In a significant development, the Dutch government has announced plans to permanently shut down the Groningen gas field in October. This decision, which is yet to be officially confirmed, has the potential to limit Europe’s supply buffer as the region approaches the upcoming winter season. It comes as other concerns over supply emerged earlier this week pushing European gas prices higher.
According to Bloomberg (citing people familiar with the matter), the shutdown is scheduled to take effect on October 1. The official decision is expected to be made during a cabinet meeting later this month, as revealed by a spokesperson for the Dutch State Secretary for Mining. The Groningen gas field has been marred by controversy and significant local opposition due to the occurrence of hundreds of earthquakes, some with magnitudes of up to 3.6.
The impact of this decision is already being felt in the energy markets. Dutch front-month gas futures, which serve as the benchmark for Europe, have surged by almost 20% in response to the news. In the meantime, uncertainty looms large for gas traders as outages were extended at key Norwegian gas facilities. This extended disruption, combined with increasing global competition for LNG adds to the complexities and challenges faced by the industry.