1 / 9 GASTERRA ABOUT GASTERRA
ABOUT GASTERRA
GasTerra B.V. is a trading company operating process, gas remains indispensable if we wish to internationally in natural gas and has its registered both secure energy supplies and restrict CO2 office at Stationsweg 1 in Groningen. The company emission levels. Although the production of natural operates on the European energy market and gas in the coming years will gradually decrease, the accounts for a significant share of the Dutch gas Netherlands will continue to be a major producer of supply. The company also provides services related natural gas for decades to come. to gas trading. The company has a good portfolio and more than 50 years of experience in natural gas GasTerra owes its existence to Groningen Gas and procurement and sales. has its registered office in the city of Groningen. That is why the company actively contributes to MISSION various social, sporting and cultural initiatives in the GasTerra’s mission is to maximise the value of Dutch city and its surroundings. natural gas. GasTerra fulfils a public role with regard to the A focus on customers, a focus on results and a focus implementation of the Dutch government’s Small on improvement are GasTerra’s three core values. Field Policy. This policy is aimed at promoting natural These are the values that GasTerra’s staff adopt as a gas production in smaller gas fields in the premise for all their business dealings. In so doing, Netherlands. we work in conformity with a code of conduct in which integrity and respect serve as the guiding VISION principles. The company strives to build long-lasting GasTerra is governed by the principles of corporate business relationships with market operators and to social responsibility (CSR). The company has enter into agreements that reflect the value of translated the three basic CSR principles of People, natural gas and its associated services. Planet and Profit into its own three areas of endeavour: Gas, Green and Groningen. In this, Gas STRATEGY stands for company operating results, Green stands The company implements its mission and vision by for our mission to bring about socially responsible capitalising on its position on the European market energy transition and Groningen (our place of to the fullest extent possible – specifically in those business) stands for the community of which market segments where demand for natural gas GasTerra is a part. goes hand in hand with demand for supplemental services. In so doing, use is made of both the The economic value and social importance of natural volume and the flexibility of gas from Dutch sources. gas underscore GasTerra’s significant role in the Gas from sources other than Dutch ones is procured utilisation of domestic gas reserves and energy if it fits into the overall supply and demand portfolio. supply in the Netherlands and the European Union. As a proponent of a free energy market, GasTerra is GasTerra promotes the safe and efficient use of gas continuously developing new products and services. and is active in the development of innovative In this context, the company seeks to be a reliable applications for gas. The company attaches great and competitive gas supplier to its customers. importance to making the supply of energy GasTerra aims to contribute to the strengthening of sustainable and initiates projects in this context. the position of natural gas within the overall energy GasTerra strives to have the transition to mix. sustainability proceed responsibly, i.e. with a view to both economic and ecological interests. In this 2 / 9 GASTERRA ABOUT GASTERRA
MANAGEMENT INFORMATION
Board of Management G.J. Lankhorst M.A., Chief Executive Officer
Directors M.J.W. de Wilde M.A., RC, Chief Financial Officer (from 15 January 2013) A.E.M. Broenink MSc., Director of Strategy & Optimisation J.E. Kielman M.A., Commercial Director (until 1 October 2013) R.E. van Rede MSc., Commercial Director (from 1st October 2013)
Heads of Department A.J.P. Buijs, Communications & Public Affairs Manager J.R.L.W. Stäbler M.A., Information Technology Manager B.A. Westmaas M.A., Personnel & Organisation Manager H.J. van Zijll de Jong, LL M, Legal Affairs & Regulation Manager
CEO Gertjan Lankhorst
Executive secretariat Kristel Klink
Legal Affairs & Regulation Personnel & Organisation Herbert van Zijll de Jong Bart Westmaas
Information Technology Communication & Public Affairs Johan Stäbler Anton Buijs
Finances & General Strategy & Commerce and Technical Support Optimisation Robert van Rede Maurice de Wilde Anton Broenink
(Jacob Kielman was Commercial Director until 1 October 2013)
Board of Supervisory Directors (as at the end of 2013) C.W.M. Dessens M.A., LL M, Chairperson* J.C. De Groot M.A., stepped down from his position D.A. Benschop M.A.* as Commissioner on 1 June 2013. The information J.D. Bokhoven MSc.* about the background of the members of the Board P. Dekker MSc. of Directors and the Board of Supervisory Directors M.E.P. Dierikx M.A.* is to be found online. J.M. Van Roost MSc.* A.P.N. van Veldhoven M.A.
* Also a member of the College of Delegate Supervisory Directors. 3 / 9 GASTERRA ABOUT GASTERRA
Works Council (as at the end of 2013) The Wet Bestuur en Toezicht (Dutch Management E. Lam MSc., Chairperson and Supervision (Public and Private Companies) Act) J.A.H. Boekhoudt was effective as of 1 January 2013. The Wet Bestuur J.R. Honkoop M.A. en Toezicht contains, among other things, a Ms. Y.N. Man MSc. provision concerning the balanced participation of E.T.O. Medas men and women in the management and on the Ms. Z.D. Mulder-Wilts Board of Supervisory Directors. The company’s R.A. Slob current allocation of seats on the Board does not yet C. Weeda MSc. comply with this provision. One vacancy emerged A.H. Wijsbeek on the Board of Supervisory Directors during the reporting year. At the time of this Annual Report’s appearance, this vacancy had not yet been filled.
MESSAGE FROM THE BOARD OF SUPERVISORY DIRECTORS
MEETINGS RISK MANAGEMENT The Board (including the College of Delegate In 2013, the Board discussed the risks associated with Supervisory Directors) met 11 times, in the presence the enterprise and the results of the management’s of the Board of Management. In these meetings, assessment of the set-up and operation of the internal apart from a few exceptions, all members of the risk management and control systems (the document Board were present. of representation). Attention was also paid to the Management Letter from the external Auditor, and At two meetings, the Audit Commission was also the corporate social responsibly relevant to GasTerra represented by the chairperson of this commission. were taken under consideration too. The Board At the invitation of the Board, the external Auditor concludes that GasTerra has a robust ‘control was present at the meeting, in which the Annual framework’, that this functions effectively, and is still Report and Accounts relating to 2012 were dealt being further improved in relation to certain points. with. STAFFING MATTERS STRATEGY AND OBJECTIVES The Board of Supervisory Directors and the The company’s strategy and its implementation as a management together annually discuss potential set of objectives for the years ahead were discussed successors present within the organisation who with the Board of Management. Maximisation of the could fulfil management functions. value of Dutch gas continues to be the first matter of importance, and there is no need to adjust the In connection with the departure of Mr Kielman as strategy. Also discussed was the extent to which the Commercial Director, the Board established a objectives for the year 2013 had been realised, and selection committee, consisting of two members of the objectives for 2014 were decided on. GasTerra the Board and the Chief Executive Officer. Based on will continually draw attention to the role of natural the recommendations of this committee, the gas in the transition to a completely sustainable appointment of the new Commercial Director, supply of energy. In addition, the Groningen Robert van Rede, took place in October 2013. earthquake dossier had an emphatic impact on the enterprise, in view of the fact that this issue has If applicable, the Board becomes involved in direct influence on our neighbours in the city and alterations relating to additional jobs of members of province in which GasTerra conducts its business. the Board of Management and other members of The minister’s decision that was announced on 17 GasTerra’s management team, and once a year January 2014 concerning production from the discusses the complete overview of these additional Groningen field has no impact on GasTerra’s jobs. Also, the overview of additional activities of strategy, but it does impact the way in which the members of the Board of Supervisory Directors is company will be able to actualise this. reviewed once a year. 4 / 9 GASTERRA ABOUT GASTERRA
AUDIT COMMITTEE Management meetings with the Works Council were The Board of Supervisory Directors has one standing twice attended by members of the Board in 2013. committee: the Audit Committee. This oversees the workings of the internal risk management- and PERSONAL DETAILS control systems, all financial affairs, relations with As of 1 June 2013 J.C. De Groot M.A., stepped the external Auditor and the application of down as a member of the Board. The vacancy which Information and Communication Technology (ICT). has thus arisen will be filled as quickly as possible. At one of the meetings of the Supervisory Board, the Audit Committee reported to the Board on the ANNUAL ACCOUNTS activities it had undertaken. The recommendations from the Board of Supervisory Directors to the General Meeting of The Audit Committee met on four occasions during Shareholders, to be held in Groningen on 13 the reporting year. February 2014, are as follows:
At year end 2013, the Audit Committee consisted of We have examined the Annual Accounts for 2013, the following members: prepared by the Chief Executive Officer in A.J. Boekelman M.A., (Chairperson) accordance with Article 23 of the Articles of T.P.K. Huysinga M.A. Association. We concur with these Annual Accounts A.H. van der Linden and recommend that: B.E. Westgren M.A. a) the net profit for 2013 – set at €36 million – be Commencing on 6 February 2013, Mr T.P.K. entirely appropriated for payment to the Huysinga was appointed as a member of the Audit shareholders; Committee, taking the place of Mr L.J. Kalmijn. As b) the 2013 Annual Accounts be adopted without of 1 June 2013, Mr A.J. Boekelman took over the alteration. chairmanship from Mr J.C. De Groot after he had withdrawn as a member and/or chairman of the The Board of Supervisory Directors wishes to express Audit Committee. Mrs Y. Peters was a member of its appreciation for the results attained in 2013 and the Audit Committee from 1 June until 1 October is grateful for the way in which the Board of 2013. As of 1 October, Mrs B.E. Westgren was Management and employees devoted themselves to appointed as a member of the Audit Committee, the enterprise during the financial year, and for the taking the place of Mrs Y. Peters. results that were achieved. The Board wished all success to everyone working at GasTerra, in their SELF-EVALUATION endeavours to achieve the objectives set for 2014. The Supervisory Board discussed its own performance in 2013, and will see to it that the recommendations established in the course of this The Board of Supervisory Directors, will be implemented. Taking things as a whole, a positive picture emerged from the evaluation. The C.W.M. Dessens M.A., Chairperson next evaluation will take place in 2015. D.A. Benschop M.A. The Audit Committee conducted a self-evaluation in J.D. Bokhoven MSc. 2012. The points of attention resulting from this P. Dekker MSc. were taken up in 2013. A subsequent self-evaluation M.E.P. Dierikx M.A. will take place in 2014. J.M. Van Roost MSc. CONTACTS WITH THE EMPLOYEES: A.P.N. van Veldhoven M.A. On an incidental basis, members of the Board have, by means of informal talks, informed employees of the progress of affairs. Leaving aside exceptions, the Board always meets in the company’s building. 5 / 9 GASTERRA ABOUT GASTERRA
BACKGROUND AND OTHER POSITIONS OF MEMBERS OF THE BOARD OF DIRECTORS AND THE BOARD OF SUPERVISORY DIRECTORS
BOARD OF DIRECTORS OF GASTERRA Education In accordance with its Articles of Association, Erasmus University Rotterdam, Business GasTerra is managed by a Chief Executive Officer Administration (graduated in 1995) and a Chartered (CEO) and three Managing Directors, each with Management Accountant (graduated in 1999) specific areas of interest. They are appointed for an Authority indefinite period. The Managing Directors are Holder of general power of attorney general authorised signatories; they fulfil their duties under the responsibility of the Chief Executive IR. ANTON BROENINK Officer. Chief Operations Officer Anton Broenink was born on 26 May 1957 in The composition of the Board of Directors of Hengelo. In May 1981, he joined Esso Nederland GasTerra is as follows: B.V. (ExxonMobil), where he held various positions, both within The Netherlands and abroad. From 1981 DRS. GERTJAN LANKHORST to 1983, he was an engineer in the Logistics Chief Executive Officer Department of Esso Benelux and subsequently at the Gertjan Lankhorst was born on 22 December 1957 Esso refinery in Rotterdam. Immediately afterwards, in Amsterdam. He worked at the VU University in from 1984 to 1986, he was senior engineer at Exxon Amsterdam from 1982 to 1986. In 1986, he took up Research & Development and at Esso’s Flexicoking a position at the Dutch Ministry of Economic Affairs Unit in Rotterdam. In the period from 1986 to 2002, as a member of the General Economic Policy he then fulfilled a variety of functions, ranging from directorate. He then held various other positions at Supply Operations Manager to European the Ministry including Director for Oil & Gas Optimisation Advisor and managing several projects. (1996–1999), Director of Competition (1999–2003) In 2002, he was appointed Gas Marketing Manager and Director-General for Energy (2004–2005). He of the ExxonMobil Gas Marketing Department. was appointed as GasTerra’s Chief Executive Officer Anton Broenink joined GasTerra’s Board of on 1 September 2006. Management on 1 June 2007.
Education Education VU University Amsterdam, General Economics University of Twente Enschede, Chemical (graduated in 1984) Engineering (graduated in 1981)
Authority Authority Director, authorised to act independently Holder of general power of attorney
DRS. MAURICE DE WILDE RC IR. ROBERT VAN REDE Chief Financial Officer – as at 15 January 2013 Chief Commercial Officer Maurice de Wilder was born on 20 September 1971 Robert van Rede was born on 19 August 1964 in in ‘s-Hertogenbosch. In 2000, he joined Shell; here Den Helder. From 1990 to 1994, he worked at he held several positions. Inter alia, Maurice de Petroleum Development Oman. In 1994, he joined Wilde served as Finance Manager in Oman and NAM where he held various positions. He then Asset Finance Manager at the Nederlandse Aardolie worked from 2003 to 2008 at the Gasunie Trade & Maatschappij (the Dutch Petroleum Company NAM). Supply, as it then was, as Area Manager for Norway/ In his last position, he worked from 2009 as financial Russia and the UK, following which he returned to director in Gabon. There he was responsible for NAM, first as Commercial Asset Manager Onshore financial affairs, IT and procurement. Prior to his and from 2010 also as Sales Manager. On 1 October work at Shell, he worked at PriceWaterhouse 2013, Robert Rede joined GasTerra’s Board of Coopers, and at Lyondell Chemical. Directors as Chief Commercial Officer. 6 / 9 GASTERRA ABOUT GASTERRA
Education Delft University of Technology, Petroleum Engineering (graduated in 1988)
Authority Holder of general power of attorney
COMPOSITION OF THE BOARD OF SUPERVISORY DIRECTORS OF GASTERRA
The Board of Supervisory Directors supervises the delegate its powers to the College, to the extent management by the Board of Directors and the that this delegation does not infringe the role and general day-to-day affairs at GasTerra. The Board of powers of the Board of Supervisory Directors. Supervisory Directors consists of eight members, one of whom is appointed by the Minister of The Articles of Association stipulate that every year, Economic Affairs. The Board appoints a chairman at the annual general meeting of shareholders, two from among its members; the Minister of Economic members of the Board of Supervisory Directors shall Affairs must approve this appointment. resign, according to a schedule to be determined by drawing lots. The board members who resign may The Board of Supervisory Directors designates from be immediately re-elected or reappointed. among its members a College of Delegated Successive members of the Board of Supervisory Supervisory Directors, consisting of five members, of Directors occupy the place of their predecessors on which one member is a commissioner appointed by the schedule. the Minister of Economic Affairs. The Board may
THE BOARD OF SUPERVISORY DIRECTORS OF GASTERRA
Name Authority Date of appointment Term of office Drs. C.W.M. Dessens, Attorney Delegated Commissioner 1 January 2006 Re-electable in 2017 Drs. D.A. Benschop Delegated Commissioner 1 May 2011 Re-electable in 2016 Ir. J.D. Bokhoven Delegated Commissioner 1 November 2007 Re-electable in 2015 Ir. P. Dekker Member of the Board of 1 July 2005 Re-electable in 2017 Supervisory Directors Drs. M.E.P. Dierikx Delegated Commissioner 2 July 2011 Re-electable in 2014 Ir. J.M. Van Roost Delegated Commissioner 1 July 2005 Re-electable in 2014 Drs. A.P.N. van Veldhoven Member of the Board of 31 March 2011 Re-electable in 2015 Supervisory Directors
One seat on the Board of Supervisory Directors is currently vacant. 7 / 9 GASTERRA ABOUT GASTERRA
DRS. C.W.M. DESSENS, ATTORNEY Chairman of the Board of EBN and responsible for all Stan Dessens was born on 30 October 1947 in activities of EBN. Vlaardingen. He is Chairman of the Board of Supervisory Directors and the College of Delegated Education Commissioners. From 1974, he worked at the Delft University of Technology, Petroleum Extraction Ministry of Economic Affairs in the Directorate- (graduated in 1983) General for Industry and Energy. From 1988 to 1999, he was Director-General for Energy. In 1999, IR. P. DEKKER he was appointed Director-General of Law Pieter Dekker was born on 16 July 1950 in Enforcement at the Ministry of Justice. Since 2005, Wassenaar. He is a member of the Board of he has been self-employed. Supervisory Directors of GasTerra. From 1977, he Mr. Dessens holds various management positions, held various positions within Shell’s natural gas including president of the Foundation for Tackling organisation, inter alia in London and Calgary. In Vehicle Crime, Governor of the Meld Misdaad 1997, he returned to The Netherlands and was Anoniem Foundation (Report Crime Anonymously) responsible for Shell’s stake in the Dutch Gas and Chairman of the Executive Board of the CATO Building (a PPP), particularly for natural gas sales (CO2 Capture Transport and Storage) project. activities. He is also a member of the Board of Supervisory Directors of the Dutch Petroleum Education Maatschappij (Nederlandse Aardolie Maatschappij Leiden University, Physics (graduated in 1972) and NAM) and responsible for Shell’s participation in the Law (graduated in 1974) NoordzeeWind offshore wind energy project in The Netherlands. DRS. D.A. BENSCHOP Dick Benschop was born on 5 November 1957 in Education Driebergen. He is a Delegated Commissioner of Delft University of Technology, Applied Physics GasTerra. He has worked in various capacities in the (graduated in 1975) Dutch House of Representatives and in the Dutch Labour Party. In 1994, he founded his own DRS. M.E.P. DIERIKX consultancy firm. From 1998 to 2002, he returned to Mark Dierikx was born on 5 June 1953 in Flushing. politics as Secretary of State for Foreign Affairs in He is a Delegated Commissioner of GasTerra. After the second Kok cabinet. graduating, he worked for several years at Esso In 2003, he joined Shell in the European gas Chemicals in marketing. company Shell Energy Europe. In early 2006, he Then he chose a career at the Ministry of Economic moved to Kuala Lumpur where he headed the Gas & Affairs. Here he was initially active in the field of Power business (LNG and GTL) in Malaysia. In 2009, Dutch industrial and technological policy, since 1992 he became Vice-President of Strategy for the Royal in the field of Foreign Economic Relations and from Dutch Shell Group. Since 1 May 2011, he has been 1994 in the post of Director of Economic CEO of Shell Nederland and Vice-President of Global Cooperation and Export Policy. In 1996, he moved Gas Market Development. to the Ministry of Foreign Affairs as Director for Asia and the Pacific, and also Deputy Director-General for Education Regional and Country Policy, to return in 2000 to VU University Amsterdam, History (graduated in the Ministry of Economic Affairs as an exempt 1984) Deputy-Director General for Foreign Economic Relations. From 2004, Mr. Dierikx worked at the IR. J.D. BOKHOVEN Ministry of Transport and Public Works as Director- Jan Dirk Bokhoven was born on 4 March 1957 in General for Water. From 1 January 2008 to 1 July Rotterdam. He is a Delegated Commissioner of 2011, he was Director-General of Civil Aviation and GasTerra. From 1982 through 2001, he held various Maritime Affairs. As at 1 July 2011, Mr. Dierikx was positions, inter alia with Conoco, Veba and Clyde. In appointed Director-General of Energy, 2001, he joined Energie Beheer Nederland (EBN) as Telecommunications and Competition at the Technical Manager. Since 2007, he has been Ministry of Economic Affairs. 8 / 9 GASTERRA ABOUT GASTERRA
Education Education VU University Amsterdam, Organic Chemistry, with Catholic University Leuven, electronic mechanical minors in Biochemistry and Economics (graduated in engineering (1977), University of Michigan, M.Sc. in 1979) Nuclear Engineering (1978), MBA (1983)
IR. J.M. VAN ROOST DRS. A.P.N. VAN VELDHOVEN Joost Van Roost was born on 13 April 1955 in Alexander van Veldhoven was born on 29 November Leuven. He is a Delegated Commissioner of 1973 in Waalwijk. He is a member of the Board of GasTerra. From 1979, he held various positions Supervisory Directors of GasTerra. From 1999, he within ExxonMobil. Since 1999 he was Upstream held various positions with Exxon Mobil, inter alia in Director of ExxonMobil Benelux. After the merger of London, Hanover and Houston. In his current Exxon with Mobil, he became president of position as Gas Marketing Manager, he represents ExxonMobil Benelux in 2000. He is also president for ExxonMobil in the Dutch Gas Building. natural gas and CEO of Esso Nederland BV and CEO of ExxonMobil Petroleum & Chemicals BVBA. Education Maastricht University, Business Administration (graduated in 1999)
OTHER POSITIONS OF CEO, DIRECTORS AND SUPERVISORY DIRECTORS OF GASTERRA
MEMBERS OF THE BOARD OF SUPERVISORY DIRECTORS
NAME POSITION
Stan Dessens Chairman of the Foundation for Tackling Vehicle Crime (AVc) Chairman of the Steering Committee on bicycle theft Member of the Board of the foundation Meld Misdaad Anoniem (Report Crime Anonymously) Chairman of the Executive Board of CATO (CO2 Capture Transport and Storage) Chairman of the Committee for Additional Innovative Projects (Borssele covenant) Member of the Supervisory Board of the National Aeronautics and Space Laboratory (Nationaal Lucht en Ruimtevaartlaboratorium NLR) Chairman of the Association for the Preservation of Old, Green and Liveable Voorschoten Board member of the Foundation for the Preservation of Cultural Historic Country Estates
Dick Benschop CEO of Shell Nederland BV Member of the Executive Committee of the Confederation of Netherlands Industry and Employers (VNO-NCW) Member of the Executive Committee of the Association of the Dutch Chemical Industry (VNCI) Chairman of the Board of Directors of the Association of the Dutch Petroleum Industry (VNPI) 9 / 9 GASTERRA ABOUT GASTERRA
NAME POSITION
Chairman of the Dutch Board of Directors of the World Petroleum Congress Chairman of the Christiaan Huygens Prize Foundation Member of the Board of Avond van Wetenschap en Maatschappij (Evening of Science and Society) Member of the Board of the Apeldoorn British-Dutch Dialogue Conference Chairman of the Supervisory Board The Hague Institute of Global Justice Member of the Supervisory Board of the Veer Stichting (organisers of meetings that shape the world) Member of Supervisory Board of NCDO (National Committee for International Cooperation and Sustainable Development) Member of the Sponsor Fund Board of the Rotterdam Theatre Member of the Advisory Board for the Clingendael International Energy Programme (CIEP) Member Social Advisory Council for Secondary Education (Secondary Education Council VO-Raad) Member International Advisory Board of Amsterdam Centre for Contemporary Studies (ACCESS Europe) Member of Trilateral Commission
Jan Dirk Bokhoven Chief Executive Officer, EBN B.V. Member of the Advisory Board of the Clingendael International Energy Programme (CIEP) Member of the TNO Strategic Advisory Board on Energy
Pieter Dekker Vice-President Joint Venture Governance, Upstream International Integrated Gas West, Shell Member of the Board of Supervisory Directors of the Dutch Petroleum Company (Nederlandse Aardolie Maatschappij B.V. or NAM) Member of the Board of Supervisory Directors of NoordzeeWind B.V.
