Oil majors seek arbitration in gas dispute with Dutch state

February 14, 2024

Shell and ExxonMobil have asked an arbitration court to decide whether the Dutch state should compensate them for the ending of gas production at the large Groningen field in the north of the Netherlands.

Shell and Exxon’s joint venture NAM operates the Groningen field, which was one of Europe’s main gas suppliers for decades.

Groningen still holds massive reserves, but beginning in 2018, the government decided that production needed to be decreased rapidly to limit seismic risks, and last year ended production – with wells set to be closed by October.

The government, Shell and Exxon reached two headline agreements on how they would handle the end of production in 2018 and 2019, but have since disagreed over the details.

“Parties have disagreed over the interpretation of the agreements for a long time and many discussions with the government have not led to a solution,” the companies said in a statement.

“Arbitration can help to bring clarity over the agreements, which would benefit all parties involved.”

The government said it had tried to make new arrangements with the companies since 2020 and would see how the arbitration would affect that process.

It has repeatedly said the rapid decrease of production was needed to ensure safety in the region, and that no compensation for the companies was justified.
Gas profits have delivered an estimated 363 billion euros($388 billion) to the Dutch treasury since production started in the 1960s, laying the foundation for the Dutch welfare state, while Shell and Exxon’s profit was about 66 billion euros.

REUTERS