The Dutch gas securitization

The current Dutch gas policy leads to problems in the long term security of supply. Still, enough opportunities exist to overcome this weakness. The Netherlands is net gas exporter and disposes over one of the largest gas fields in the world. Unfortunately past policy decisions created an inadequate policy regime. It is recognized by the former policymakers that revenues were spent careless and a pro-cyclical budget was created. Still the uncertainty of the future gas revenues is reflected in the Dutch government budget. The current financial crisis, the significant increase in the government deficit and the population ageing, increase the dimension and choices that have to be made. According to the Dutch administration the three pillars; sustainability, efficiency and reliability must achieve long term supply security. The lower consumption, the “small field policy” and the production cap have led to the protection of the Dutch gas resources. Unfortunately remaining reserves are decreasing and would be able to deliver until 2026. As a consequence gas import has increased in the last decade. Gas traders and suppliers in Europe increasingly use the Dutch gas trading platform TTF which outstripped the other gas-hubs on the European continent. The Dutch administration is facing a major challenge to become European North-West gas-hub. Creating an international gas trading market provides transit and premium revenues, increases the employment and the supply security. To overcome the risks and to become less dependent, source and infrastructure diversification is essential. Therein an efficient market and incentive regulation are necessary. Regrettably both are insufficient in order to achieve long term supply security. For the sake of investment possibilities, the allocation of the gas revenues has to restructure. Hence the regulations have to be in line with the current policy objectives. An ex-ante regulation and the creation of a SWF are suggested.