Mark Dierikx Director-General for Energy, Telecommunications and Competition, Ministry of Economic Affairs Member of topteam Energy
Joost Van Roost CEO of Esso Nederland B.V. Chairman of ExxonMobil Petroleum & Chemical, bvba Member of the Board of Supervisory Directors of the Dutch Petroleum Company (Nederlandse Aardolie Maatschappij B.V. or NAM) Vice-President at the American Chamber of Commerce in Belgium Board Member at the American Chamber of Commerce in The Netherlands Trustee at United Fund of Belgium Member of the Advisory Board of the Clingendael International Energy Programme (CIEP)
Alexander van Veldhoven Gas Marketing Manager, Esso Nederland B.V. 1 / 32 GASTERRA RESULTS AND THE MARKET
RESULTS AND THE MARKET
GASTERRA’S VISION
In essence, the task of GasTerra (until 2005 the GasTerra believes that, despite the announced trading arm of Gasunie) has not changed since the production limitation, it is capable of meeting its 60s: now, just as then, we try to optimise the sale of contractual commitments. Dutch natural gas so as to maximise the value of the gas extracted in the Netherlands. However, the Regardless of the ceilings set by the Minister of circumstances in which we do this are changing Economic Affairs, the capacity of the Groningen Gas continuously. Field will slowly decrease in the future, so that volumes that can be produced annually from According to the Groningen ceiling set by the Groningen after 2020 will also decline. GasTerra will Minister of Economic Affairs, from 2006 through therefore be confronted by new challenges, for 2015 GasTerra was permitted to purchase a total of which the company is already preparing. In that 425 billion m3 of gas from the Groningen Gas Field context, national and international plans are afoot to and 449 billion m3 in the period 2011-2020. From convert equipment so as to make it suitable for 2006 to 2013, the company has purchased 334 high-calorific gas as from 2020. This conversion is billion m3 of gas from the Groningen Gas Field, so internationally expected to last 10 to 20 years. that, according to the applicable ceiling in 2013, about 91 billion remained for the years 2014 and We see that the share of renewable resources in the 2015. energy mix continues to grow. A good social development, even if it does lead to the necessary In response to the increasing frequency and strength challenges for the transmission system operators in of the earthquakes in the extraction area, the particular. They are the ones who have to fit this Cabinet decided on 17 January 2014 to set new fickle energy supply, mostly generated locally, into production ceilings. According to the Cabinet the market. Traditionally, the flexible gas-fired power decision, in 2014 and 2015, no more than 42.5 stations, capable of being switched on and off billion m3 of gas per year may now be extracted quickly, took care of such variations. However, the from the Groningen Gas Field, and a further 40 reality is that over the past year, even the most billion m3 in 2016. Furthermore, at five production modern and most efficient gas-fired power stations sites in the heart of the earthquake zone, around are hardly ever mobilised, but that coal-fired plants Loppersum, extraction has to be reduced by 80 per are being used. A number of gas-fired power cent. stations have already been shut down; others are slated to be closed. GasTerra would like to see this In preparation for the Cabinet decision, in January trend reversed. Not only because we, as a gas 2013, the Minister of Economic Affairs had ordered trading company, have an immediate interest in this, 14 studies to be carried out on various issues related but also from a social perspective. Coal, which, from to the production of gas from the Groningen Gas a cost perspective, is now often being used in the Field, such as the extent of the damage, the power plants to generate electricity, produces possibilities for reducing the number and strength of significantly more CO2 emissions than gas. the tremors and the consequences of any potential production limitation. GasTerra was involved in a How things will develop, is largely dependent on the number of these research projects. new European CO2 emission targets for 2030 and 2 / 32 GASTERRA RESULTS AND THE MARKET
their impact on the price of CO2 emission rights. In the past, gas prices in Western Europe and GasTerra would like to see Brussels come up with a elsewhere were based on the value of alternative clear energy policy with one single objective. The fuels, particularly oil products. Today, gas prices are core problem, after all, is greenhouse gas emissions. mainly driven by gas hubs. These are trading points There’s a single objective associated with that: created by transmission system operators where reduction in CO2 emissions. No additional parallel trading in structured gas products takes place. The objectives for sustainability, for example, which may, importance of this trade has increased significantly in certain circumstances, even lead to an increase in in the past decade. In the Netherlands and the UK,
CO2 emissions. The means that must be deployed for gas prices have already been determined for several that purpose can be left to the market. Twelve CEOs years at these trading points, even for non- of European companies in the energy sector, structured gas products. In most other countries including GasTerra (the so-called Magritte group), where the gas from GasTerra is supplied, the have taken the initiative themselves in this respect to importance of hub prices has also increased in work for the improvement of the position of natural recent years. But in these countries, in degrees that gas. In November 2013, they spoke with the Cabinet vary from country to country, gas prices based on members responsible. An important goal of the the value of alternative fuels (especially oil), still play meeting was to influence the position of the a role. Under the influence of the hub prices, Netherlands in the European Council next spring margins for trading companies are under pressure. with regard to the framework for a climate and GasTerra is responding to that by focusing intensely energy policy leading up to 2030. on internal costs and by developing innovative products that dovetail with the needs of the market. Important points of interest of the group are:
• ambitious climate target (focus on CO2 reduction) for 2030; • structural reform of the ETS (Emission Trading System) as the most important policy tool; • more targeted and efficient system of subsidies, focusing on innovative low-carbon technologies; • European solutions instead of fragmentation due to national policy initiatives, for example regarding the backup issue in the electricity market. 3 / 32 GASTERRA RESULTS AND THE MARKET
ANNUAL ACCOUNTS
BALANCE SHEET AT 31 DECEMBER (BEFORE PROFIT APPROPRIATION)
IN MILLIONS OF EUROS
ASSETS Note 2013 2012
Fixed assets - Tangible fixed assets (1) 38,9 36,6
Current assets - Receivables (2) 3.201,8 3.437,9 - Cash and bank 702,6 259,2
Total 3.943,3 3.733,7
LIABILITIES Shareholders’ equity (3) 216,0 216,0 Current liabilities (4) 3.727,3 3.517,7
Total 3.943,3 3.733,7
PROFIT AND LOSS ACCOUNT
IN MILLIONS OF EUROS Note 2013 2012
Net turnover (5) 24.292,8 23.381,4 Cost of sales (6) 24.219,6 -/-23.366,4
Gross profits 73,2 15,0 Operating expenses (7) -/-70,2 -/-63,6
Operating profit 3,0 -/- 48,6 Net financial income and expenses (8) 45,0 96,6
Results on ordinary activities before tax 48,0 48,0 Taxation (9) -/-12,0 -/-12,0
Results after tax 36,0 36,0 4 / 32 GASTERRA RESULTS AND THE MARKET
STATEMENT OF CASH FLOWS
IN MILLIONS OF EUROS 2013 2012 CASH FLOW FROM OPERATING ACTIVITIES Operating profit 2,7 -/-48,1 Adjustments for: - depreciation and impairment losses 10,5 9,4 - movements in receivables 236,1 74,9 - movements in current liabilities ( excluding short-term financing) 209,6 -387,2 Cash flow from operations 458,9 -/-351,1
Interest received 45,7 98,0 Interest paid & financing costs -0,7 -/-1,4 Tax paid -/-12,0 -/-12,0 33,0 84,6
Cash flow from operating activities 491,9 -266,4
CASH FLOW FROM INVESTMENT ACTIVITIES Investments in tangible fixed assets -/-12,8 -/-13,1 Cash flow from investment activities -/-12,8 -/-13,1
CASH FLOW FROM FINANCING ACTIVITIES Movements in short-term financing 0 0 Dividends paid -/-36,0 -/-36,0 Cash flow from financing activities -/-36,0 -/-36,0 Net cash flow 443,1 -/-315,5 Exchange and translation differences on cash and bank balances 0,3 -/-0,5 Movements in cash and bank balance 443,4 -/-316,0
Cash and bank at year-end 702,6 259,2 Cash and bank at preceding year-end 259,2 575,2
Movements in cash and bank balance 443,4 -/-316,0
5 / 32 GASTERRA RESULTS AND THE MARKET
EXPLANATORY NOTES TO THE ANNUAL ACCOUNTS
1. PRINCIPLES FOR VALUATION AND DETERMINATION OF RESULTS
GENERAL ESTIMATES AND UNCERTAINTIES The Annual Accounts have been drawn up in In preparing these financial accounts, assessments, accordance with the statutory provisions of Title 9, estimates and assumptions have been made that Book 2 of the Dutch Civil Code (BW). Unless affect the reported amounts. In particular, this otherwise stated, assets and liabilities are recognised concerns the net sales and cost of sales (including at nominal value. The principles applied as the general transport costs). The assessments, estimates and basis for the valuation for assets and liabilities and the assumptions made are based on market data, determination of results are the historical costs. knowledge and experience, and other factors that are considered reasonable under the given circumstances. Comparative figures have been adjusted where Potential special features regarding estimates and required to improve comparison. assessments, if significant, are included in the notes to the balance sheet and the profit and loss account. An asset is included in the balance sheet when it is probable that future economic benefits will flow to FOREIGN CURRENCIES the company and its value can be reliably determined. Cash and bank balances, trade receivables and A liability is included in the balance sheet when it is current liabilities in foreign currency are stated at the probable that settlement thereof will entail an prevailing exchange rate as at the balance sheet date. outflow of resources that embody economic benefits and the magnitude of the amount thereof can be The exchange rate differences for gas exports and gas reliably determined. imports are allocated under gas purchase. Other exchange rate differences are recorded under Income is included in the profit and loss account financial income and expenses. when an increase of the economic potential related to an increase in an asset or a decrease of a liability FIXED ASSETS has taken place, the magnitude of which can be Tangible fixed assets reliably determined. Expenses are accounted for when Tangible fixed assets are valued at the historical a decrease of the economic potential related to a purchase price or production cost, less straight-line decrease in an asset or an increase of a liability has depreciation over the economic life of the asset. taken place, the magnitude of which can be reliably determined. Tangible fixed assets that have not been completed as at the balance sheet date are included under ‘Fixed If a transaction results in almost all or all of the future assets under construction’. After the relevant asset economic benefits and all or almost all of the risks has been put into use, it will be classified under the related to an asset or liability being transferred to a main category ‘Fixed assets’, which primarily includes third party, the asset or liability is no longer included software. in the balance sheet. Furthermore, assets and liabilities are not included in the balance sheet from The depreciation periods applied are between 5 and the time at which the requirements of probability of 10 years. future economic benefits and/or reliability of the Any impairment of assets that is expected to be determination of the value are no longer met. permanent is taken into account.
CONTINUITY CURRENT ASSETS These financial accounts have been prepared on a Receivables going concern basis. The receivables are valued at the amortised cost taking collectability risks into account. 6 / 32 GASTERRA RESULTS AND THE MARKET
Trade receivables also include sales that have not yet is recognised to the extent that there will be been invoiced. repayment by the fund or a set-off against contributions owed in the future. PENSIONS GasTerra is affiliated with the Gasunie pension fund. CURRENT LIABILITIES The employees of GasTerra have a pension scheme The current liabilities are valued at the amortised cost, administered by the Gasunie Pension Fund with which the income and expenditure arising from Foundation. The pension scheme has been amended amortisation are recognised in the profit and loss as of 1 January 2013 with which the additional account using the effective interest method. This contribution deposit obligation no longer exists for takes place at fair value measurement wherein the the employer. In connection with this amendment, transaction costs that are directly attributable to the GasTerra made a one-time payment into the pension acquisition are included in the measurement. This fund in 2013. relates to liabilities with a term of no more than one year. Amounts payable also include purchases that As of January 2014, the scheme will be changed from have not yet been invoiced. Amounts received from a final salary scheme to a conditionally indexed career or to be charged to clients due to a decreased average scheme. From 1 January 2014, the financial purchase of gas under ‘take-or-pay’ agreements are obligations of GasTerra with respect to the fund recorded under current liabilities as an obligation to consist of a fixed premium in conjunction with the deliver. The obligation to deliver arising from the one-time payment to the accrual and supplementary receipt of gas in the storage service is also recorded benefits account of the pension fund. When the under current liabilities. resources that the fund has available are insufficient, the risk thereof then lies with the (former) DERIVATE FINANCIAL INSTRUMENTS participants. Financial instruments comprise receivables, cash and bank and current liabilities. A provision is also included as at the balance sheet The company uses derivative financial instruments date for existing additional obligations with respect to within the course of its normal business activities. the fund and the employees if it is likely that an This relates to forward exchange contracts and gas outflow of resources will be required in order to settle price swaps in order to hedge the price risk of certain these obligations, and the scope of the obligations gas contracts. may be reliably estimated. The presence or absence of additional obligations is assessed based on the The company applies cost price hedge accounting administration agreement concluded with the fund, techniques in order to incorporate the results from the pension agreement concluded with the hedge instruments including the forward exchange employees, and other commitments made to the contracts and the gas price swaps and the changes in employees. The provision is valued at the best value simultaneously in the profit and loss account. estimate of the cash value of the amounts that will be Forward exchange contracts and gas price swaps are required to settle the obligations on the balance sheet initially valued at cost. As long as the forward date. To the extent this obligation relates to the exchange contract or the gas price swap relates to an upcoming financial year, this is recorded in the current expected future transaction, the forward exchange liabilities account. contract or the gas price swap will not be revalued. As soon as the hedged position of the expected The starting point is that pension charges to be future transaction leads to the processing of a processed in the reporting period are equal to the financial asset or a financial obligation, the profits or pension contributions owed to the pension fund losses tied to the forward exchange contract or the during the same period. To the extent that the gas price swap will be recorded in the profit and loss contributions payable on the balance sheet date have account during the same period as that wherein the not yet been met, a liability is included for this. If the asset obtained or obligation entered into has an contributions already paid at the balance sheet date effect on the profit or loss. exceed the contributions owed, an accrued asset item 7 / 32 GASTERRA RESULTS AND THE MARKET
The company documents the hedge relationships and The income is recorded during the reporting period in periodically reviews the effectiveness of the hedge which the gas was delivered and the services were relationships by establishing that there is no question provided. of over-hedges. A loss due to an over-hedge is recorded at cost or lower market value directly in the A distinction is made between services related to profit and loss account. making transport capacity and flexibility available and actual usage. The services are considered to have GasTerra concludes gas purchase contracts and gas been provided if the service was made available to sale contracts as part of its business operations. the client during the agreed time period. These contracts are concluded for the actual physical delivery and receipt of gas in accordance with the COST OF SALES company’s expected purchases or sales levels, or In the main, the cost of sales represents the cost of usage requirements. For this reason, these fall outside the purchase of gas and the associated services, the of the scope of RJ 290 (reporting standard). Financial transport costs and the costs related to underground instruments embedded in contracts that are not gas storage. separated from the host contract are incorporated in accordance with the host contract. OPERATING EXPENSES The expenses are determined on a historical basis, GAS SALES AND GAS PURCHASES taking into account the principles for valuation The pricing of natural gas for both the sales and mentioned previously, and are allocated to the purchasing sides is influenced to a significant degree reporting period to which they relate. Losses are by developments in the gas market prices of natural recorded during the reporting period in which gas as well as the prices of other energy carriers. provisions for them may be made.
