Decreasing gas production

In the period from 2014 to 2025, gas production reduction is projected to cause economic contraction of 8 to 10 percent in the Northern Netherlands

The Economics Department of ING analyzed the effect of decreasing gas production on the Northern Netherlands economy.

 

In 2014, gas, oil and minerals production contributed about 11.7 billion euros to the Northern Netherlands economy, which is roughly 20 percent of the total Northern Netherlands economy. However, due to the earthquakes caused by gas production, operations have already been reduced in recent years and will be further reduced in the future. The Economics Department’s rule of thumb is that a decrease in gas production of 5 billion m3 gas will cause the northern economy to contract by one percent. In 2017, gas production is capped at 24 billion m3 gas, which is down from a production level of 53 billion m3 gas in 2013. The official government policy is that the gas production can be kept at the same level up to 2021 and will be reduced further in the years thereafter. However, the Dutch parliament decided in February 2017 that gas production must already be further reduced from 2017 onwards.

Due to the earthquakes caused by gas production, operations have already been reduced in recent years and will be further reduced in the future.

The chart shows the cumulative impact on the economy if gas production is further reduced in the future, both according to official government policy (baseline) and accord to the Dutch Parliamentary decision (alternative). As the charts reveal, it will severely affect the economy of the Northern Netherlands. A contraction of the Northern Netherlands economy in 2025 of more than 8 percent is expected in the baseline, and a contraction of around 10 percent is expected in the alternative, either of which would negatively affect employment.

Gas production and cumulative economic impact - baseline

Historic gas production + base scenario

Cumulative impact on economic growth

Historic gas production + alternative scenario

Gas production and cumulative economic impact - alternative

Cumulative impact on economic growth in Northern Netherlands