled back to levels at which NAM made little to no profit, Van Beurden told lawmakers.

“What made sense for Shell was to quit. In any other country we would have stopped this operation. But in the Netherlands that was impossible because the Netherlands was dependent on Groningen gas.”

A damning report in 2015 from the independent Dutch Safety Board had accused the government and the field’s operators of ignoring the threat of earthquakes linked to the field for years. As vast amounts of gas were removed from under the province since 1963, the ground sank and settled above empty pockets, triggering quakes.

Prime Minister Mark Rutte’s government has capped Groningen production at 2.8 billion cubic metres (bcm) in the year starting Oct. 1, roughly 7% of annual domestic consumption in the Netherlands. That compares with 42.5 bcm in 2014.

As gas prices skyrocketed following Russia’s invasion of Ukraine in February, Rutte has said production at the field could only be increased again if households face a physical shortage.

The inquiry is looking into decision-making around the quakes, which are continuing, and compensation for owners of tens of thousands of buildings those quakes have damaged.

Rutte is due to testify later on Thursday.

Reporting by Toby Sterling Editing by Bernadette Baum

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