GasTerra’s shareholders have concluded an agreement Net financial income and expenses relating to the after-tax profits to be made by This item includes the income and expenses related to GasTerra. This agreement stipulates that the price of financing. the natural gas from Groningen sold by the Nederlandse Aardolie Maatschappij B.V. (NAM) to CORPORATION TAX GasTerra during the year has been set such that The amount of corporation tax to be included in the GasTerra will retain the after-tax profits determined profit and loss account is calculated based on the for that year by the shareholders. results determined according to this account, in due observance of the valid tax-related provisions and NET TURNOVER rates. Net turnover is divided into gas sales and other net turnover. STATEMENT OF CASH FLOWS This report provides a statement of the cash flows Gas sales represent the income from the supply of gas generated. The statement of cash flow is drawn up and the income from the corresponding services on the basis of the indirect method based on the provided, after deducting the tax assessed on the operating results in the profit and loss account. turnover. Other net turnover is represented primarily by the income from the delivery of services to third parties. This income results primarily from flexibility services. 8 / 32 GASTERRA RESULTS AND THE MARKET
2. EXPLANATORY NOTES TO THE BALANCE SHEET
TANGIBLE FIXED ASSETS (1) IN MILLIONS OF EUROS Book value Investments Depreciation Book value as at as at 1 Jan. 2013 31 Dec. 2013
Equipment 28,9 8,9 10,5 27,3 Assets under construction 7,6 4,0 - 11,6
Total 36,6 12,9 10,5 38,9
Purchase value Cumulative depreciation as at 31 Dec. 2013 as at 31 Dec. 2013
Equipment 56,5 29,2 Assets under construction 11,6 -
Total 68,1 29,2
RECEIVABLES (2) 31 Dec. 2013 31 Dec. 2012
IN MILLIONS OF EUROS Trade receivables 3.187,4 3.351,3 Taxation 2,9 - Other receivable amounts 11,5 86,6
Total 3.201,8 3.437,9
None of the receivables have a term longer than one year. 9 / 32 GASTERRA RESULTS AND THE MARKET
SHAREHOLDERS’ EQUITY (3)
IN MILLIONS OF EUROS
Issued capital The authorised and issued capital totals €180 million, and is divided into 40,000 shares, each of €4,500 nominal value. The issued capital, which is paid in full, is divided as follows:
EBN B.V. 40% Esso Nederland B.V. 25% Shell Nederland B.V. 25% Staat der Nederlanden 10%
Unappropriated profit in millions of euros Balance as at 1 January 2013 36,0 Appropriation of the results for the 2012 financial year in accordance with the resolution of the General Meeting of Shareholders -/-36,0
Unappropriated profit for the 2013 financial year 36,0
Balance as at 31 December 2013 36,0
CURRENT LIABILITIES (4) 31 dec. 2013 31 dec. 2012 IN MILLIONS OF EUROS Amounts payable – for gas purchases 2436,5 1.798,8 Amounts payable – to affiliated companies 1109,1 1.004,7 Other trade amounts payables 5,6 15,1 Taxation and social security contributions 2,2 9,9 Other payables 166,8 688,6 Accrued and deferred income 7,1 0,5
Total 3.727,3 3.517,7
10 / 32 GASTERRA RESULTS AND THE MARKET
FINANCIAL INSTRUMENTS
General programme of €1.0 billion. The Company monitors its In the course of its normal business activities the liquidity position through liquidity forecasts. The company uses derivative financial instruments that management ensures that the company always has expose the company to market risk including foreign sufficient liquidity available in order to be able to currency rate risk, interest rate risk, credit risk, meet its commitments. liquidity risk. The company uses derivative financial instruments to manage risks. The company does not Foreign currency risk trade in derivative financial instruments. GasTerra’s policy up to and including 2012 has been to fully hedge the currency risks that arise from Credit risk purchases and sales at the time the receivables or The credit risk consists of the loss that would be payables manifest themselves. From 2013, GasTerra is generated if customers or counterparties were to following a policy of controlling currency risks on remain in default and fail to fulfil their contractual receivables and payables in the balance sheet using a obligations. The company has drawn up guidelines bandwidth. The currency risks are only – and then with which customers or counterparties must comply. completely – covered by means of short term These guidelines limit the risk associated with possible currency contracts, if the unrealised results of those credit concentrations and market risks. If customers risks fall outside of a bandwidth set by the company. or counterparties fail to comply with these guidelines, they will be asked to furnish additional security such Market value as bank guarantees. This prevents the company from The market value of the majority of the financial running any major credit risks in respect of any instruments recorded in the balance sheet, including individual customer or counterparty. receivables, cash and bank and current liabilities, is approximate to the book value of those items. Interest rate risk The interest rate risk is limited to potential changes in The estimated market value and the total book value the market value of funds withdrawn and issued. It is of the forward exchange contracts and gas price company policy not to use derivative financial swaps as at 31 December are specified in the table instruments to manage fluctuations in interest rates below: (on an interim basis or otherwise).
Liquidity risk To limit the liquidity risk, as at the end of 2013, GasTerra has at its disposal a commercial paper
IN MILLIONS OF EUROS Estimated Book value Estimated Book value market value 2013 market value 2012 2013 2012 Forward exchange contracts for selling pounds sterling 0,0 0,0 0,6 0,0 Forward exchange contracts for buying pounds sterling 0,0 0,0 1,0 0,0 Gas price swaps 0,0 0,0 0,6 0,0
Total 0,0 0,0 2,2 0,0 11 / 32 GASTERRA RESULTS AND THE MARKET
By applying cost price hedge accounting as set out As a result of the implementation of the above in the accounting principles, the book value of agreement, no notes are given on the valuation of derivative financial instruments included in the the individual gas purchase and sales contracts. above table is nil. The commitments and rights arising from long-term COMMITMENTS AND RIGHTS NOT SHOWN ON gas purchase, sales and transport contracts are not THE BALANCE SHEET shown on the balance sheet. Purchase, delivery and transport obligations GasTerra has long-term procurement, supply and Long-term gas purchase and sales agreements transport commitments pursuant to gas purchase, usually contain renegotiation clauses enabling the gas sales and transport contracts. The gas purchase parties to review the contract conditions during the and sales prices depend to a large degree on the term of the agreement, subject to certain future market prices of other energy carriers, as well conditions. GasTerra regularly renegotiates the as the future gas market prices of natural gas. long-term gas sales and purchase contracts with the counterparties. It is not possible to arrive at a The long-term supply commitments are covered by reliable estimate of the outcomes of these long-term purchase contracts, wherein the planned renegotiations. supply to GasTerra of the natural gas from Groningen more than exceeds the long-term supply €22.8 million in bank guarantees have been issued commitments. The differences between delivery to the benefit of GasTerra by third parties. obligations and the import and domestic procurement obligations, are sold by GasTerra, in Underground gas storage particular as short-term, in liquid marketplaces. GasTerra has long-term financial commitments with regard to underground gas storage capacity that are GasTerra’s shareholders have concluded an not included in the balance sheet and that have an agreement relating to the after-tax profits to be average annual payment commitment of €0.5 billion made by GasTerra. On the basis of this, the price of (2012: €0.5 billion). the natural gas from Groningen sold by the Nederlandse Aardolie Maatschappij B.V. (NAM) to GasTerra during the year has been set such that the profit of €36 million after tax determined for that year by the shareholders remains for GasTerra. 12 / 32 GASTERRA RESULTS AND THE MARKET
3. 3 EXPLANATORY NOTES TO THE PROFIT AND LOSS ACCOUNT
NET TURNOVER (5) 2013 2012
IN MILLIONS OF EUROS Gas sales 24.240,4 23.262,7 Other net turnover 52,4 118,7
Total 24.292,8 23.381,4
The following is a regional analysis of gas sales. 2013 2012 The Netherlands 9.574,1 8.888,1 Rest of Europe 14.666,3 14.374,6
Total 24.240,4 23.262,7
The volumes decreased by 7.1% to 89.3 billion m 3 as compared to 2012. The average selling price is 27.1 cents/m3 (27.9 cents/m3 in 2012).
COST OF SALES (6) 2013 2012
IN MILLIONS OF EUROS Gas Purchases 23.710,5 22.861,0 Transport Costs 509,1 505,4
Total 24.219,6 23.366,4
The average purchase price is 26.0 cents/m3 (26.9 cents/m3 in 2012). The gas purchase costs also include the costs connected with underground gas storage.
OPERATING EXPENSES (7) 2013 2012
IN MILLIONS OF EUROS Wages and salaries 22,0 16,6 Social security charges 1,8 1,8 Pension expenses 6,4 6,1 Costs of work subcontracted and other outside expenses 24,2 24,2 Other operating expenses 15,9 14,9
Total 70,2 63,6 13 / 32 GASTERRA RESULTS AND THE MARKET
NET FINANCIAL INCOME AND EXPENSES (8) 2013 2012
IN MILLIONS OF EUROS Interest income 45,7 98,0
Financial income 45,7 98,0
Interest charges -/-0,7 -/-1,1 Financing costs - -/-0,3
Financial expenses -/-0,7 -/-1,4
Net position 45,0 96,6
TAX ON PROFIT FROM ORDINARY ACTIVITIES (9) The effective tax burden for 2013: 25.0 per cent (2012: 25.0 per cent).
Affiliated companies The shareholders Energie Beheer Nederland B.V., Esso Nederland B.V. and Shell Nederland B.V. are classified as affiliated companies of GasTerra. Transactions between GasTerra and the affiliated companies are processed at prices that conform to market levels.
Number of employees At the end of 2013, the number of personnel in full-time equivalent positions was 186 (2012: 189). The average number of employees in full-time equivalent positions during the financial year was 186 (2012: 191).
Auditor’s fees During the financial year, the following fees charged by KPMG Accountants N.V. were charged to the company, pursuant to Section 2:382a of the Dutch Civil Code [BW]:
2013 2013 2012 2012 KPMG KPMG KPMG KPMG Accountants N.V. other Accountants N.V. Miscellaneous
AMOUNTS IN EUROS Audit of the accounts 230.000 22.165 205.632 22.149 Other auditing work 11.000 - Other non-audit related services 100.890 - 154.800 Tax advice - -
230.000 123.055 216.632 176.949 14 / 32 GASTERRA RESULTS AND THE MARKET
REMUNERATION OF DIRECTORS AND SUPERVISORY DIRECTORS The remuneration policy of GasTerra is aimed at motivating and retaining Directors of the company who are capable of heading a large enterprise and remunerating them based on their performance. The remuneration policy as regards the company’s Supervisory Directors is one of restraint.
Directors of the company The remuneration for the Executive Director of the company, G.J. Lankhorst M.A., is as follows: 2013 2012 Regular remuneration € 347.783 € 340.194 Variable remuneration 84.002 € 75.162 Employer’s contribution to secondary employment conditions 89.907 € 72.657
The aforementioned variable remuneration is based on achieving the agreed objectives during the year under review. In 2013 an amount of €40,009 was recorded as a charge under the crisis levy act (2012 crisis levy: €39,276). GasTerra holds an insurance policy that offers Directors and Supervisory Directors coverage in the event of their liability.
Supervisory Directors of the company The total remuneration of the members of the Board of Supervisory Directors for the 2013 financial year was €55,437 (2012: €58,084).
Board of Management G.J. Lankhorst M.A., Chief Executive Officer
Board of Supervisory Directors C.W.M. Dessens M.A., Chairperson D.A. Benschop M.A. J.D. Bokhoven MSc. P. Dekker MSc. M.E.P. Dierikx M.A. J.M. Van Roost MSc. A.P.N. van Veldhoven M.A.
Groningen, 13 February 2014 15 / 32 GASTERRA RESULTS AND THE MARKET
SUMMARY OF FINANCIAL RESULTS
2013 2012 INCOME AND EXPENDITURE (IN MILLIONS OF EUROS) Net Turnover 24,293 23,381 Gas Purchases 23,711 22,861 Transmission Costs 509 505
RESULTS (IN MILLIONS OF EUROS) Profit Before Tax 48 48 Net Profit 36 36 Dividend 36 36
OTHER FINANCIAL INFORMATION Investments (IN MILLIONS OF EUROS) 13 13 Liquidity Ratio 1.0 1.1
BALANCE SHEET DATA (YEAR END, IN MILLIONS OF EUROS) Total Assets 3,943 3,734 Shareholders’ Equity 216 216 Short-term liabilities 3,727 3,518
VOLUMES SOLD (IN BILLIONS OF M³) Total Sales 89.3 83.4 -The Netherlands 36.1 34.8 -Rest of Europe 53.2 48.6
STAFF (YEAR END, IN FULL-TIME EQUIVALENTS) Company staff 186 189
HEALTH AND SAFETY Absenteeism (%) 2.2 1.4 Average absenteeism rate 1.1 1.2 16 / 32 GASTERRA RESULTS AND THE MARKET
MARKET TRENDS
Despite the economic crisis and the low coal and LNG
CO2 price compared to the price of gas, the gas The prices for liquefied natural gas (LNG) are market in 2013 in Europe was tight. This was due to currently higher in Asia and South America than in the long, cold winter and the reduced supply of Europe. In the Netherlands in 2013, hardly any LNG LNG. reached our shores. Other European countries as well, notably the United Kingdom, received less LNG Gas-Fired Power Stations in 2012 and 2013 than in previous years. Belgium, Several Northwest European energy companies France and Spain delivered some of the imported announced in 2013 that they will be shutting down LNG onwards to Asia and South America. It is several gas-fired power stations. There are plans to anticipated that only from 2016, after the launch of put even the most modern, efficient gas-fired power new LNG production in Australia and the U.S., will stations in mothballs. Because of the current price more LNG be able to arrive in Europe. levels of gas, coal and CO2 emission rights, producers prefer to use coal-fired plants. At the Security of delivery in Europe same time, the demand for electricity is relatively Due to the long, cold winter, the reservoirs in reduced as a result of the economic crisis and Europe in the first quarter of 2013 fell below production from renewable resources continues to average. It was not until November that the increase. Gas-fired power stations are therefore reservoirs were again filled to a normal average rarely used. GasTerra views gas as precisely the ideal level. Despite the great contribution of reservoirs to complement to these resources in the transition supplies in this cold period, this is not reflected in phase to a fully sustainable energy supply. Gas-fired the valuation of flexibility. The summer-to-winter power stations can be flexibly switched on and off spread (the price disparity between the winter and and thus form a good complement to the less summer prices) has further decreased this year. It predictable renewable energy production. Besides, can be concluded from this that there is now gas is the cleanest fossil fuel. How the position of sufficient reservoir capacity in Europe. With the natural gas for electricity generation will develop in current prices, there will be limited or no investment the long term is largely dependent on the price of in reservoirs, but as soon as a shortage in reservoir coal and the new European CO2 reduction targets capacity were to arise, then GasTerra is of the for 2030 and their impact on the price of CO2 opinion that this will be reflected in price signals emission rights. which would bring investments in their wake. In the field of electricity, several Member States have taken Virtual Trading Points various measures to ensure that sufficient electricity Also in 2013, the English National Balancing Point can be produced, for example, by the use of (NBP) and the Dutch virtual trading point TTF (Title capacity mechanisms. Due to the negative impact of Transfer Facility) were the most liquid trading points these national interventions on the functioning of in Northwest Europe. The substantial growth in the the internal European electricity market and the volume traded on the TTF in recent years continued possible illegal state aid that goes with it, the in 2013. Trading on the NBP decreased, while there European Commission is critical of unilateral national was strong growth on the German hubs NetConnect measures in this field. Germany and Gaspool. Nevertheless, the volume traded on the German hubs remained far behind that on the TTF and NBP. The prices on the Northwest European continental hubs largely follow the prices on the TTF. This indicates that the cohesiveness of Northwest European hubs is good under normal circumstances. 17 / 32 GASTERRA RESULTS AND THE MARKET
SALES
In 2013, GasTerra supplied 89.3 billion m³ of gas. TTF and to export customers. The average gas price That is 5.9 billion m³ more than in 2012. This in 2013 was 27.1 eurocents per m3. increase can be explained by selling more gas on the
21,4 BILLION M3 VIRTUAL TRADING POINTS 24% (EXCLUDING ENERGY COMPANY 53,2 AND INDUSTRIAL SALES) BILLION M3
ABROAD 60% 89,3 BILLION M3 IN TOTAL
4,1 BILLION M3 10,6 INDUSTRY BILLION M3 4% ENERGY COMPANIES 12%
VIRTUAL TRADING POINTS
TTF supplied on the TTF was 46 billion m³ as against 43 In addition to the direct sale of gas to customers, billion m3 in 2012. GasTerra’s share therefore gas is also sold by GasTerra on the virtual trading amounts to 63%. point Title Transfer Facility (TTF) through brokers or The total volume traded on the TTF by market directly on the ICE Endex trading platform. In 2013, operators amounted to 848 billion m3, an increase GasTerra sold 29.0 billion m³ of gas on the TTF. That of 73 billion m3 compared to the previous year. The volume is higher than what was supplied on the TTF substantial growth undergone by TTF in recent years in 2012 (27.3 billion m3). The total physical volume has thereby intensified. 18 / 32 GASTERRA RESULTS AND THE MARKET
Trends in physical and traded volumes on TTF
(in million m3)
100.000
80.000
60.000
40.000
20.000
0 2011 2012 2013
Source: GTS
Traded volume on TTF Physical volume on TTF
The prices for trading on the TTF were on average ahead price by 1.7 eurocents/m3. The following higher in 2013 than in previous years. The annual graph shows the Day-Ahead and Month-ahead price average Day-ahead price rose by 2.0 eurocents/m3 evolution of the products. relative to 2012 and the average annual Month-
Trends in average monthly TTF prices (eurocents per m3)
35
30
25
20 2011 2012 2013 2014
Source: Heren
Month-ahead Day-ahead 19 / 32 GASTERRA RESULTS AND THE MARKET
FOREIGN TRADING POINTS
In 2013, GasTerra traded 1.6 billion m3 and supplied The total physical volume traded on the NBP has 7.9 billion m3 on the British National Balancing Point declined slightly in 2013. Trading on NCG and (NBP) trading point. Furthermore, in 2013 0.1 billion Gaspool has grown but lags far behind that of NBP m3 were traded on the German Net Connect and TTF in extent. NBP and TTF remain by far the Germany (NCG) and Gaspool trading points. most liquid trading points in Europe.
