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Economy Watch reported that gas prices will continue to increase in Europe after the Netherlands announced its decision to reduce its production cap for the first half of the year. The decision to cut down production from the gas field in Groningen is reportedly due to environmental and safety hazards. Cutting back to will prevent […]
Economy Watch reported that gas prices will continue to increase in Europe after the Netherlands announced its decision to reduce its production cap for the first half of the year. The decision to cut down production from the gas field in Groningen is reportedly due to environmental and safety hazards. Cutting back to will prevent negative ecological impact, but will also substantially affect the economy and may result in the country importing gas by 2025.
As quoted in the market news:
Though experts predict that this is only a short-term rise, they believe that long-term prices will rise due to a persistent supply-demand mismatch. On Monday, the prices stood at $7.92 per million BTU for natural gas and $26 per megawatt-hour for Dutch fuel, both the highest since December of last year.
Earlier in December 2014, the Dutch government announced that the annual production cap for Groningen would be 42.5 billion cubic meters, down from 39.4 billion cubic meters. First half annual production was set at 16.5 billion cubic meters of which 7.6 billion were already produced in the month of January, which was 0.6 billion lower than the average production capacity during February.
Since Groningen contributes 75% of the nation’s gas supply, and with talks of further reducing the production cap to 35 billion cubic meters per annum, experts fear that this will result in a steady 9 percent year-over-year reduction in gas production.