Europe's biggest natural gas producer is running out of fuel

[WARSAW] The European Union's biggest natural gas producer is running out of reserves.

The Netherlands, the region's biggest trading hub for the fuel, has used up almost 80 per cent of its natural gas reserves, Dutch statistics office CBS said on Friday. Production fell 38 per cent over the previous two years and is set to fall further as the government limits extraction because of earthquakes in Groningen, the province that houses the EU's largest gas deposit, it said.

The nation of about 17 million people is struggling to contain tremors linked to gas production by a joint venture of Exxon Mobil Corp and Royal Dutch Shell Plc that has damaged thousands of homes.

The government budget has been hit by the caps on extraction and declining wholesale prices, with gas accounting for just 3 per cent of state income in 2015, down from 9 per cent two years earlier, the CBS said.

"The production ceiling put in place for Groningen has had a definite impact on gas production during the last years," CBS said. "Considering the Groningen field accounts for almost three-quarters of the remaining reserves, Dutch natural gas production will likely fall further, despite a small increase in production from the remaining fields, most of which are in the North Sea."

The Netherlands produced 3.85 trillion cubic metres of gas since the discovery of the Groningen deposit in 1959, more than total global production last year, and has 940 billion cubic metres of reserves, CBS said. Output fell to 52 billion cubic metres last year, the lowest level since the early 1970s, from 84 billion in 2013.

Groningen gas production was capped at 27 billion cubic metres in the gas year that started Oct 1, 2015. Parliament on Thursday approved a government proposal to lower the cap to 24 billion cubic metres a year for five years. State income from gas fell to 5.3 billion euros (S$8.13 billion) in 2015, down from 15.4 billion euros in 2013, the CBS said.

BLOOMBERG