Trends in traded volumes per month
(in million m3)
250.000
200.000
150.000
100.000
50.000
0 2011 2012 2013 2014
Source: NCG, GTS, Gaspool en National Grid
NCG TTF
Gaspool NBP 20 / 32 GASTERRA RESULTS AND THE MARKET
Trends in physical volumes per month
(in million m3)
12.000
10.000
8.000
6.000
4.000
2.000 2011 2012 2013 2014
Source: NCG, GTS, Gaspool en National Grid
NCG TTF
Gaspool NBP
The prices trend on the TTF, NCG and Gaspool was 2013. This is an indication of increased gas market comparable. The NBP price follows the same trend, integration. The prices of the other continental but is more seasonally affected. The price trading points broadly followed the prices on the differentials between the Northwest European TTF. continental trading points continued to decline in
Trends in average monthly Month-ahead prices
(eurocents per m3)
30
25
20 2011 2012 2013 2014
Source: Heren
NCG TTF Gaspool NBP 21 / 32 GASTERRA RESULTS AND THE MARKET
Belgium, France and Italy increased. Continuous renewal of the product range In Belgium, Zeebruges consolidated its position as a and adaptation of the contractual terms to changing physical hub. Trading on the Zeebruges Trading market conditions are the underlying reasons for Point, a virtual trading point launched on 1 October this. Thus, GasTerra offers energy companies steadily 2012, was very limited in 2013. increasing possibilities for choice. Examples of this are the choices for various delivery points, the France has three separate trading points. PEG Nord, degree of (price) risks, the degree of temperature the most important of the three, was far less liquid flexibility and contracting or not contracting for in 2013 than the TTF and trading on PEG Nord has flexibility during the day. decreased. The transmission capacity between PEG Nord and the PEG Sud and PEG TIGF market areas GasTerra concluded contracts with a significant forms a physical barrier between North and South. number of new customers for structured products Partly because of this, the gas prices on PEG Sud with delivery on the TTF. Thanks to the sales during and PEG TIGF are significantly above those of PEG 2013 for delivery in 2014, it is expected that the Nord. volume to be supplied in 2014 will remain at approximately the same level as in 2013. The volume traded on the Italian trading point PSF rose sharply in 2013. Because of an increase in the INDUSTRY capacity limit, the price differential between TTF and PSV decreased. In 2013, GasTerra supplied 4.1 billion m³ of gas to its industrial customers. It concerns supplies to inter alia Liquidity the chemical industry, breweries, paper mills and the Although no hard figure exists whereby the liquidity food industry. This volume represented a fall in sales of a market can be expressed, there are aspects that to these customer groups compared to the previous collectively give a good picture of the liquidity. This year. The worsened economic conditions and limited concerns the trading volume, the churn rate (the deployment of CHP plants were to blame for this. number of times a physical m3 is traded), the products traded, the volatility of the prices and the In collaboration with the customer, GasTerra is spread between bid and ask prices. responding to these conditions by adapting and improving the products and services it supplies to its Based on these aspects, it can be concluded that the customers. In 2013, therefore, the launch of a more TTF has become more liquid in 2013 and the active approach to customers, improved information liquidity of NCG and Gaspool has also increased. provision and the establishment and development of Less volume was traded on the NBP, but it is still a a digital customer portal took place. From 2014, our very liquid trading point. The Italian trading point industrial customers can visit this portal to conclude has had a boost in liquidity in 2013, but is still small contracts, request quotes and call up current sales compared to the TTF. The liquidity of the French prices. In addition, they have access here to trading points decreased in 2013 due to a decrease customer-specific information, such as contract in the volume traded. In terms of liquidity, the documents and invoices. Belgian trading points have remained virtually unchanged from 2012. Customer Satisfaction In the first quarter of 2013, GasTerra carried out a ENERGY COMPANIES customer satisfaction survey amongst its industrial customers. In general, industrial customers were In 2013, GasTerra supplied 10.6 billion m3 of gas, of shown to be positive about our service provision. which 7.5 billion m3 were supplied to power They gave GasTerra on average a 7.9 mark. The companies via TTF. This volume was higher than respondents reported that they see GasTerra as an expected (8.8 billion m3). This was due to the long, expert, customer-focused and transparent cold winter and because sales during the year organisation, but less as an innovative and 22 / 32 GASTERRA RESULTS AND THE MARKET
sustainable business. It transpired that not all by regularly publishing a newsletter in addition to customers were aware of our projects in the field of providing customer-specific market information. CSR. In addition, they indicated a need for more information from GasTerra, specifically on key market trends and prices. GasTerra has given effect to this
OVERSEAS SALES
In 2013, GasTerra supplied 53.2 billion m³ of gas to long, cold winter. The customer portfolio remained customers abroad. That is 4.6 billion m³ more than unchanged. in 2012. This increase can mainly be explained by the
Natural gas sales of GasTerra 2013
36,1
9,5
5,4 22,4
6,5 0,8
8,6
(in billion m3) 2013 2012 The Netherlands 36,1 34,8 Belgium 5,4 4,7 France 6,5 6,1 Germany 22,4 19,3 Italy 8,6 8,2 UK 9,5 9,6 Switzerland 0,8 0,7 Total 89,3 83,4
Total excluding the Netherlands 53,2 48,6 23 / 32 GASTERRA RESULTS AND THE MARKET
Renegotiation of some long-term contracts took France makes extensive use of electricity generated place in 2013. Previously, the pricing formula for by nuclear power, but in recent years, a number of long-term contracts used to be based on the price gas-fired power stations have also been built. These of oil. Increasingly, prices under these contracts are power stations are in limited use because of the being based on gas prices on the trading points. import of cheap electricity (specifically from coal-fired power stations in Germany). France has When parties to renegotiations do not mutually several LNG terminals. Due to limited internal reach agreement, they may submit their dispute to transmission capacity, LNG is primarily important for arbitration. In 2007, GasTerra made use of this the south of the country. Nevertheless, even France opportunity after stalled price renegotiations of two shipped LNG originally intended for the French long-term gas supply contracts with the Italian market to Asia. This was probably under the energy company Eni. In both procedures, the influence of the high prices. Because of the loss of arbitrators vindicated GasTerra and awarded price this gas, the demand for pipeline gas from Northern increases retroactively. The two final judgments in Europe increased. Of this gas, more must now be these procedures were handed down in 2012 and transmitted to the South of France. Because of 2013. infrastructure bottlenecks between the North and the South of France, the prices in the South of Below, a brief overview is given of the main France are higher than in the North of France. developments in the energy field for each of the countries to which GasTerra exports gas. Germany In 2013, GasTerra supplied 22.4 billion m³ of gas to Belgium German trading parties, 42% of the total exported. Of the exported gas, in 2013, we sold 5.4 billion m 3 Germany also imports gas primarily from Norway to Belgium. This country has no natural gas and Russia. production and is therefore completely dependent on imports of natural gas. Besides purchasing from In response to the disaster at the Japanese nuclear the Netherlands, Belgium imports mainly LNG and power station in Fukushima, the German gas from Norway via pipelines. Belgium is able to government announced in 2011 that the oldest import nine billion m3 per annum via the Zeebruges nuclear power stations were to be shut down LNG terminal. Belgium has a long-term contract immediately and nuclear energy was to be phased from 2007 to 2027 with Qatar for the supply of out in the period up until 2022. This decline in three billion m3 of LNG per annum. That makes production, however, is currently not being replaced Qatar, together with Norway and the Netherlands, by the use of gas-fired power plants, but by the use the largest gas supplier for Belgium. Recently, a of coal-fired power plants and the growth of number of LNG cargoes destined for Belgium were renewable energy resources, specifically wind and diverted and shipped to Asia. The higher premiums sun. Many gas-fired power stations have closed in the Asian market appear to be the basis for this. down or are slated for closure by the Federal Network Agency. In connection with the necessary The electricity market in Belgium is characterised by network stability, not all applications for closure are the large-scale use of nuclear power stations being honoured. At the same time, the growth of (approx. 50%) and gas-fired power stations (30%). solar and wind energy is progressing, because, In October 2011, Belgium decided to phase out its thanks to grants, the producers of energy from nuclear energy capacity between 2015 and 2025, these sources receive a guaranteed price per but with the proviso that sufficient replacement delivered MWh and because renewable electricity by capacity can be found. definition is given precedence on the network.
France A problem with the growing share and the In 2013, GasTerra supplied 6.5 billion m³ of gas for guaranteed price of renewable energy in the the French market. France also imports gas primarily German energy mix, combined with the use of in the form of LNG and via pipelines from Norway coal-fired power stations, is that it is difficult to and Russia. influence the generation of renewable energy and 24 / 32 GASTERRA RESULTS AND THE MARKET
the old coal-fired power stations cannot be quickly power stations in France, for the construction of a switched on and off. Therefore, in situations where new nuclear power station in the United Kingdom. there is a high supply of electricity and little demand, Germany exports the surplus electricity at Switzerland low (and sometimes even negative) prices. In the In 2013, GasTerra supplied 0.8 billion m³ of gas to a coalition agreement of the new German Federal Swiss trading company. Government, a more market-based approach has therefore been agreed to restrict the growth of Summary renewable resources to some extent. The gas market in Northwest Europe has been further integrated. Price differentials amongst the Italy various trading points have decreased further. An 16% of the gas that GasTerra exported in 2013 went obvious recurring theme throughout Europe is the to Italy (8.6 billion m3). Italy also imports LNG and competition between coal and gas for electricity gas via pipelines, mainly from Norway, Algeria, Libya generation. It is clear that, at present, gas cannot and Russia. compete with coal. Socially, GasTerra finds this an undesirable situation and as a result, GasTerra is Security of delivery is a major national issue. New participating in the Magritte group, mentioned LNG landing facilities and the laying of new pipelines elsewhere in this Annual Report. are meant to ensure diversification of gas supplies. Italy’s ambition is to become the central hub for gas Furthermore, we see that despite this deterioration by transmitting pipeline supplies and LNG from of the competitive position of gas relative to coal South-Eastern Europe, Asia and Africa to Northwest and the general economic climate in Europe in 2013, Europe. Recently, a third LNG terminal was taken there is still a shortage on the gas market. Causes into operation and the transmission system operator must be sought in the long, cold winter of 2013, the is engaged inter alia in facilitating two-way capacity diversion of LNG to Asia and the reduced supply via Switzerland to Germany, so that not only can gas because of declining European production. Above be imported but it will also be possible to export it. all, the increasing flexibility with which LNG can be Furthermore, it was announced that, for the supply and is being diverted is a trend which GasTerra route for their gas to Europe, the partners in the expects will manifest itself to an ever greater extent Shah Deniz II gas field (Azerbaijan) have opted for in the future, as the result of which a global gas the TAP pipeline via Greece and Albania to Italy market will become progressively more a reality. rather than the Nabucco pipeline through the Balkans to Austria.
United Kingdom In 2013, GasTerra supplied 9.5 billion m3 of gas to the United Kingdom, of which 1.6 billion m3 via NBP. This constitutes 18% of the total exports in 2013. In addition, the United Kingdom imports gas, mainly from Norway, as well as LNG. It is possible that more room will be made available in the United Kingdom for the use of gas-fired power stations. As a consequence of the European Large Combustion Plant Directive, a number of polluting coal-fired power stations must be shut down here. That means an additional demand for gas in the short term. In addition to a high deployment of offshore wind, the British government also sees a role for nuclear power. In October 2013, an agreement was concluded with EDF, the operator of the nuclear 25 / 32 GASTERRA RESULTS AND THE MARKET
PROCUREMENT
In 2013, GasTerra purchased 89.3 billion m³ of gas. small fields (26.3 billion m3). The remaining 11% This is an increase of 5.9 billion m3 compared to were procured at trading points or imported 2012. Of this, 60% originates from the Groningen (9.6 billion m3). Gas Field (53.4* billion m3 and 29% from the
Overview of GasTerra gas procurement in 2013
IN 2013, GASTERRA PROCURED 89.3 BILLION M³ 89,3 OF GAS BILLION M3 53,4 BILLION M3
60% OF THE GAS ORIGINATED FROM THE GRONINGEN GAS FIELD 26,3 BILLION M3 9,6 BILLION M3
29% OF THE GAS THE REMAINING 11% ORIGINATED FROM WAS PROCURED AT THE SMALL FIELDS VIRTUAL TRADING POINTS OR IMPORTED
GRONINGEN GAS FIELD The Groningen Ceiling: old and new With this aforementioned purchased volume, 60% of the gas that we purchased in 2013 GasTerra has kept to the purchasing ceiling set by originated from the Groningen Gas Field. In total, the Minister of Economic Affairs. From 2006 GasTerra purchased 53.4* billion m3 of gas from this through 2015, GasTerra was permitted to purchase a field in 2013 (2012: 47.2 billion m3). This increase total of 425 billion m3 of gas from the Groningen relative to 2012 can be explained by the cold winter Gas Field and 449 billion m3 in the period 2011- in the beginning of the year and the associated 2020. From 2006 to 2013, the company has higher gas sales and replenishing the emptied purchased 334 billion m3 of gas from the Groningen reservoirs in the summer. Gas Field, so that, according to the applicable ceiling
* Including correction for prior delivery years of 0.2 billion m3 26 / 32 GASTERRA RESULTS AND THE MARKET
in 2013, about 91 billion remained for the years shown to contain gas with a higher calorific value. In 2014 and 2015. order to make this high-calorific gas (H-gas) suitable for appliances designed for L-gas, nitrogen is added In response to the increasing frequency and strength at special-purpose processing facilities. In parts of of the earthquakes in the extraction area, the Germany, Belgium and France as well, L-gas from Cabinet decided on 17 January 2014 to set new the Netherlands is used. There, since 1996, new production ceilings. According to the Cabinet appliances have been made compatible for use with decision, in 2014 and 2015, no more than 42.5 both L-gas and H-gas. billion m3 of gas per year may now be extracted from the Groningen Gas Field, and a further 40 It is expected that the volume of production from billion m3 in 2016. Furthermore, at five production the Groningen Gas Field will markedly decline after sites in the heart of the earthquake zone, around 2020. That has consequences for consumers. Even Loppersum, extraction has to be reduced by 80 per with the full use of the existing nitrogen plants, not cent. all existing consumers can be supplied with L-gas from 2020. That means that, over time, they will In preparation for the Cabinet decision, in January have to switch to H-gas. Research by the Energy 2013, the Minister of Economic Affairs had ordered Delta Gas Research Consortium (EDGaR) showed 14 studies to be carried out on various issues related that conversion in the Netherlands will not become to the production of gas from the Groningen Gas necessary until 2030. Field, such as the extent of the damage, the possibilities for reducing the number and strength of Conversion of appliances from L-gas to H-gas the tremors and the consequences of any potential The transition from L-gas to H-gas will have to begin production limitation. GasTerra was involved in a abroad, in connection with the different situations in number of these research projects. the Netherlands and the countries that purchase Dutch L-gas. Because of the existing long-term GasTerra believes that, despite the announced contracts, this will take place first in Germany (2020) production limitation, it is capable of meeting its and afterwards in Belgium and France (from 2024). contractual commitments. GasTerra views it as its responsibility to inform both customers and others who are directly involved in In the period from 2006 to 2013, the following good time and give them guidance on how to quantities of Groningen gas have been purchased by prevent shortages of L-gas. Thus in 2013, GasTerra, GasTerra (quantities in billion m3): GTS and the Ministry of Economic Affairs brought this message to the attention of foreign customers, 2006 32.2 transmission system operators, government 2007 29.9 departments and regulators. Germany has 2008 38.9 meanwhile incorporated the start of the conversion 2009 37.8 plan into its Netzentwicklungsplan Gas and is now 2010 50.1 working on the assumption of a gradual reduction in 2011 4 4.7 L-gas from the Netherlands between 2020 and 2012 47.2 2030. The message has been conveyed to Belgium 2013 53.4* * Including correction for prior and France as well, but given the ten-year planning delivery years of 0.2 billion m3 horizon of the transmission system operators, Decrease in Low-calorific gas (L-gas) production conversion between 2024 and 2030 is not yet Gas from the Groningen gas field contains relatively included in concrete and public plans. In our high levels of nitrogen compared to gas from other contacts with our foreign customers, it has become fields. This results in Groningen gas having a lower clear that there are already plans in the making for calorific value. After the Groningen gas field was the transition to H-gas. discovered, all gas appliances in the Netherlands were made compatible with the calorific value of this so-called L-gas or Low-calorific gas. Later, smaller natural gas fields were discovered that were 27 / 32 GASTERRA RESULTS AND THE MARKET
How quickly the transition of the Dutch L-gas for natural gas (especially in the built environment), consumers to H-gas will happen after 2030 will need the remaining production from the Groningen Gas to be determined during the course of the 2020s. Field and the possibility of involving nitrogen plants. This is dependent on developments in the demand
SMALL FIELDS
In 2013, GasTerra purchased 26.3 billion m³ of gas 0.4 billion m3 compared to the procurement in the from small fields. This is a limited increase of previous year (25.9 billion m3.)
GasTerra procurement from small fields
(in billion m3) Achieved Forecast 60
50
40
33,1 30 31,4
27,4 26,3 25,9 24,9 20 20,7 18,8 16,6 14,0 10
0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
In the past decade, the purchase of gas from small More new developments are needed for that. fields decreased by about two billion m3 per annum. This is mainly because many small fields are Production-driven supply becoming emptier. As a result, the pressure in these In 2013, GasTerra agreed a new operational regime fields decreases, and the production declines with the producers. The ‘Buyer’s Request Regime’ steadily. This decrease is not compensated to the has thereby been replaced by the ‘Seller’s same extent by production from new fields. For the Nomination Regime’. This means that from now on Netherlands as a whole, production decreased again supply is no longer demand-driven, i.e. at the in 2013 compared to 2012. However, within the request of GasTerra, but production-driven. portfolio of GasTerra, that is not the case and in Producers determine themselves how much gas they 2013, there was stabilisation. This can be attributed supply. This allows them to adjust the supply to the to the conclusion of new contracts and the technical facilities of the fields. GasTerra anticipates transition to production-driven supply as described that by means of this process, the supply of gas by below. The outlook for the coming years shows a producers will be accelerated. All of this has been further decrease. These projections are based on incorporated into a new Natural Gas Sales statements from the producers and assume a stable Agreement (NGSA), which all producers have level of investment. That level is not sufficient to accepted in 2013. bring about a breach in the production trend. 28 / 32 GASTERRA RESULTS AND THE MARKET
Pricing VIRTUAL STORAGE SERVICE Besides the conditions of supply, pricing was also a topic for discussion in 2013. GasTerra proposed GasTerra has been providing market operators with basing the purchase prices from 1 January 2013 on options to contract for virtual storage space since TTF virtual trading point prices. This proposal, 2011. This service is known as its virtual storage recorded in the new NGSA, was accepted by all service (VSS). In total, there is a storage volume of producers. 1.95 billion m3 available. This amount is auctioned in the form of so-called Standard Bundled Units (SBUs) PROCUREMENT FROM VIRTUAL TRADING of 1440 kWh each. There are thus 13.2 million SBUs POINTS AND OVERSEAS MARKETS available. ICE Endex conducts auctions on instructions from GasTerra, so that purchasers GasTerra procured a total of 9.6 billion m³ of gas in remain anonymous to GasTerra. The service is 2013. This was done both through trading points, provided on the TTF and is attractive for market and by imports, specifically from Norway, Russia, operators because it is virtual and is therefore not Germany and the United Kingdom. This affected by gas quality, and also cannot be cancelled procurement under foreign contracts remained due to technical faults. Until now, the service was similar to 2012. auctioned on each occasion for a single storage year (from April to April). For the storage season Due to changing market conditions - increased 2013/2014, a total of 2 million SBUs were sold. competition and the fact that the Dutch market is entirely based on TTF - GasTerra paid particular Five-year product attention in the 2013 renegotiation of long-term Market research revealed that market operators contracts to the adjustment of the price formulas would like to secure capacity for a longer time. which, in any event, must reflect the current reality. Therefore GasTerra - in addition to the fixed price Furthermore, there are also other conditions of the one-year product - also developed a five-year “classical” long-term contracts that are under product. This product is characterised by a price pressure. It takes great effort to reach agreement formula that has been indexed to the summer/Q1 amongst parties on what long-term contracts in the spread. The auctions of the two products were held future should look like. on 20 and 21 November 2013 and were successful. Of the five-year product (for storage years GasTerra did not conclude any procurement 2014/2019) 11.8 million SBUs, or 1.75 billion m3 in contracts for foreign gas with new parties in 2013. A working gas volume, were offered for auction. Of number of small contracts expired, including the this, 4.1 million SBUs, or 600 million m3 were sold. final supply contract from the Norwegian Ekofisk Of the one-year product (for the storage year fields on 1 October 2013. This brought an end to 2014/2015), 4.5 million SBUs were offered for nearly four decades of gas supply under this auction. Of these, 3.7 million SBUs (or 80%) were contract. sold. The remaining amount of 5.4 million SBUs will be auctioned in February 2014 in the form of a one-year product. 29 / 32 GASTERRA RESULTS AND THE MARKET
TRANSMISSION
By procuring transmission capacity from The transmission costs are comparable to 2012 transmission system operators, GasTerra acquires the (€505 million). With this, the structural and effective right to feed gas into the so-called ‘entry points’ of decrease in transmission costs over recent years has the transmission network or to extract gas at the come to an end. ‘exit points’. The costs for procuring transmission capacity in 2013 were €509 million.
GasTerra transmission costs
(in millions of euros) 1000
900
800 853 804 700 708 600
500 505 509 400
300
200
100
0 2009 2010 2011 2012 2013
This trend was partly caused by the shift from published the Method Decision 2014-2016, which is having the delivery point at exit points to trading on the basis for setting the tariffs. GasTerra is broadly in the TTF. When trading on this virtual point, GasTerra agreement with this Method Decision. The only pays for the injection of the gas; the cost of transmission costs will turn out to be significantly extraction are for the account of the buyer. This shift higher in 2014 than in the previous two years. This is seems to have come to an end in 2012: those because, in 2012 and 2013, GTS was required to customers who opt to trade on the TTF, in retrospectively refund approximately €400 million to preference to trading at exit points, have already the market and incorporated this into the tariffs for made the switch. 2012 and 2013. Now that this refund has ceased, the tariffs in the Netherlands are going up. Tariffs In the Netherlands, GasTerra purchases the Abroad transmission capacity from Gasunie Transport GasTerra is not only active in the Dutch transmission Services B.V. (GTS), operator of the national gas market. Since 2006, GasTerra has also been transmission network. The transmission tariffs in the purchasing capacity from transmission system Netherlands are regulated by the Authority for operators BBL Company and the English National Consumers and Markets (ACM; until 1 April 2013, Grid for the export of gas to the United Kingdom. the Dutch Competition Authority – Nederlandse With the increased liquidity on the German hubs, Mededingingsautoriteit or NMa). In 2013, the ACM from 2013, GasTerra is also procuring capacity from 30 / 32 GASTERRA RESULTS AND THE MARKET
several German transmission system operators. Results When booking capacity, GasTerra makes use of the In accordance with the objective, all necessary PRISMA booking platform launched in 2013. On this transmission capacity was contracted in good time platform, gas traders can book transmission capacity and there are therefore no penalties to report for with various transmission system operators. exceeding transmission capacity. Meanwhile, nineteen European transmission system operators have joined PRISMA.
