‘Dutch-Russian energy cooperation: a sustainable partnership’

Speech by the Minister of Economic Affairs, Henk Kamp, Netherlands-Russia Business Meet 2013, Session on Natural Resources - Innovative, successful and sustainable energy cooperation, Amsterdam, 8 April 2013.

Excellencies, ladies and gentlemen,

Good afternoon!

The Netherlands and Russia have a long history of strong economic relations, both at government level and in the private sector. Nowhere is this more apparent than in the field of energy.

We are both energy countries. Our knowledge, expertise and international reach complement each other.

Russia has by far the largest gas reserves in the world, and major companies supplying a quarter of Europe’s oil and gas consumption.

The Netherlands is both a gas-producing country and a major gas-trading country, connected to the global gas market.

We are becoming the central gas hub for Northwest Europe, thanks to major investments in gas production, gas storage, gas pipelines and gas research. We now have the Gate Terminal, where the largest LNG vessels can dock. We have launched a small scale LNG chain. And our energy companies deploy a wide range of different technologies, from oil to wind to bio-energy.

Strong Russian-Dutch energy relations are of great importance to both our economies. We value them even more today, as they stimulate economic growth and enhance energy security.

Dutch companies like Shell, Gasunie, GasTerra, Van Oord and Boskalis remain interested in further expanding their relationship with Russia. And we welcome Russian companies like Gazprom, Rosneft, Lukoil and – most recently – Summa.

Ladies and gentlemen, this latest example of Russian-Dutch cooperation is good news for both our countries. I am glad to announce that Shtandart TT (the joint venture of Russia’s Summa Group and Dutch Vitol Tanks Terminal International) can now begin building the one billion dollar Tank Terminal Europoort West near the newly expanded port area Maasvlakte 2. Three days ago, the Port of Rotterdam and Shtandart signed an important land transfer document. They also resolved other technical issues. This is a milestone. Construction is to start at the end of this year and the terminal should be operational by 2016. It will provide a tank capacity for Urals oil and petroleum products equal to twice Heineken’s annual beer production in the Netherlands! And it will help introduce a new reference oil brand, creating new opportunities for trade.

I can mention many more recent examples of successful Russian-Dutch cooperation.

In Russia, they range from the Yamal Peninsula in Siberia to the island of Sakhalin in the Far East.

In Holland, they include the Dutch gas storage facility in Bergermeer, Western Europe’s largest open-access gas storage facility, which will have a capacity equivalent to the annual gas consumption of 2.5 million Dutch households.

We also teamed up to build Nord Stream, whose current capacity [55 bcm] is equal to two thirds of the Dutch yearly gas production [80 bcm]. And here is more good news: today Gasunie and Gazprom will sign a Letter of Intent to explore a possible expansion of the Nord Stream pipelines with a view to transporting gas to the United Kingdom.

Ladies and gentlemen,

These projects have several common features.

First, they contribute to more energy security for both the European Union and Russia.

Second, they involve big investments from top Russian and Dutch companies, supported by governments that bear the responsibility for ensuring a stable investment climate and protecting investments.

And third, they are subject to intense public scrutiny, as some of them involve exploration and exploitation in vulnerable areas.

Let me expand on that last point, as the Arctic is one of this session’s topics. It is of particular interest in the global debate on oil and gas production in vulnerable areas.

Clearly, the era of easy oil and gas is over. The surge in shale gas production and the simultaneous drop in gas prices may suggest otherwise. But in the longer run, oil and gas prices are bound to rise again, driven by an expected 50% rise in worldwide energy demand over the next 20 years.

In this situation, the natural resources in the Exclusive Economic Zones of the Arctic are bound to be explored and exploited. With that in mind, we will work to ensure that oil and gas extraction complies with very strict environmental and safety standards and respects the rights of indigenous people.

We have been an observer in the Arctic Council since its creation in 1996. We are an active participant in several of its working groups, on issues like protecting the environment and regulating maritime activities.

Here again, we see ample opportunities for Dutch-Russian cooperation. Dutch companies have considerable experience in assessing and minimising environmental hazards. In our own country, NAM has been drilling for almost 30 years in the Wadden Sea, which is on UNESCO’s World Heritage List. It has done so without major incidents and with the highest precautionary measures. That experience was put to good use when building Nord Stream across the Baltic Sea.

Dutch companies also have a wealth of experience in working in extreme circumstances. We have learned a lot since the epic journey of Captain Willem Barentsz over four hundred years ago. Contractors like Van Oord and Tideway are cooperating with Gazprom in the Yamal fields. Shell is preparing to resume its exploration activities in Alaska’s Beaufort and Chukchi Seas at a later stage. Dutch companies are also working with Gazprom and other international companies to set high ISO standards for Arctic operations.

The Dutch government will continue to support the development of ‘golden rules’ for the Arctic. We will also support research and development of technologies that allow for sustainable development of Arctic resources, building on the expertise of companies like Royal HaskoningDHV and Witteveen+Bos, and knowledge institutes like TNO, the Netherlands Organisation for Scientific Research, Delft University of Technology and the Arctic Centre.

In our view, strict regulations, high standards and innovation are the only way to earn a ‘license to operate’ in this fragile part of our planet.

Ladies and gentlemen,

Russian-Dutch energy relations clearly rest on solid foundations. What is more, we have acquired valuable experience in working together at both public and private levels. The Project Delta Group, the organiser of this session, is an excellent example.

As you may know, that group was set up six years ago by more than twenty Dutch companies and knowledge institutes – world leaders in offshore oil and gas activities, in infrastructure development, in landfill, in environmental impact studies and in marine protection. They wanted to share with Gazprom their decades of experience in dealing with gas exploration and exploitation in ecologically sensitive shallow waters. Experience that can be extremely useful in the Arctic.

Its positive experiences with Gazprom are encouraging the Project Delta Group to consider working with other Russian partners as well, at both private and public level. Including regional governments – which will certainly be discussed later this month when a Dutch business delegation visits the Governor of Yamal.

I believe fruitful partnerships between companies need to be supported by strong government-to-government cooperation. This is why we highly value our work in the energy working group of the Joint Commission on Economic Cooperation co-chaired by Minister Dvorkovich and my colleague Minister Ploumen. It’s an excellent platform for strengthening our partnership in energy.

Let me finally mention a series of conferences on energy at the end of May in Groningen, in our far North. They will provide an opportunity to discuss private sector demands for clear rules on trade, transport and investments in the field of energy.

The jewel in the crown will be the Energy Forum organised by Gasunie and Gazprom. I hereby invite our Russian guests to come and visit the Netherlands again next month!

Your Excellencies, ladies and gentlemen,

Russian-Dutch cooperation on energy is getting stronger every day. This clearly benefits both our countries. It helps us increase energy security, boost economic growth and set high international standards for working in sensitive areas like the Arctic.

And there is much more we can achieve together.

Like improving investment security. Making markets work better. And stimulating innovation in the field of energy.

Russian and Dutch companies and institutes have achieved a lot together. But there are still many opportunities to be seized.

I hope today’s Business Meet will enable you to take new steps in our increasingly productive cooperation on energy.

Thank you.