RISK MANAGEMENT
Risk management is applied to the activities that REVIEW GasTerra carries out for the purpose of achieving its GasTerra periodically reviews the effectiveness of its business objectives. This gives a high degree of risk management by carrying out internal audits. confidence that the objectives will be achieved. A Moreover, activities in this area are assessed within thorough risk policy is a prerequisite for the all departments and at all levels on an annual basis. company to achieve its objectives in a controlled This evaluation is summarised in the so-called manner. Risk management is an integral part of the ‘Document of Representation’. All these activities are Management Control System at GasTerra. GasTerra supervised by the Audit Committee appointed by carries out risk management at three levels: on the Board of Supervisory Directors. strategic, tactical and operational levels. PRINCIPAL RISKS AND UNCERTAINTIES ON STRATEGIC AND TACTICAL LEVELS By means of regular discussions of risk, we pinpoint Prior to the annual planning and control cycle, the principal risks and uncertainties facing GasTerra. GasTerra drafts a strategic plan. This plan is based In doing so, strategic, operational and financial risks on the current and anticipated developments on the are examined, as well as risks in the fields of European gas market and incorporates the strategic financial reporting, legislation and regulations. The long-term choices. The plan also includes a principal risks and uncertainties relate to the description of opportunities and threats (risks). following issues:
GasTerra then translates this strategic plan for the Earthquakes in Groningen short and medium term into a Business Plan and a Due to a number of earthquakes in 2012 and 2013 budget. In monthly and quarterly reports, the results and the resulting damage and the uncertainty are compared with the targets set out in the regarding the frequency and strength of Business Plan. This Business Plan contains a risk earthquakes in the future, there has been much analysis at the tactical level. The validity of this risk social unrest in the region in the past year. State analysis is assessed a further two times during the Supervision of Mines (Staatstoezicht op de Mijnen or year. The analysis includes both specifically named SodM) concluded in 2013 that the earthquake risk in risks and the measures that are needed to manage the Groningen Gas Field is greater than previously these risks. thought. Last year, the Minister of Economic Affairs therefore had 14 studies carried out to gain more AT THE OPERATIONAL LEVEL insight into the cause of earthquakes, the possible Risk management at the operational level is consequences, the possibilities of preventing or performed at the level of individual departments. It reducing the frequency and magnitude of consists of a risk analysis, control measures, earthquakes, the possibilities of preventing or documentation and reporting. The assumption is reducing the damage caused by the earthquakes that the line management in all parts of the and the manner in which damage by earthquakes is organisation are responsible for identifying relevant dealt with. GasTerra has participated in several of risks and for implementing appropriate control the Minister’s studies. measures. 31 / 32 GASTERRA RESULTS AND THE MARKET
The Minister has since published a decision. The GasTerra controls the aforementioned risk in two Cabinet decision means that in 2014 and 2015, no ways: more than 42.5 billion m3 of natural gas per annum may be extracted from the Groningen Gas Field and 1) The close tracking of regulatory developments at in 2016, another 40 billion m3. Furthermore, at five European level and at national level in the production sites in the heart of the earthquake zone, countries where GasTerra is active. Where around Loppersum, extraction has to be reduced by possible, GasTerra tries to influence the 80 per cent. developments. The implementation of new regulations is picked up in good time to be able GasTerra believes that, despite the announced to achieve it in time. production limitation, it is capable of meeting its contractual commitments. The company will do its 2) At policy level, through discussions with utmost to contribute to the successful government and EU leaders, GasTerra is a implementation of the Cabinet decision. proponent of an unambiguous European energy policy so as to reduce fragmentation. Regulation GasTerra is confronted with an increasing degree of Credit risk regulation at national and European level in various The credit risk consists of the loss that would be areas (specifically Energy and Finance). We note that generated if customers or counterparties were to the regulations that are relevant for GasTerra are remain in default and fail to fulfil their contractual increasingly fragmented. This fragmentation gives obligations. The company has drawn up guidelines rise to inefficiencies in management and to the with which customers or counterparties must obligation to continue following many national comply. These guidelines limit the risk associated regulations in order to be certain that we are with possible credit concentrations and market risks. complying with the applicable ones. If customers or counterparties fail to comply with these guidelines, they will be asked to furnish Examples of these fragmented regulations are the additional security such as bank guarantees. This introduction of European Regulation No. 1227/2011 prevents the company from running any major credit concerning integrity and transparency in the risks in respect of any individual customer or wholesale energy market (REMIT), EU Regulation No. counterparty. 648/2012 concerning OTC derivatives, central counterparties and trade repositories (REMIT, EMIR) FINANCIAL INSTRUMENTS and EU Directive 2004/39/EC concerning markets in financial instruments (MiFID). Interest rate risk The interest rate risk is limited to potential changes In addition, certain European regulations, such as in the market value of funds withdrawn and issued. Regulation 715/2009, which governs the conditions It is company policy not to use derivative financial for access to the natural gas transmission networks, instruments to manage fluctuations in interest rates as well as the subsequent procedural rules for (on an interim basis or otherwise). congestion management (CMP), are not introduced simultaneously in various Member States. Finally, this Liquidity risk regulation creates mechanisms for the allocation of To limit its risk, as at the end of 2013, GasTerra has transmission capacity on cross-border transmission at its disposal a commercial paper programme of links (CAM). This type of European regulation also €1.0 billion. The company monitors its liquidity requires the necessary advocacy of GasTerra’s position through liquidity forecasts. The interests. In chapter three you can read more management ensures that the company always has about these regulations. sufficient liquidity available to meet its commitments. 32 / 32 GASTERRA RESULTS AND THE MARKET
Foreign currency risk Borrowing Requirements GasTerra’s policy up to and including 2012 has been As a trading company with few fixed assets and to fully hedge the currency risks that arise from without inventories, GasTerra has a limited purchases and sales at the time the receivables or borrowing requirement, and only in the very short payables manifest themselves. From 2013, GasTerra term, often for only a few days. This borrowing is following a policy of controlling currency risks on requirement is met by either issuing GasTerra’s receivables and payables in the balance sheet using commercial paper, with a maximum not used in a bandwidth. Currency risks are only - and fully - 2013 of one billion Euros, or financing by means of hedged by short-term foreign currency contracts, if short-term bank loans. Up to and including October the unrealised results of those risks fall outside a 2013, GasTerra had a committed credit line facility of range set by the company. €50 million under contract.
OBJECTIVES OF BUSINESS PLAN
GasTerra’s main objective is unchanged: to maximise the value of Dutch natural gas.
This main objective has its concrete expression in the Business Plan in the following objectives:
1. Aiming to sell the entire volume of natural gas offered to GasTerra 2. Realising value for the entire portfolio 3. Anticipating a changing market 4. Careful and efficient implementation
Doing business in a socially responsible manner is an integral principle of GasTerra’s activities and a part of all its main goals. 1 / 13 GASTERRA 2013 ANNUAL ACCOUNTS
GASTERRA 2013 ANNUAL ACCOUNTS
The 2013 Annual Accounts comprise the following:
Balance sheet at 31 December (before profit appropriation) 2
Profit and loss account 2
Statement of cash flows 3
Explanatory notes to the Annual Accounts 4 2 / 13 GASTERRA 2013 ANNUAL ACCOUNTS
BALANCE SHEET AT 31 DECEMBER (BEFORE PROFIT APPROPRIATION)
IN MILLIONS OF EUROS
ASSETS Note 2013 2012
Fixed assets - Tangible fixed assets (1) 38,9 36,6
Current assets - Receivables (2) 3.201,8 3.437,9 - Cash and bank 702,6 259,2
Total 3.943,3 3.733,7
LIABILITIES Shareholders’ equity (3) 216,0 216,0 Current liabilities (4) 3.727,3 3.517,7
Total 3.943,3 3.733,7
PROFIT AND LOSS ACCOUNT
IN MILLIONS OF EUROS Note 2013 2012
Net turnover (5) 24.292,8 23.381,4 Cost of sales (6) 24.219,6 -/-23.366,4
Gross profits 73,2 15,0 Operating expenses (7) -/-70,2 -/-63,6
Operating profit 3,0 -/- 48,6 Net financial income and expenses (8) 45,0 96,6
Results on ordinary activities before tax 48,0 48,0 Taxation (9) -/-12,0 -/-12,0
Results after tax 36,0 36,0 3 / 13 GASTERRA 2013 ANNUAL ACCOUNTS
STATEMENT OF CASH FLOWS
IN MILLIONS OF EUROS 2013 2012 CASH FLOW FROM OPERATING ACTIVITIES Operating profit 2,7 -/-48,1 Adjustments for: - depreciation and impairment losses 10,5 9,4 - movements in receivables 236,1 74,9 - movements in current liabilities ( excluding short-term financing) 209,6 -387,2 Cash flow from operations 458,9 -/-351,1
Interest received 45,7 98,0 Interest paid & financing costs -0,7 -/-1,4 Tax paid -/-12,0 -/-12,0 33,0 84,6
Cash flow from operating activities 491,9 -266,4
CASH FLOW FROM INVESTMENT ACTIVITIES Investments in tangible fixed assets -/-12,8 -/-13,1 Cash flow from investment activities -/-12,8 -/-13,1
CASH FLOW FROM FINANCING ACTIVITIES Movements in short-term financing 0 0 Dividends paid -/-36,0 -/-36,0 Cash flow from financing activities -/-36,0 -/-36,0 Net cash flow 443,1 -/-315,5 Exchange and translation differences on cash and bank balances 0,3 -/-0,5 Movements in cash and bank balance 443,4 -/-316,0
Cash and bank at year-end 702,6 259,2 Cash and bank at preceding year-end 259,2 575,2
Movements in cash and bank balance 443,4 -/-316,0
4 / 13 GASTERRA 2013 ANNUAL ACCOUNTS
EXPLANATORY NOTES TO THE ANNUAL ACCOUNTS
1. PRINCIPLES FOR VALUATION AND DETERMINATION OF RESULTS
GENERAL ESTIMATES AND UNCERTAINTIES The Annual Accounts have been drawn up in In preparing these financial accounts, assessments, accordance with the statutory provisions of Title 9, estimates and assumptions have been made that Book 2 of the Dutch Civil Code (BW). Unless affect the reported amounts. In particular, this otherwise stated, assets and liabilities are recognised concerns the net sales and cost of sales (including at nominal value. The principles applied as the general transport costs). The assessments, estimates and basis for the valuation for assets and liabilities and the assumptions made are based on market data, determination of results are the historical costs. knowledge and experience, and other factors that are considered reasonable under the given circumstances. Comparative figures have been adjusted where Potential special features regarding estimates and required to improve comparison. assessments, if significant, are included in the notes to the balance sheet and the profit and loss account. An asset is included in the balance sheet when it is probable that future economic benefits will flow to FOREIGN CURRENCIES the company and its value can be reliably determined. Cash and bank balances, trade receivables and A liability is included in the balance sheet when it is current liabilities in foreign currency are stated at the probable that settlement thereof will entail an prevailing exchange rate as at the balance sheet date. outflow of resources that embody economic benefits and the magnitude of the amount thereof can be The exchange rate differences for gas exports and gas reliably determined. imports are allocated under gas purchase. Other exchange rate differences are recorded under Income is included in the profit and loss account financial income and expenses. when an increase of the economic potential related to an increase in an asset or a decrease of a liability FIXED ASSETS has taken place, the magnitude of which can be Tangible fixed assets reliably determined. Expenses are accounted for when Tangible fixed assets are valued at the historical a decrease of the economic potential related to a purchase price or production cost, less straight-line decrease in an asset or an increase of a liability has depreciation over the economic life of the asset. taken place, the magnitude of which can be reliably determined. Tangible fixed assets that have not been completed as at the balance sheet date are included under ‘Fixed If a transaction results in almost all or all of the future assets under construction’. After the relevant asset economic benefits and all or almost all of the risks has been put into use, it will be classified under the related to an asset or liability being transferred to a main category ‘Fixed assets’, which primarily includes third party, the asset or liability is no longer included software. in the balance sheet. Furthermore, assets and liabilities are not included in the balance sheet from The depreciation periods applied are between 5 and the time at which the requirements of probability of 10 years. future economic benefits and/or reliability of the Any impairment of assets that is expected to be determination of the value are no longer met. permanent is taken into account.
CONTINUITY CURRENT ASSETS These financial accounts have been prepared on a Receivables going concern basis. The receivables are valued at the amortised cost taking collectability risks into account. 5 / 13 GASTERRA 2013 ANNUAL ACCOUNTS
Trade receivables also include sales that have not yet is recognised to the extent that there will be been invoiced. repayment by the fund or a set-off against contributions owed in the future. PENSIONS GasTerra is affiliated with the Gasunie pension fund. CURRENT LIABILITIES The employees of GasTerra have a pension scheme The current liabilities are valued at the amortised cost, administered by the Gasunie Pension Fund with which the income and expenditure arising from Foundation. The pension scheme has been amended amortisation are recognised in the profit and loss as of 1 January 2013 with which the additional account using the effective interest method. This contribution deposit obligation no longer exists for takes place at fair value measurement wherein the the employer. In connection with this amendment, transaction costs that are directly attributable to the GasTerra made a one-time payment into the pension acquisition are included in the measurement. This fund in 2013. relates to liabilities with a term of no more than one year. Amounts payable also include purchases that As of January 2014, the scheme will be changed from have not yet been invoiced. Amounts received from a final salary scheme to a conditionally indexed career or to be charged to clients due to a decreased average scheme. From 1 January 2014, the financial purchase of gas under ‘take-or-pay’ agreements are obligations of GasTerra with respect to the fund recorded under current liabilities as an obligation to consist of a fixed premium in conjunction with the deliver. The obligation to deliver arising from the one-time payment to the accrual and supplementary receipt of gas in the storage service is also recorded benefits account of the pension fund. When the under current liabilities. resources that the fund has available are insufficient, the risk thereof then lies with the (former) FINANCIAL INSTRUMENTS participants. Financial instruments comprise receivables, cash and bank and current liabilities. A provision is also included as at the balance sheet The company uses derivative financial instruments date for existing additional obligations with respect to within the course of its normal business activities. the fund and the employees if it is likely that an This relates to forward exchange contracts and gas outflow of resources will be required in order to settle price swaps in order to hedge the price risk of certain these obligations, and the scope of the obligations gas contracts. may be reliably estimated. The presence or absence of additional obligations is assessed based on the The company applies cost price hedge accounting administration agreement concluded with the fund, techniques in order to incorporate the results from the pension agreement concluded with the hedge instruments including the forward exchange employees, and other commitments made to the contracts and the gas price swaps and the changes in employees. The provision is valued at the best value simultaneously in the profit and loss account. estimate of the cash value of the amounts that will be Forward exchange contracts and gas price swaps are required to settle the obligations on the balance sheet initially valued at cost. As long as the forward date. To the extent this obligation relates to the exchange contract or the gas price swap relates to an upcoming financial year, this is recorded in the current expected future transaction, the forward exchange liabilities account. contract or the gas price swap will not be revalued. As soon as the hedged position of the expected The starting point is that pension charges to be future transaction leads to the processing of a processed in the reporting period are equal to the financial asset or a financial obligation, the profits or pension contributions owed to the pension fund losses tied to the forward exchange contract or the during the same period. To the extent that the gas price swap will be recorded in the profit and loss contributions payable on the balance sheet date have account during the same period as that wherein the not yet been met, a liability is included for this. If the asset obtained or obligation entered into has an contributions already paid at the balance sheet date effect on the profit or loss. exceed the contributions owed, an accrued asset item 6 / 13 GASTERRA 2013 ANNUAL ACCOUNTS
The company documents the hedge relationships and The income is recorded during the reporting period in periodically reviews the effectiveness of the hedge which the gas was delivered and the services were relationships by establishing that there is no question provided. of over-hedges. A loss due to an over-hedge is recorded at cost or lower market value directly in the A distinction is made between services related to profit and loss account. making transport capacity and flexibility available and actual usage. The services are considered to have GasTerra concludes gas purchase contracts and gas been provided if the service was made available to sale contracts as part of its business operations. the client during the agreed time period. These contracts are concluded for the actual physical delivery and receipt of gas in accordance with the COST OF SALES company’s expected purchases or sales levels, or In the main, the cost of sales represents the cost of usage requirements. For this reason, these fall outside the purchase of gas and the associated services, the of the scope of RJ 290 (reporting standard). Financial transport costs and the costs related to underground instruments embedded in contracts that are not gas storage. separated from the host contract are incorporated in accordance with the host contract. OPERATING EXPENSES The expenses are determined on a historical basis, GAS SALES AND GAS PURCHASES taking into account the principles for valuation The pricing of natural gas for both the sales and mentioned previously, and are allocated to the purchasing sides is influenced to a significant degree reporting period to which they relate. Losses are by developments in the gas market prices of natural recorded during the reporting period in which gas as well as the prices of other energy carriers. provisions for them may be made.
GasTerra’s shareholders have concluded an agreement Net financial income and expenses relating to the after-tax profits to be made by This item includes the income and expenses related to GasTerra. This agreement stipulates that the price of financing. the natural gas from Groningen sold by the Nederlandse Aardolie Maatschappij B.V. (NAM) to CORPORATION TAX GasTerra during the year has been set such that The amount of corporation tax to be included in the GasTerra will retain the after-tax profits determined profit and loss account is calculated based on the for that year by the shareholders. results determined according to this account, in due observance of the valid tax-related provisions and NET TURNOVER rates. Net turnover is divided into gas sales and other net turnover. STATEMENT OF CASH FLOWS This report provides a statement of the cash flows Gas sales represent the income from the supply of gas generated. The statement of cash flow is drawn up and the income from the corresponding services on the basis of the indirect method based on the provided, after deducting the tax assessed on the operating results in the profit and loss account. turnover. Other net turnover is represented primarily by the income from the delivery of services to third parties. This income results primarily from flexibility services. 7 / 13 GASTERRA 2013 ANNUAL ACCOUNTS
2. EXPLANATORY NOTES TO THE BALANCE SHEET
TANGIBLE FIXED ASSETS (1) IN MILLIONS OF EUROS Book value Investments Depreciation Book value as at as at 1 Jan. 2013 31 Dec. 2013
Equipment 28,9 8,9 10,5 27,3 Assets under construction 7,6 4,0 - 11,6
Total 36,6 12,9 10,5 38,9
Purchase value Cumulative depreciation as at 31 Dec. 2013 as at 31 Dec. 2013
Equipment 56,5 29,2 Assets under construction 11,6 -
Total 68,1 29,2
RECEIVABLES (2) 31 Dec. 2013 31 Dec. 2012
IN MILLIONS OF EUROS Trade receivables 3.187,4 3.351,3 Taxation 2,9 - Other receivable amounts 11,5 86,6
Total 3.201,8 3.437,9
None of the receivables have a term longer than one year. 8 / 13 GASTERRA 2013 ANNUAL ACCOUNTS
SHAREHOLDERS’ EQUITY (3)
IN MILLIONS OF EUROS
Issued capital The authorised and issued capital totals €180 million, and is divided into 40,000 shares, each of €4,500 nominal value. The issued capital, which is paid in full, is divided as follows:
EBN B.V. 40% Esso Nederland B.V. 25% Shell Nederland B.V. 25% Staat der Nederlanden 10%
Unappropriated profit in millions of euros Balance as at 1 January 2013 36,0 Appropriation of the results for the 2012 financial year in accordance with the resolution of the General Meeting of Shareholders -/-36,0
Unappropriated profit for the 2013 financial year 36,0
Balance as at 31 December 2013 36,0
CURRENT LIABILITIES (4) 31 dec. 2013 31 dec. 2012 IN MILLIONS OF EUROS Amounts payable – for gas purchases 2436,5 1.798,8 Amounts payable – to affiliated companies 1109,1 1.004,7 Other trade amounts payables 5,6 15,1 Taxation and social security contributions 2,2 9,9 Other payables 166,8 688,6 Accrued and deferred income 7,1 0,5
Total 3.727,3 3.517,7
9 / 13 GASTERRA 2013 ANNUAL ACCOUNTS
FINANCIAL INSTRUMENTS
General programme of €1.0 billion. The Company monitors its In the course of its normal business activities the liquidity position through liquidity forecasts. The company uses financial instruments that expose the management ensures that the company always has company to market risk including foreign currency sufficient liquidity available in order to be able to rate risk, interest rate risk, credit risk, liquidity risk. The meet its commitments. company uses derivative financial instruments to manage risks. The company does not trade in Foreign currency risk financial instruments. GasTerra’s policy up to and including 2012 has been to fully hedge the currency risks that arise from Credit risk purchases and sales at the time the receivables or The credit risk consists of the loss that would be payables manifest themselves. From 2013, GasTerra is generated if customers or counterparties were to following a policy of controlling currency risks on remain in default and fail to fulfil their contractual receivables and payables in the balance sheet using a obligations. The company has drawn up guidelines bandwidth. The currency risks are only – and then with which customers or counterparties must comply. completely – covered by means of short term These guidelines limit the risk associated with possible currency contracts, if the unrealised results of those credit concentrations and market risks. If customers risks fall outside of a bandwidth set by the company. or counterparties fail to comply with these guidelines, they will be asked to furnish additional security such Market value as bank guarantees. This prevents the company from The market value of the majority of the financial running any major credit risks in respect of any instruments recorded in the balance sheet, including individual customer or counterparty. receivables, cash and bank and current liabilities, is approximate to the book value of those items. Interest rate risk The interest rate risk is limited to potential changes in The estimated market value and the total book value the market value of funds withdrawn and issued. It is of the forward exchange contracts and gas price company policy not to use derivative financial swaps as at 31 December are specified in the table instruments to manage fluctuations in interest rates below: (on an interim basis or otherwise).
Liquidity risk To limit the liquidity risk, as at the end of 2013, GasTerra has at its disposal a commercial paper
IN MILLIONS OF EUROS Estimated Book value Estimated Book value market value 2013 market value 2012 2013 2012 Forward exchange contracts for selling pounds sterling 0,0 0,0 0,6 0,0 Forward exchange contracts for buying pounds sterling 0,0 0,0 1,0 0,0 Gas price swaps 0,0 0,0 0,6 0,0
Total 0,0 0,0 2,2 0,0 10 / 13 GASTERRA 2013 ANNUAL ACCOUNTS
By applying cost price hedge accounting as set out As a result of the implementation of the above in the accounting principles, the book value of agreement, no notes are given on the valuation of derivative financial instruments included in the the individual gas purchase and sales contracts. above table is nil. The commitments and rights arising from long-term COMMITMENTS AND RIGHTS NOT SHOWN ON gas purchase, sales and transport contracts are not THE BALANCE SHEET shown on the balance sheet. Purchase, delivery and transport obligations GasTerra has long-term procurement, supply and Long-term gas purchase and sales agreements transport commitments pursuant to gas purchase, usually contain renegotiation clauses enabling the gas sales and transport contracts. The gas purchase parties to review the contract conditions during the and sales prices depend to a large degree on the term of the agreement, subject to certain future market prices of other energy carriers, as well conditions. GasTerra regularly renegotiates the as the future gas market prices of natural gas. long-term gas sales and purchase contracts with the counterparties. It is not possible to arrive at a The long-term supply commitments are covered by reliable estimate of the outcomes of these long-term purchase contracts, wherein the planned renegotiations. supply to GasTerra of the natural gas from Groningen more than exceeds the long-term supply €22.8 million in bank guarantees have been issued commitments. The differences between delivery to the benefit of GasTerra by third parties. obligations and the import and domestic procurement obligations, are sold by GasTerra, in Underground gas storage particular as short-term, in liquid marketplaces. GasTerra has long-term financial commitments with regard to underground gas storage capacity that are GasTerra’s shareholders have concluded an not included in the balance sheet and that have an agreement relating to the after-tax profits to be average annual payment commitment of €0.5 billion made by GasTerra. On the basis of this, the price of (2012: €0.5 billion). the natural gas from Groningen sold by the Nederlandse Aardolie Maatschappij B.V. (NAM) to GasTerra during the year has been set such that the profit of €36 million after tax determined for that year by the shareholders remains for GasTerra. 11 / 13 GASTERRA 2013 ANNUAL ACCOUNTS
3. EXPLANATORY NOTES TO THE PROFIT AND LOSS ACCOUNT
NET TURNOVER (5) 2013 2012
IN MILLIONS OF EUROS Gas sales 24.240,4 23.262,7 Other net turnover 52,4 118,7
Total 24.292,8 23.381,4
The following is a regional analysis of gas sales. 2013 2012 The Netherlands 9.574,1 8.888,1 Rest of Europe 14.666,3 14.374,6
Total 24.240,4 23.262,7
The volumes decreased by 7.1% to 89.3 billion m 3 as compared to 2012. The average selling price is 27.1 cents/m3 (27.9 cents/m3 in 2012).
COST OF SALES (6) 2013 2012
IN MILLIONS OF EUROS Gas Purchases 23.710,5 22.861,0 Transport Costs 509,1 505,4
Total 24.219,6 23.366,4
The average purchase price is 26.0 cents/m3 (26.9 cents/m3 in 2012). The gas purchase costs also include the costs connected with underground gas storage.
OPERATING EXPENSES (7) 2013 2012
IN MILLIONS OF EUROS Wages and salaries 22,0 16,6 Social security charges 1,8 1,8 Pension expenses 6,4 6,1 Costs of work subcontracted and other outside expenses 24,2 24,2 Other operating expenses 15,9 14,9
Total 70,2 63,6 12 / 13 GASTERRA 2013 ANNUAL ACCOUNTS
NET FINANCIAL INCOME AND EXPENSES (8) 2013 2012
IN MILLIONS OF EUROS Interest income 45,7 98,0
Financial income 45,7 98,0
Interest charges -/-0,7 -/-1,1 Financing costs - -/-0,3
Financial expenses -/-0,7 -/-1,4
Net position 45,0 96,6
TAX ON PROFIT FROM ORDINARY ACTIVITIES (9) The effective tax burden for 2013: 25.0 per cent (2012: 25.0 per cent).
Affiliated companies The shareholders Energie Beheer Nederland B.V., Esso Nederland B.V. and Shell Nederland B.V. are classified as affiliated companies of GasTerra. Transactions between GasTerra and the affiliated companies are processed at prices that conform to market levels.
Number of employees At the end of 2013, the number of personnel in full-time equivalent positions was 186 (2012: 189). The average number of employees in full-time equivalent positions during the financial year was 186 (2012: 191).
Auditor’s fees During the financial year, the following fees charged by KPMG Accountants N.V. were charged to the company, pursuant to Section 2:382a of the Dutch Civil Code [BW]:
2013 2013 2012 2012 KPMG KPMG KPMG KPMG Accountants N.V. Other Accountants N.V. Other
AMOUNTS IN EUROS Audit of the accounts 230.000 22.165 205.632 22.149 Other auditing work 11.000 - Other non-audit related services 100.890 - 154.800 Tax advice - -
230.000 123.055 216.632 176.949 13 / 13 GASTERRA 2013 ANNUAL ACCOUNTS
REMUNERATION OF DIRECTORS AND SUPERVISORY DIRECTORS The remuneration policy of GasTerra is aimed at motivating and retaining Directors of the company who are capable of heading a large enterprise and remunerating them based on their performance. The remuneration policy as regards the company’s Supervisory Directors is one of restraint.
Directors of the company The remuneration for the Executive Director of the company, G.J. Lankhorst M.A., is as follows: 2013 2012 Regular remuneration € 347.783 € 340.194 Variable remuneration € 84.002 € 75.162 Employer’s contribution to secondary employment conditions € 89.907 € 72.657
The aforementioned variable remuneration is based on achieving the agreed objectives during the year under review. In 2013 an amount of €40,009 was recorded as a charge under the crisis levy act (2012 crisis levy: €39,276). GasTerra holds an insurance policy that offers Directors and Supervisory Directors coverage in the event of their liability.
Supervisory Directors of the company The total remuneration of the members of the Board of Supervisory Directors for the 2013 financial year was €55,437 (2012: €58,084).
Board of Management G.J. Lankhorst M.A., Chief Executive Officer
Board of Supervisory Directors C.W.M. Dessens M.A., Chairperson D.A. Benschop M.A. J.D. Bokhoven MSc. P. Dekker MSc. M.E.P. Dierikx M.A. J.M. Van Roost MSc. A.P.N. van Veldhoven M.A.
Groningen, 13 February 2014 1 / 4 GASTERRA ENERGY SUPPLY
ENERGY SUPPLY
GASTERRA’S VISION
Europe has opted to liberalise the energy market in IN THE CHAIN order to increase the freedom of choice available to We buy and sell gas and related services. In doing consumers and to promote competition. It is so, we have to deal with various national and inherent in the operation of the free market that the international parties. Obviously with manufacturers, role of commercial market operators like GasTerra suppliers and customers, but also, for example, with should be limited with regard to the security of transmission system operators for the transmission delivery. It is the Transition System Operators (TSOs) of the gas, market regulators and politicians and that are responsible for that. The gas users executives who are responsible for (monitoring of) themselves are responsible for the security of supply; legislation and regulations. Within the chain, the the role of GasTerra does not extend beyond the trading portion falls within GasTerra’s fulfilment of contracts. responsibilities. In addition, we have the public duty to give effect to parts of the Gas Act. Although SECURITY OF DELIVERY management of the chain is not formally a It goes without saying that GasTerra accepts its responsibility of GasTerra, we do try to exert responsibility with regard to security of delivery by influence in this area. In doing so, we focus primarily meeting agreed contracts at all times. In addition, on the use of our product, because we consider it is we are giving effect to this by already responding exceedingly important that gas be used efficiently. In now to an expected marked decline in production of this context, we have supported several initiatives low calorific gas from the Groningen Gas Field after that promote the efficient use of gas. In addition, 2020. we assist our clients in solving energy issues. Upstream, GasTerra does business primarily with GasTerra further anticipates that market operators Dutch gas producers, who, inter alia, have to meet are, to a large extent, able to guarantee a reliable strict requirements with respect to the delivery. Globally, there is sufficient gas, and with environmental and good employment practices. LNG, the diversity as well as the flexibility of the GasTerra stimulates the production of this Dutch gas supply has increased. Furthermore, a great deal has by matching the contract conditions to the needs of been done in Europe to stimulate cross-border producers wherever possible. In this, we give trading. Agreements, inter alia about transmission, focused effect to our social responsibility. We will balancing and gas quality should remove trade continue to do so in the transition period to a barriers as much as possible. That increases the sustainable energy supply. security of delivery. This is reflected in the valuation of reservoirs, which is low at this time. As a result, investments in reservoirs are currently not interesting, although these will be necessary in the longer term. GasTerra is of the opinion that price signals are the only accurate instrument for allowing market operators to make timely investments. 2 / 4 GASTERRA ENERGY SUPPLY
SECURITY OF DELIVERY
Europe has opted to liberalise the energy market. In Netherlands will not become necessary until 2030. this context, the gas users themselves have become Since in the short term new appliances in the responsible for the security of supply and the role of Netherlands must also be suitable for H-gas, in the GasTerra in this is restricted to the fulfilment of run up to that time, most of the gas appliances will contracts. Our stakeholders have indicated that they be suitable for it. consider this an important issue for GasTerra. It goes without saying that GasTerra meets agreed contracts CONVERSION FROM L-GAS TO H-GAS at all times. In order to be able to achieve this, The transition from L-gas to H-gas will therefore amongst other things, we make use of accurate have to begin abroad. Because of the existing analysis of temperature data and demand. Based on long-term contracts, this will take place first in the correlation, we estimate the expected Germany (2020) and afterwards in Belgium and consumption as well as the resources available in the France (from 2024). GasTerra views it as its areas of production, infrastructure and transmission. responsibility to inform both customers and others In doing this, we include the actual risks and always who are directly involved in good time and give maintain a margin. them guidance on how to prevent shortages of L-gas. Thus in 2013, GasTerra, GTS and the Ministry GasTerra is also transparent about the (im) of Economic Affairs widely publicised this message possibilities of delivery. Likewise with regard to the to foreign customers, transmission system operators, anticipated marked decrease in L-gas production government departments and regulators. Germany from the Groningen Gas Field after 2020. has meanwhile incorporated the start of the conversion plan into its Netzentwicklungsplan Gas DECREASE IN LOW-CALORIFIC GAS (L-GAS) and is now working on the assumption of a gradual PRODUCTION reduction in L-gas from the Netherlands between Gas from the Groningen gas field contains relatively 2020 and 2030. The message has reached Belgium high levels of nitrogen compared to gas from other and France as well, but given the ten-year planning fields. This results in Groningen gas having a lower horizon of the transmission system operators, calorific value (L-gas). When the Groningen gas field conversion between 2024 and 2030 is not yet was discovered, all gas appliances in the Netherlands included in concrete and public plans. However, the were made compatible for its use. Later, smaller transition to H-gas there is already being prepared. natural gas fields were discovered containing gas The timing of the transition of the Dutch L-gas with a higher calorific value – high-calorific gas consumers to H-gas after 2030 will need to be (H-gas). In order to make this gas suitable for further determined during the course of the 2020s. appliances designed for L-gas, nitrogen is added at This is dependent on developments in the demand special-purpose processing facilities. In parts of for natural gas (especially in the built environment), Germany, Belgium and France as well, L-gas from the remaining production from the Groningen Gas the Netherlands is used. There, since 1996, new Field and the possibility of involving nitrogen plants. appliances have been made compatible for use with both L-gas and H-gas. SECURITY OF SUPPLY As a result of the liberalisation, security of supply is After dozens of years of growing and stable the responsibility of the market. GasTerra contributes production, the expectations are that the volume of to this as a major market operator by strictly production from the Groningen Gas Field will complying with its contractual commitments. markedly decline after 2020. Even with the full use of the existing nitrogen plants, it is anticipated that not all existing consumers of L-gas can be provided for from 2020. That means that, over time, the existing consumers of L-gas will have to switch to H-gas. Research by the Energy Delta Gas Research Consortium (EDGaR) showed that conversion in the 3 / 4 GASTERRA ENERGY SUPPLY
RESPONSIBLE EXTRACTION
GasTerra procures gas from various parties in the EARTHQUAKES IN GRONINGEN Netherlands and abroad. The bulk of gas originates Due to a number of earthquakes in 2012 and 2013 from the Groningen Gas Field and the small fields in and the resulting damage and the uncertainty the Netherlands (89% in 2013). The gas producers in regarding the frequency and strength of the Netherlands have to meet strict requirements, earthquakes in the future, there has been much inter alia with respect to the environment and good social unrest in the region in the past year. State employment practices. GasTerra stimulates the Supervision of Mines (Staatstoezicht op de Mijnen or production of this Dutch gas by matching the SodM) concluded in 2013 that the earthquake risk in contract conditions to the needs of producers the Groningen Gas Field is greater than previously wherever possible. In addition, GasTerra procures thought. Last year, the Minister of Economic Affairs gas specifically from Norway and Russia. The volume therefore had 14 studies carried out to gain more which GasTerra imports from these countries insight into the cause of earthquakes, the possible comprises only a small part of the export volume of consequences, the possibilities of preventing or the parties involved, Statoil and Gazprom. This reducing the frequency and magnitude of obviously limits the influence of GasTerra. earthquakes, the possibilities of preventing or Nonetheless, our company seeks to promote the reducing the damage caused by the earthquakes responsible extraction of this natural gas, with and the manner in which damage by earthquakes is attention to the environment and safety. Thus dealt with. GasTerra plays a facilitating role in the Project Delta Group, which aims to create opportunities for Dutch GasTerra has participated in several of the Minister’s companies in the production of Russian natural gas. studies. The Minister has since published a decision. The Cabinet decision means that in 2014 and 2015, The long-term contracts between producers and no more than 42.5 billion m3 of natural gas per GasTerra are the basis of our actions. Consequently, annum may be extracted from the Groningen Gas the producers and GasTerra are constantly in Field and in 2016, another 40 billion m3. dialogue to keep the reputation of the gas product Furthermore, at five production sites in the heart of high. Along with that, there is a mutual opportunity the earthquake zone, around Loppersum, extraction to discuss with each other activities being carried has to be reduced by 80 per cent. out by the other which could harm the reputation of gas. GasTerra believes that, despite the announced production limitation, it is capable of meeting its THE GAS ACT contractual commitments. The company will do its GasTerra stimulates the production of Dutch natural utmost to contribute to the successful gas by giving effect to the Gas Act. The Gas Act implementation of the Cabinet decision. states that GasTerra has a public duty to procure gas from the Netherlands’ small gas fields, if so SHALE GAS requested, at reasonable terms and at a payment in Shale gas is natural gas extracted from a dense type conformity with the market. This gives gas producers of rock, such as slate. Shale gas may well lead to an certainty about the sale of the gas and gives them increase in Europe’s natural gas reserves in the an incentive to invest in these small fields. With the future. A lack of social acceptance stands in the way exchange of the ‘Buyer’s Request Regime’ for the of extraction in the Netherlands in the short term. In ‘Seller’s Nomination Regime’, GasTerra expects to September 2013, the Minister of Economic Affairs promote production from small fields even further. announced that for the time being, the government abandoned making a decision on conducting any test drilling. First he wishes to explore all possible locations for test drilling, in order to get more 4 / 4 GASTERRA ENERGY SUPPLY
insight into the locations where potential test drilling institutes and the Dutch business world joined forces could be carried out most responsibly. Given the as part of this consortium. CEO Gertjan Lankhorst potentially large economic value of shale gas, has a seat on the consortium on behalf of GasTerra. GasTerra is an advocate of thorough research into Inter alia, PDG shares ‘best practices’ in the field of the possibilities of extracting shale gas. Social sustainable gas extraction with the Russian natural support and safe extraction techniques are gas company Gazprom. In doing this, PDG, and thus preconditions for potential extraction. also GasTerra, are making a contribution to the responsible extraction of natural gas. In 2013, PDG PROJECT DELTA GROUP also organised a trade mission to Russia. GasTerra GasTerra plays a facilitating role in the Project Delta was one of the parties that travelled along to Russia. Group (PDG) public-private partnership. The Dutch During the mission, stable, long-term commercial Ministry of Economic Affairs, Dutch knowledge relationships were discussed.
RESPONSIBLE USAGE
GasTerra’s mission is to maximise the value of Dutch vocational college and university level. Furthermore, natural gas. In doing so, we not only look at the efficient, innovative energy technologies can price, but we would also wish to maximise the value contribute to a more efficient use of natural gas. by using the gas as efficiently as possible. Inter alia, With knowledge, projects and financial support, we give effect to this by supporting initiatives that GasTerra contributes towards the development and contribute to the efficient use of gas. In addition, we introduction of these technologies. support customers with sustainable initiatives. SUPPORTING CUSTOMERS EFFICIENT USE GasTerra supports industrial customers in improving Broadening and deepening knowledge about energy their energy efficiency, reducing their emission levels plays an important role in the efficient use of and making their production processes more energy. It helps to make responsible choices about sustainable through projects in the context of the energy issues now and in the future, based on Environmental Plan for Industry (EPI). In addition, factual knowledge. The stakeholder analysis that GasTerra helps customers wishing to use sustainable GasTerra conducted in 2013 brought to the fore that energy by developing products that fit in with the stakeholders would like to see GasTerra play a customer’s demand for energy in conjunction with significant role in spreading knowledge. We give this sustainable production. effect by supporting such initiatives in the field of knowledge transfer such as the Energy Academy Europe, which runs educational courses in energy at 1 / 6 GASTERRA LEGISLATION AND REGULATIONS AND COMPLIANCE
LEGISLATION AND REGULATIONS AND COMPLIANCE
FREE MARKET OPERATIONS AND REGULATION: GASTERRA’S VISION
The energy markets, at outset frequently organised GasTerra is an advocate of a free energy market and nationally under the guiding influence of the stands behind regulation that encourages trade. Government, are and are increasingly becoming However, excessive regulation is at odds with free liberalised and harmonised within the European market operations. It is necessary to strike a balance Union, with the Netherlands being no exception. here.
EUROPEAN TRANSMISSION NETWORK CODES
Within the European Union, hard work is underway transmission system operator, GTS, has implemented to promote cross-border gas trade, inter alia by the new rules ahead of schedule (as from 1 January harmonising access to international transmission 2014). systems. To accomplish this, the European regulators and transmission companies are working on new CONGESTION AT INTERCONNECTION POINTS regulations: the so-called European network codes. Parties must pre-book the transmission capacity they The European Commission establishes these codes. anticipate using with transmission system operators. In 2013, several steps were taken in this field. It Sometimes one party will have a shortage of booked looks as if the new network codes for the gas capacity whereas other parties are not making full market will be implemented in the Netherlands in use of their booked capacity. The Congestion 2014. Notwithstanding all efforts, it seems the Management Procedures (CMP) Guidelines are ambitious objective of the European Union to intended to resolve these contractual congestion function as a single European energy market by problems at interconnection points (which, in the 2014 will unfortunately not be achieved. Netherlands, correspond with border points). The CMP entered into force on 1 October 2013. When TRANSMISSION CAPACITY ALLOCATION carrying out these regulations, European Member In 2013, the European Commission adopted the States can opt to restrict renomination (the so-called Network Code on Capacity Allocation Mechanism short-term ‘use-it-or-lose-it’) and/or a transfer and (CAM). Based on these network codes, entry and repurchase arrangement. The Dutch regulator ACM exit transmission capacity is offered at auction via and GTS have chosen the latter option. GasTerra the central platform (PRISMA), as a single bundled backs this decision. In practice, this means that at product rather than as two separate products. As a certain border points, GTS can offer more capacity result, the gas can no longer be supplied at the than is technically available, on the assumption that border points, unless the necessary transmission not all parties are simultaneously using the full one capacity is already contracted. The bundling of free hundred per cent of their booked capacity. The capacity is mandatory. ‘Unbundled’ capacity is only system provides a benefit to all users who want to offered if there is a mismatch between the available book capacity, but it is of great importance here for capacity on both sides of the border. The GTS to have a good estimate. This mechanism came transmission system operators must comply with the into operation on 1 January 2014. code by 1 November 2015. The Dutch national 2 / 6 GASTERRA LEGISLATION AND REGULATIONS AND COMPLIANCE
BALANCING day, GTS will directly buy or sell gas on the The network code for balancing has also been (ICE-ENDEX) exchange until the balance in the adopted in the meantime. The balancing system network has been restored. GTS will be bringing used by GTS in the Netherlands fits well with these forward implementation of the regulations to 3 June European regulations. Only a few changes are 2014. needed to comply with the network code. The biggest change is the cancellation of the bid price MISCELLANEOUS ladder (BPL). With the BPL, GTS would make Furthermore, the European regulators and arrangements every day with parties who transmission companies are working, inter alia, on committed themselves, in case of imbalance on new rules for harmonising the methods by which demand from GTS, to supply extra gas or conversely the tariffs are set and on adjustments to the CAM to withdraw gas from the network. From now on, network code which will relate to new capacity. where there is imbalance in the network during the
FINANCIAL REGULATION
Europe is currently revising its financial regulations as the definition of the financial instrument. This a result of the global financial crisis. A sector-specific definition is contained in another directive for the regulation (Regulation in Energy Markets Integrity financial markets, MiFID (Markets in Financial and Transparency, REMIT) had already been adopted Instruments Directive), which is also being revised at in 2011 especially for the energy sector. This includes the present time. It is uncertain whether (part of) a ban on insider trading and market manipulation. GasTerra’s gas supply contracts come under these GasTerra has established a compliance programme regulations. These are contracts concluded on to prevent insider trading and market manipulation. exchanges and broker platforms. Further clarification The regulation also contains a requirement for about this is expected by no later than 12 February market participants to report their deals to the 2014. If these contracts fall within the scope of European regulators. The European Commission is EMIR, GasTerra must apply certain risk mitigation currently working on giving effect to these techniques (such as timely confirmation of deals, regulations. Reporting requirements are expected to portfolio reconciliation). In addition, GasTerra must come into force in the second half of 2014. report relevant deals to Trade Repositories. GasTerra, EMIR (The Regulation on OTC Derivatives, Central like the vast majority of energy companies, believes Counterparties and Trade Repositories – also known that the gas supply contracts are not financial as the European Market Infrastructure Regulation) instruments. came into force in 2012. Whether or not these financial regulations apply to GasTerra depends on
GOVERNANCE
GasTerra B.V. is a private limited company with All shares have been subscribed, fully paid up and registered offices in Groningen, The Netherlands. registered, and can only be transferred by The company was founded on 1 July 2005 when unanimous approval of the Shareholders’ AGM. The N.V. Nederlandse Gasunie was legally split into a shares are held by the State (10%), EBN B.V. (40%), Transmission System Operator (TSO) and a trading Shell Nederland B.V. (25%) and Esso Nederland B.V. company. In doing so, the infrastructure (the gas (25%). No share certificates are issued. pipelines) and all transmission-related activities remained with Gasunie while the newly formed GasTerra is not a listed company, as a result of which GasTerra continued with all gas trading activities. the Corporate Governance Code does not apply to GasTerra B.V.’s authorised share capital is €180 the organisation. However, where possible and million, split into 40,000 shares of €4,500 each. relevant, GasTerra is guided by the principles of the 3 / 6 GASTERRA LEGISLATION AND REGULATIONS AND COMPLIANCE
code and takes the best practice provisions as a Act shall be observed. guide. In this chapter, we report on the appropriate principles of the Code. Supervision of the Board of Directors of GasTerra is exercised by the Supervisory Board. The Supervisory These are to be implemented in the main when it Board consists of eight people, of which one comes to the principles and provisions included position is currently vacant. One member is under the task and manner of working of the Board appointed directly by the Minister of Economic of Directors. The tools that the Board of Directors Affairs, the remaining members are appointed by uses for this consist specifically of the annual activity the Annual General Meeting of Shareholders on the plan, the budget, monthly and quarterly reports and recommendation of the individual shareholders. The the Business Risk Analysis (BRA) tailored to the number of supervisory board memberships that one organisation. The structure and operation of risk person may hold is limited to ensure the proper management at GasTerra is described herein (see performance of the duties. The Supervisory Board also elsewhere in this Annual Report, Chapter has appointed its own secretary, who is supported, Results and the market, containing a description of where necessary, by the Company Secretary. the principal risks). Risk management has been delegated to the line management. Reports are The duty and manner of working of the Supervisory made to the Board of Directors concerning Board are in accordance with the Code set out in its implementation. Via the BRA, the Board of Directors own regulations. By default, the Annual Report reports at least once a year to the Audit Committee. contains a report from the Supervisory Board. A The external auditor assesses the compliance of this (brief) profile of the members of the Supervisory system to the extent relevant in the context of the Board is included in the Annual Report (see audit of the accounts. elsewhere in this Annual Report for this, chapter Society). The provisions relating to the supervision of The Board of Directors of GasTerra consists of a the Board of Directors by the Supervisory Board are Managing Director, nominated on the effected at the regular meetings of the Supervisory recommendation of the Supervisory Board, Board. Furthermore, at least once a year (in the approved by the Minister of Economic Affairs. The absence of the Board of Directors), the Supervisory Managing Director is appointed for an indefinite Board discusses its own performance (and desired period. In addition to the Managing Director, the competencies) as well as that of its individual Board of Directors also consists of three further members and the Board of Directors. Directors / holders of a general power of attorney: the Financial Director, the Commercial Director and The Articles of Association stipulate that decisions the Director of Strategy and Optimisation. The which are important to GasTerra must be approved remuneration of the Managing Director is by the Supervisory Board or the College of Delegate determined by the Supervisory Board and in addition Supervisory Directors. The College of Delegate to a fixed remuneration, it also has a variable Supervisory Directors is a statutory company body. component that is dependent on the performance The College is formed by members of the of the organisation. The Supervisory Board decides Supervisory Board and consists of five supervisory whether the Managing Director is eligible for a directors including the supervisory director who has variable remuneration and the amount thereof. The been appointed by the Minister of Economic Affairs. size of the variable remuneration shall not exceed 30 per cent of the fixed salary. The amount of the The Supervisory Board has established an Audit remuneration of the Managing Director is given Committee. The Audit Committee is a non-statutory elsewhere in the Annual Report (see Chapter Results body composed of four members appointed by the and the market). With regard to the Managing Supervisory Board. The Supervisory Board or the Director, the provisions relating to the maximum College of Delegate Supervisory Directors may refer number of allowable supervisory board matters for the consideration of the Audit memberships in the Management and Supervision Committee. Whether solicited or unsolicited, the 4 / 6 GASTERRA LEGISLATION AND REGULATIONS AND COMPLIANCE
Audit Committee issues advice to the Supervisory publication of the Annual Report, the Annual Board or the College of Delegate Supervisory Accounts and the quarterly reports. Directors on the matters within the remit of the Audit Committee and prepares the decisions of the The Annual General Meeting of Shareholders Supervisory Board in relation to those matters. The appoints the external auditor. It is standard Audit Committee generally meets four times a year, procedure for the Audit Commission to interrogate and did so in 2013. the external auditor with regard to his declaration on the accuracy of the financial statements. The duty and method of working of the Audit Furthermore, the Board of Directors and the Committee are set out in regulations that essentially Supervisory Board report to the Annual General follow best practice provisions mentioned in the Meeting of Shareholders on the independence of Code. Thus, the duties of the Audit Committee the external auditor and an informed include supervision regarding the financing of the recommendation is issued for the appointment of an company, operating expenses and capital external auditor. For this purpose, the Board of expenditures in relation to the agreed budgets, the Directors and the Supervisory Board regularly, but at provision of financial information, the operation of least once every four years, undertake a thorough the internal risk management and control systems, assessment of the functioning of the external compliance with recommendations and observations auditor. KPMG has been appointed to do the audit of internal and external auditors, the role and up to and including the year 2014. The (re) functioning of the internal audit department, and appointment of the external auditor is on the maintaining the relationship with the external agenda of a regular AGM. auditor. Matters covered in particular by this latter topic are the independence of the auditor, In connection with the audit of the financial remuneration and the potential provision of work statements, the external auditor is involved in the that is not audit-related. Internal Audits working plan. Findings concerning the internal audit function are included where The (system of) remuneration of the Supervisory necessary in the external auditor’s Management Board has been approved by the Annual General Letter. The Management Letter is discussed at a Meeting of Shareholders (AGM). The total amount meeting of the Supervisory Board. The external of remuneration of the Supervisory Board is stated in auditor reports anything he wishes to bring to the the Annual Report. attention of the Board of Directors and the Supervisory Board in relation to his audit of the With regard to the powers of the Shareholders, the financial statements and the related verifications. Articles of Association stipulate that decisions of This gives effect to the provisions pertaining to the Shareholders may only be taken by a majority of principle in the Code on the relationship and three-fourths of the votes cast. For a number of communication of the external auditor with the decisions, in particular the transfer of shares, company’s organs. suspension or dismissal of the Managing Director, amendment of the Articles of Association and CSR AND GOVERNANCE dissolution of the Company, unanimity is required. CSR is an integral part of the strategy at GasTerra and has thus been embedded into our day-to-day As regards disclosure of information to shareholders operations. Since 2013, GasTerra has integrated the and the potential impact on the share price, it must CSR matrix and associated objectives and activities be noted that the ‘GasTerra share’ is not traded on into the Business Plan which is approved by the the financial markets. Supervisory Board, the governance body with the highest degree of responsibility. Monitoring of With regard to financial reporting, several times a progress is included in the regular reporting cycle. year (at regular meetings), the Supervisory Board, The quarterly reports are discussed by the College of the College of Delegate Supervisory Directors and Delegate Supervisory Directors, the Advisory the Audit Committee supervise compliance with the Committee of Shareholders and the Audit internal procedures relating to the preparation and Committee. 5 / 6 GASTERRA LEGISLATION AND REGULATIONS AND COMPLIANCE
INTERNAL CODES OF CONDUCT AND PROCEDURES
GasTerra maintains a code of conduct laid down by ANCILLARY ACTIVITY REGULATION the Board of Directors. It includes the standards GasTerra appreciates it when, alongside their work, intended to promote and safeguard the quality and staff are socially active. The ancillary activity integrity of the staff’s actions. These standards are regulation prevents conflicts of interest from arising. based on two values: integrity and respect. All GasTerra staff subscribe to the code of conduct on ANTI-BRIBERY AND ANTI-CORRUPTION joining the company. Attention is also regularly PROCEDURE drawn to the code of conduct within the The basic principles for giving and receiving gifts organisation. In addition, we have drawn up various have also been incorporated into the code of supplementary rules and procedures designed to conduct. These principles are set out in a ensure compliance with external legislation and supplementary regulation. This regulation serves as regulations. The most important of these are as the guideline for staff when deciding whether they follows: may give or receive a gift, what sort of gift this may be and how much it may cost. COMPETITION LAW COMPLIANCE The code of conduct explicitly states that staff REMIT COMPLIANCE PROCEDURE adhere to Dutch and European competition European regulations, specifically drawn up for the regulations. In 2009, GasTerra elaborated these energy sector, prohibit market manipulation and regulations into an integrated Competition Law insider trading and stipulate that information which Compliance Programme. A Compliance Officer has might constitute insider information be made public been appointed who is responsible for implementing as quickly as possible. If our organisation has the programme. information that may be regarded as insider information in the sense of the relevant regulations, Forming part of the Compliance Programme is an for all safety’s sake, we immediately cease our annual obligatory compliance course for all staff. trading activities. Only once the information is in the The objective of this is to make staff aware of the public domain, for example, publicised on our importance of the duty to adhere to legislative and website, are trading activities resumed. In 2013, other regulatory requirements applicable to GasTerra placed such a publication on its website GasTerra. The regulations and procedures discussed four times. below are also addressed. During the course, potentially problematic situations are pinpointed and WHISTLEBLOWER SCHEME the staff learn what they ought and ought not to do A whistleblower scheme has been in force at in these situations. The compliance course is offered GasTerra since 2007. Employees who uncover severe several times a year. In 2013, 96% of employees abuses and whose reports fall on deaf ears within took the course. the organisation can report these in confidence to the Chair of the Board of Supervisory Directors. By GasTerra also holds regular internal audits to ensure doing so, they need not be apprehensive about compliance with legislation and regulations. All repercussions or unfair treatment. In 2013, nobody contracts are drawn up on the basis of pre- made use of this scheme. established standards and audited by an account manager, a department manager and the VIOLATIONS AND FINES departments of Legal Affairs and Finance. In In 2013, three fines amounting in total to €2,680 addition, the internal auditor regularly vets each were imposed on the company in connection with department to check on whether they are complying violation of legislation and regulations. These were a with all procedures. Results of all audits are fine imposed by the Employee Insurance Agency discussed with the auditor and the Audit Committee. UWV (Uitvoeringsinstituut Werknemersverzekeringen) for overdue reporting of sickness and two fines imposed by the tax authorities for late submission of tax returns. 6 / 6 GASTERRA LEGISLATION AND REGULATIONS AND COMPLIANCE
There have been no reports of staff who have not adaptations will be needed to meet the coming complied with the code of conduct and/or changes in European financial regulations, such as supplementary procedures. the introduction of the MiFID and the EMIR. It is also anticipated that a further elaboration of the REMIT GasTerra continually assesses whether the code of Compliance procedure will be needed, based on conduct and procedures need to be adapted or experience gained. supplemented. We anticipate that in the future
MONITORING BY MARKET REGULATORS
Market regulators maintain market rules and ensure competition law is enforced by the European a proper and fair operation of the market. In the Commission (EC). In addition, the ACER (Agency for Netherlands, this task is assigned to the Authority the Cooperation of Energy Regulators) monitors the for Consumers and Markets (ACM; previously the gas market on behalf of Europe. GasTerra attaches Dutch Competition Authority – Nederlandse great value to maintaining an open and businesslike Mededingingsautoriteit or NMa). European working relationship with the market regulators. 1 / 8 GASTERRA ENERGY TRANSITION
ENERGY TRANSITION
GASTERRA’S VISION
GasTerra attaches great importance to making the From this, ‘knowledge about energy’ and ‘the role supply of energy sustainable. We strive to make the of gas in the system’ emerged as the priorities. We transition to a sustainable energy supply (energy see the Energy Academy Europe (EAE), and in transition) responsibly - that is to say, to have it particular the Energy Transition Centre (EnTranCe) proceed with an eye for both ecological and which is a part of the EAE, as the tool for working economic interests. Broadening and deepening on these priorities. In 2013, GasTerra invested knowledge about energy and further optimising the approximately €3.6 million in know-how and role of gas in the system are indispensable to this. innovation. With this budget, and all the ensuing GasTerra thus encourages this as much as possible. initiatives mentioned in this chapter, GasTerra is We apply this in our own operations as well, but giving effect to the Green two main objectives of given our limited footprint, our impact is low. the CSR matrix. In the past year, GasTerra has worked on reformulating its own vision on energy transition, and the role that GasTerra can play in that transition.
BROADENING AND DEEPENING KNOWLEDGE
Broadening and deepening knowledge cooperating in the development of teaching packets Many people take energy for granted. Little is said for primary and secondary education. Finally, we are about it and when it comes to sustainability, also trying to broaden and deepen knowledge emotion often seems to have the upper hand. among policy makers, decision makers and other Whereas accurate knowledge of matters is of great stakeholders. Development of knowledge and importance in order to be able to make the right education is primarily via the Energy Academy decisions in the area of sustainability. GasTerra wants Europe and EnTranCe; the further development and to help broaden and deepen knowledge in the field application of the ETM (Energy Transition Model), for of energy, and to support education in this area. Our example, is also focused on this. In addition, there ambition is to provide more information - and above are activities that are tailored to specific target all honest and factual information - so as to focus groups such as Energy Challenges for students and more attention on the issue of energy as well. To Energy Podium Dinners for decision makers. achieve this, in 2013, GasTerra has made a contribution through 12 initiatives in the field of THE ROLE OF GAS IN THE SYSTEM knowledge and education that fit within our policy. The energy transition is a long-term process. The GasTerra is striving to equal this effort in 2014. Both demand for energy and the supply of alternative in 2013 and 2014, GasTerra’s investment in the energy resources are not linked up with each other Energy Academy Europe (EAE) has been playing an and storage of electricity is still relatively difficult and important role in this. With its contribution to the expensive. Natural gas, as the cleanest of the fossil Energy Academy Europe, GasTerra is supporting fuels is therefore indispensable for the time being if research and contributing to the development of we wish to secure energy supplies, keep them teaching materials, from vocational education to affordable and also restrict CO2 emission levels. postgraduate education. In addition, we are New gases such as hydrogen - obtained, inter alia, 2 / 8 GASTERRA ENERGY TRANSITION
from wind and solar energy and biogas, may development, GasTerra therefore supports research eventually quite possibly supplement or even replace into the development and use of new gas natural gas. Therefore GasTerra wishes to have gas applications at EnTranCe, the ‘testing ground’ of the play a sustainable supporting role in the energy Energy Academy Europe, and derivative projects. transition by cooperating on further optimisation of Examples include: system integration with fuel cells, the role of gas in the system. New, smart (gas) hybrid boilers, storage of hydrogen in natural gas, technologies are indispensable in this. Combined fermentation of biomass. with the ambitions in the field of knowledge
OVERVIEW OF KNOWLEDGE AND EDUCATION PROJECTS
ENERGY TRANSITION MODEL The EAE has an ‘energy testing ground’ called GasTerra is the main sponsor of the Energy Transition EnTranCe (Energy Transition Centre). This is where Model (ETM) developed by Quintel Intelligence. This innovative projects and applications which are model allows the effects of energy-related choices needed for the energy transition and which interface to be visualised. The model was used in 2013 in with gas, are developed and tested. In 2013, establishing the Energy Agreement for sustainable EnTranCe has been increasingly taking shape; thus in growth. The ETM is accessible online via 2013, eight fuel cells, a hybrid central heating boiler www.energietransitiemodel.nl. Meanwhile, a 3D (small electric heat pump combined with a high model of the ETM has also been developed. Just like efficiency combi-boiler), two mini-CHPs based on a the other versions of the ETM, this model will be gas turbine and a low-cost new generation of solar used for education. boilers were installed there to be tested and monitored. Also at EnTranCe, the extent to which ENERGY ACADEMY EUROPE verge cuttings can be used as biomass for the GasTerra actively contributes to the EAE (Energy production of green gas is being researched. In the Academy Europe). In doing so, we work very closely context of the ambition to develop the EAE into an with the University of Groningen, the Hanze international educational institution, in 2013, University of Applied Sciences Groningen and the GasTerra along with the other parties together paid Energy Valley Foundation. The EAE offers vocational a visit to Brussels in order to bring EnTranCe to the college and graduate courses in the fields of energy, attention of the politicians there. and also invests in research and innovation. This follows on from GasTerra’s objective to broaden and ENERGY PODIUM DINNERS deepen knowledge about energy and the energy In 2013, for the second year in a row, GasTerra issue. organised 12 energy podium dinners at various places in the country. During these dinners, the main The EAE opened its doors in September 2012 topics on energy and energy transition were admitting 300 students. The aim is to expand this discussed. At each dinner, a keynote speaker at CEO number in ten years’ time to 3,000 students at level gave an introduction to a select group of vocational college and university level, inter alia by people at the top of journalism, politics, social interesting overseas students. The EAE is also organisations, the business community, science and working through Energy College on programmes in the energy world. Based on the energy transition which vocational students at secondary school level model, the attendees discussed a preselected energy can participate. The EAE aims to become the theme. This cross-sector approach provides a new pre-eminent international institute of education for view of the opportunities and bottlenecks for clean, energy-related studies, an internationally respected economical and reliable energy provision. ‘centre of excellence’. 3 / 8 GASTERRA ENERGY TRANSITION
DUURZAME DINSDAG (SUSTAINABLE TUESDAY) showcasing green efforts. In 2013, the Energy Valley The Duurzame Dinsdag initiative is demanding Topclub added EnTranCe, the ‘testing ground’ for attention for innovative sustainable ideas from the energy transition and part of the Energy society at large that contribute towards making the Academy Europe in Groningen, as one of its Netherlands more sustainable. Duurzame Dinsdag projects. GasTerra is on the board of the Energy gives politicians an indication of what is needed in Valley Topclub and in 2013 contributed financially to legislation and regulation to be able to innovate and this foundation. operate sustainably. On Tuesday, 3 September, Secretary of State Wilma Mansveld accepted the YOUNG ENERGY VALLEY Duurzame Dinsdag suitcase on behalf of the Young Energy Valley is a foundation for young Cabinet. This suitcase was filled with over 300 professionals from the Dutch energy industry. sustainable initiatives of enterprises, organisations Participating organisations are, inter alia, Gasunie, and citizens. GasTerra is a sponsor of Duurzame NAM, DNV Kema, EDI, Eneco and Essent. Dinsdag and within this initiative bestows the Knowledge sharing and networking are key priorities GasTerra Energy Prize. In 2013, this prize was won by of the foundation. On behalf of GasTerra, two young Mr Joop de Kock with his project RestNRG. This professionals are sitting on the board of Young project investigates the possibilities for converting Energy Valley. In addition, GasTerra also contributes low-grade heat into electricity. GasTerra put Mr De financially to this foundation. Kock into contact with EnTranCe, the ‘testing ground’ for the energy transition and part of the On Wednesday, 6 March 2013, Young Energy Valley Energy Academy Europe in Groningen. organised a meeting at GasTerra about the Energy Agreement for sustainable growth. The Chair of the ETM STUDENT MEETINGS Social Economic Council (SER), Wiebe Draijer, gave In December 2013, the kick-off took place for a an explanation of the Energy Agreement, the parties series of meetings with students and young involved and the issues that will be playing a role in graduates. During these meetings, the Energy energy policy in the coming decades. The young Transition Model (ETM) is the focus. Based on the professionals were challenged to express their views energy choices and the impact of these choices, and their innovative ideas for the Energy Agreement. which can be visualised via the ETM, discussions on They subsequently processed these after the the energy transition will occur. The meetings are meeting and incorporated them into a proposal that organised by Yes-DC. This party was the winner of was submitted to the SER on Friday, 15 March. the 2012 GasTerra Energy Prize, part of Duurzame Ultimately, the results of this were also reflected in Dinsdag. the final Energy Agreement for sustainable growth.
ENERGY VALLEY TOPCLUB GASTERRA ANNUAL TRANSITION PRIZE The Energy Valley Topclub is a collaboration In 2013, for the fifth time, the GasTerra Annual between BAM, GasTerra, Gasunie, Groningen Transition Prize was awarded. This annual prize (with Seaports, Imtech and RWE. These parties see a role €100,000 in prize money) is intended to challenge for the four top level sport clubs in Groningen (FC students in vocational colleges to come up with Groningen, GasTerra Flames, Abiant/Lycurgus and creative ideas in the field of the transition to a Nic./Alfa-college) to involve young people in the sustainable energy supply. In the first four years, energy issue. The Topclub has taken two major students were asked to come up with their own projects under its wing: Energy Challenges and ideas; in 2013, this was supplemented by issues from CleanCampagne. Energy Challenges is a competition the business community. The first prize was won by in which schools compete against each other to students of Saxion, who devised a conversion achieve the most energy savings. In 2013, 10 schools system for central heating radiators. With this participated; in 2014, it is expected that more than system, the heat output of a radiator is significantly 50 schools will participate. The CleanCampagne increased and the temperature of the heating water project inspires SMEs who are supporters of the can be reduced. This increases the efficiency of a sports clubs to become more sustainable, by boiler. This also results in the radiators being made bringing together supply and demand and by suitable for e.g. heat pumps. 4 / 8 GASTERRA ENERGY TRANSITION
GREEN DREAM DISTRICT The eye-catcher of the project is a travelling In 2013, GasTerra also sponsored the children’s TV laboratory with adjoining lecture room; a lorry with programme Green Dream District. In Green Dream a twenty metre long trailer, equipped with iPads, District, children aged 8 to 14 present their ‘most solar panels and an extendable windmill. Among sustainable invention of the year’. Since 2012, the other things, this trailer will use the Energy Transition programme no longer appears on National Model. In 2013, the trailer has called at over 150 Geographic, but on Disney XD, in order to connect secondary schools. With that, the goal set in 2013 better with the target group. This year, the first prize to visit 100 schools has been easily met. was awarded to the design of a toothbrush equipped with a mechanical winding system, so that WATT NU? (WATT NOW?) no electricity is needed. In 2013, as was the case in 2012, GasTerra contributed to the TV programme ‘Watt Nu?’, both INFOVERSUM financially and in terms of content. In this In the Ebbingekwartier in Groningen, the so-called programme, well-known and less well-known Infoversum is currently under construction. experts discuss the sustainable energy future of the Infoversum will build bridges between art, culture, Netherlands based on the Energy Transition Model. science and business. There will be films, exhibitions, In 2013, ‘Watt Nu?’ was broadcast 12 times on RTL lectures, concerts and conferences. GasTerra is one 7 and 60 times on RTL Z. In addition, RTL repeated a of the ‘founding fathers’ of the Infoversum. total of 56 broadcasts. The discussions were led by presenter Joris Putman. Alliander and Shell were also JOUW ENERGIE VAN MORGEN (YOUR ENERGY involved in this programme as co-sponsors. FOR TOMORROW) With the ‘Jouw Energie van Morgen’ project, the University of Groningen and GasTerra hope to interest students in senior general secondary education and pre-university education in courses that are offered by the Energy Academy Europe.
OVERVIEW OF INNOVATION PROJECTS
FUEL CELLS In 2013, preparations were made, in cooperation After the first positive results of a field test, GasTerra with transmission system operator Alliander, to put wants to test fuel cells on a somewhat wider scale ten fuel cells into homes in Heerhugowaard in early and in various built environments. This form of 2014. For this project, in which the fuel cells are micro-CHP is capable of converting natural gas into linked to the output of solar panels, experiments electricity with a very high efficiency. Until mid- were carried out in the EnTranCe ‘energy testing 2014, the Kiwa (gas) research institute in Apeldoorn ground’ of the Energy Academy Europe with new will carry out research commissioned by GasTerra ‘stacks’, with which the fuel cell can react (be into this type of fuel cell. The aim of the research is balanced) in response to the varying electricity to determine which fuel cells are best suited to be demand. In Heerhugowaard, the balancing of the placed in Dutch built environments. Fuel cells are electricity demand will take place in the homes. In being sent to Apeldoorn from all over the world and 2013, a start was also made to the roll-out of 45 adapted there for use with gas from the Groningen fuel cells on Ameland. These fuel cells are linked to Gas Field. The fuel cells will then be tested for the power grid, to which a solar farm is also efficiency and emissions. If the fuel cell seems to be connected. In contrast to the project in suitable for use in Dutch homes, then the cell will be Heerhugowaard, the balancing with the fuel cells subjected to longevity trials. If these trials prove here takes place on a sort of neighbourhood level. positive, then a practical test in a home will follow. The project on Ameland started in the last quarter of 2013. 5 / 8 GASTERRA ENERGY TRANSITION
HIGH-EFFICIENCY ECO BOILER ON GREEN GAS existing cogeneration systems with similar power The province of Gelderland announced in late 2012 output. that it was providing a subsidy of €10 million for 10,000 high-efficiency eco boilers that are fed with RESEARCH INTO COMPACT COMBUSTION green gas. The province asked GasTerra at the time ENGINE to join in thinking of the process of subsidising In Japan, a combustion engine has been developed high-efficiency eco boilers. GasTerra introduced the that is optimised for natural gas and because of its possibility of using green gas for that part of the gas structure is particularly low-noise and vibration-free. consumption of the high-efficiency eco boiler which This makes the engine suitable for placement as is responsible for the production of electricity. This micro-CHP inside a home. The engine can be applied involves an average additional gas consumption of as a so-called ‘add-on’ unit as a micro-CHP in an approximately 200 m3 per annum, with which an existing heating system. GasTerra has obtained a annual electricity production of 2,000 KWh is patent on the integration (in terms of hydraulics and achieved. In early 2014, the subsidy for the control engineering) of a micro-CHP in a heating high-efficiency eco boiler will become available. system. After the engine has obtained CE marking, it GasTerra will procure green gas for this project and will be tested for further research before a small assign the corresponding certificates to the amount field test, possibly in early 2015, is set up. of green gas needed for the high-efficiency eco boilers, for a period of ten years. In total, through ROADSIDE VERGE CUTTINGS FOR GREEN GAS the contribution of GasTerra, the high-efficiency eco Through the Green Gas Netherlands Foundation, boilers will be supplying around 200 GWh of GasTerra is involved in the development, renewable electricity. demonstration and promotion of the use of green gas. In cooperation with Energy Valley and the PARTICIPATION IN GGNL (GREEN GAS research and consulting firm Proces Groningen, in NETHERLANDS FOUNDATION) 2012, GasTerra conducted research into the GasTerra is one of the ‘founding fathers’ of Stichting fermentation potential for verge cuttings. It turns Groen Gas Nederland (GGNL), the Green Gas out that verge cuttings are ideal to serve as biomass Netherlands Foundation. GGNL is an independent for the production of green gas. In cooperation with national foundation dedicated to accelerating the Proces, in 2013, a follow-up study was started at development of the green gas market and to EnTranCe. For this purpose, a small fermenter was increase the production of green gas. To this end, placed at EnTranCe. In early 2014, a larger fermenter the foundation cooperates with various partners, will be standing at EnTranCe. such as farmers, the waste sector, the food, drinks and tobacco industry, energy companies, FLEXINET/IBALANCE RESEARCH transmission system operators, project developers, GasTerra wishes to gain insight into the potential for banks and public authorities. In 2013, as in previous using gas to balance the electricity network. years, GGNL has dedicated itself to removing GasTerra is therefore cooperating in the iBalance and bottlenecks in the green gas market. Flexinet projects by making fuel cells and expertise available. Both projects should increase the further APPLICATION OF CHP ON A (STEAM) BOILER development of knowledge about making the The Dutch company Innecs has developed a gas energy infrastructure more flexible and sustainable. turbine module, called PowerBurner, which can be At EnTranCe, in 2013, the necessary experiments placed on an existing (steam) boiler so that it can be were conducted with eight fuel cells, specifically to converted into a cogeneration plant. GasTerra is gain insight into the reaction speed of these cells. In supporting the development of this PowerBurner. In addition, tests are being done with storing the heat 2013, the development was continued successfully. released when fuel cells are used. The hunt is now on for the opportunity to test the PowerBurner in practice. The PowerBurner by Innecs GAS AND SUN increases the chances of growth of Dutch The role of natural gas in new housing cogeneration facilities; specifically, the system is neighbourhoods is under pressure. With some considerably more compact and cheaper than the regularity, new neighbourhoods are being built 6 / 8 GASTERRA ENERGY TRANSITION
without gas infrastructure. One of the reasons for the EPC will be 0.0. The research indicated that a the construction of these so-called ‘all-electric’ high-efficiency combi-boiler in combination with neighbourhoods is the future tightening of both a solar boiler and photovoltaic panels provides requirements for new construction. Homes with a robust solution for homes with an EPC of 0.0. At high-efficiency combi-boilers would not be able to EnTranCe, in cooperation with the company meet these requirements. Research commissioned Grunneger Power, a testing facility was set up in by Gasunie, Shell and GasTerra was carried out into 2013, where the combination of a solar boiler the role of gas in further reduction of the Energy system and a high-efficiency combi-boiler is Performance Coefficient (EPC). The current EPC for currently being tested and further optimised. new construction is 0.6. It is expected that by 2020,
ENVIRONMENTAL PLAN FOR INDUSTRY
A third leg of GasTerra’s efforts from the Energy A big EPI project in 2013 was for a collective of Transition Department is the Environmental Plan for brickworks. Via research institute DNV-GL (formerly Industry (EPI) (Milieuplan Industrie or MPI). DNV Kema), the issue of how the use of gas burners could be further optimised was investigated. The With EPI projects, GasTerra supports industrial tests showed that significant savings might be customers in the improvement of energy efficiency, possible with improved process control. Ultimately, the reduction of emissions and the sustainability of in 2013, six projects were carried out, with which their operational processes. We call in a technical we exceeded the target to perform five EPI projects consultant who, in consultation with the customer, for industrial clients in 2013. For 2014, there are looks at the opportunities in these areas. already two projects planned.
GREEN GAS
In 2011, GasTerra signed a Green Gas Green Deal the certificates issued by Vertogas on the production (G3D), together with several market operators, of green gas. The gas and the certificates were public authorities, institutions of knowledge and subsequently sold to biofuel producers BioMCN. other organisations. When doing so, GasTerra promised to dedicate itself in the coming years to NEW CONTRACTS accommodate the entire volume of biogas that can GasTerra had as its target in 2013 to conclude at be fed into the network of the national transmission least three new green gas contracts. To this end, we system operator, provided the green gas is certified approached almost all parties who had been given by way of a system of certification and its price is an SDE order in 2010, 2011 and 2012 for the competitive. production of substantial amounts of green gas. (SDE stands for Stimulation of Sustainable Energy Just as in 2012, in 2013, GasTerra inter alia gave Production – Stimulering Duurzame effect to the G3D by purchasing the production of a Energieproductie). Only in a few cases were the SDE number of green gas production facilities belonging allocations converted into actual green gas projects. to Suikerunie (9.3 million m3), HVC (3.1 million m3) Notwithstanding the limited number of new and Greenchoice (7.8 million m3). In so doing, for production projects in the Netherlands, in 2013 HVC and Greenchoice, GasTerra absorbs the GasTerra was yet again able to conclude or extend variations in the green gas production into its own some contracts, including the purchase of green gas portfolio, and then resupplies it to HVC and from three new green gas facilities under two new Greenchoice in the profile that both parties desire. contracts. Two facilities will together produce From Suikerunie, GasTerra purchased gas, including approximately 17 million m3 of green gas on an 7 / 8 GASTERRA ENERGY TRANSITION
annual basis, with the first production expected in underground. GasTerra considers it important that 2014. With the production of green gas in this the green gas purchased is produced in a project, a new type of fermenter will be used, with a demonstrably sustainable way. Therefore, included higher efficiency than usual. The third facility, about in this agreement inter alia is a condition that the 23 million m3, likewise uses a new innovative biomass used for the production of the green gas technology, whereby biomass is converted into must meet the requirements set for the NTA 8080 biogas under high temperature and pressure mark of quality.
FOOTPRINT OF GAS
GasTerra buys the vast majority of its gas from Dutch with the highest international standards and is sources. It is the exclusive buyer of the Groningen transmitted over short distances. gas produced by the NAM. In addition, the company has a legal obligation to take gas from the Dutch A small part of GasTerra’s purchasing volume comes small fields if producers offer it. This situation limits from abroad, in particular from Norway and Russia. the influence of GasTerra over the manner in which With its participation in the Project Delta Group and the conditions under which the gas is extracted. (PDG) public-private partnership, GasTerra tries to Within the context of its CSR policies, in 2012, promote a reduction in the footprint of natural gas
GasTerra has conducted studies into the CO2 from the Russian gas company GazProm. PDG does footprint of the gas purchases. From these, it this inter alia by sharing best practices. emerged that Dutch gas is extracted in accordance
FOOTPRINT OF OPERATIONS
The move to the new office premises in February TRAVEL 2013 has led to substantial energy savings. The The new GasTerra office is situated right next to the installation of solar panels, triple glazing, thermal Central Station of Groningen and has only 15 storage and LED screens has ensured that the parking spaces. The goal was to have more staff building has gone from energy efficiency rating G to travel by public transport so as to reduce the A+, the second highest level. In 2012, in the building ‘footprint’ in this way. This has succeeded; all at the Rozenburglaan, 6200 GJ of primary energy employees are now coming to work (sometimes were used. In the building on the Stationsweg, in partially) by bicycle, on foot or by public transport, 2013, 4600 GJ were used. as the result of which the car mileage has dropped. After moving, a lot of equipment that was not yet Also in order to reduce some of the business working optimally, needed to be adjusted. Partly mileage, we offer public transport cards and we because of that, consumption was higher than have purchased six electric bicycles. estimated. We anticipate that the energy In 2013, GasTerra compensated the CO2 emissions consumption of GasTerra in the coming year will be from staff business travel by car via the Climate lower than in 2013. In this context, it is important Neutral Group. The CO2 emissions from business air that employees deal with energy in the building travel were compensated via the travel management attentively. We therefore constantly call attention to company ATP.nl. this subject. 8 / 8 GASTERRA ENERGY TRANSITION
PROCUREMENT OF GENERAL AND TECHNICAL SUPPORT GOODS AND SERVICES When purchasing goods and services attention is In 2013, the purchasing turnover amounted to €35 paid – in addition to price and quality – to CSR million. GasTerra’s goal is to reduce the purchasing issues. Whether it comes to choosing the caterer turnover in 2014 by one million by constantly paying and cleaning service or to saving on paper and ink attention to efficiency in the procurement process. cartridges as a result of ‘paperless’ operations. CSR is an important pillar of our purchasing policy. 1 / 9 GASTERRA SOCIETY
SOCIETY
GASTERRA’S VISION
GasTerra wants to make a meaningful contribution so that they also remain attractive for the labour to society. We do that through buying and selling market. In addition, employees can change job roles natural gas, our core business, but we also think it internally, and secondment outside GasTerra is important to actively participate in society. Indeed, possible. we let ourselves be guided by the three fundamental CSR principles: People, Planet, Profit, which we have GRONINGEN translated into ‘Gas, Green and Groningen’. Here, Not only the employees, but also the area in which Groningen stands for People, Green for Planet and GasTerra is established is part of the CSR Gas for Profit. GasTerra therefore wants to be a cornerstone ‘people’. Not for nothing did we respected party and employer in Northern Dutch translate this as ‘Groningen’, for while GasTerra is society, and contributes to various social, sporting indeed a big player in the European market, and cultural organisations and initiatives in this nevertheless, since the greatest part of our portfolio region. consists of gas from the Groningen field and our office is established in Groningen, we feel ourselves EMPLOYEES to be primarily a Groningen company. Partly by GasTerra’s mission is to maximise the value of Dutch means of sponsorship, we try to contribute our mite natural gas. Our employees play a very important to Groningen society, and then particularly to the role in this. In a constantly-changing market, it’s social, sporting and cultural life in the city and their job to optimally attune our products and region of Groningen. Besides that, through services to the customer’s needs, in order thus to sponsorship we want to improve awareness of our create a maximal value. This calls for creativity and a name and our image, strengthen the network of commercial and analytical way of thinking. GasTerra business contacts and broaden knowledge about wants to attract good employees and, naturally, to energy and the energy question. be a good employer. GasTerra stimulates and provides facilities for employees to develop Up to now, our sponsorship activities have mainly themselves, irrespective of job role or age. This is been determined on the basis of the applications, reflected in the fact, among other things, that but in the future we want to go about things in a employees are assessed on the basis both of their more proactive manner. In 2014, therefore, we are results and on their personal development. conducting research into Groningen society, in order Probably, the economic recession has led to a to gain more insight into the structure of the limited staff turnover at GasTerra. A good regional sponsoring landscape, and do discover circulation, however, is certainly important for the where there is most need of support. The intention development of the organisation and for a balanced is subsequently to respond to these needs with our distribution of the personnel in terms of age, origin sponsorship policy. and sex. Therefore we stimulate our staff to also look beyond GasTerra if that fits in with their ambitions, and to keep developing themselves, 2 / 9 GASTERRA SOCIETY
CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility (CSR) has been of which we are a part. Based on the results of the embedded into GasTerra’s day-to-day operations. stakeholder dialogue 2013, GasTerra has We have translated the three basic CSR principles – accentuated the previously-formulated main People, Planet and Profit – into three areas of objectives for each of the three G’s (Gas, Green and endeavour of our own: Gas, Green and Groningen. Groningen). These main objectives have been linked, Here, Gas stands for the operating results, Green for through a CSR-matrix, to the so-called material our ambition to bring about a socially-responsible affairs that the stakeholders find important. energy transition, and Groningen for the community The role of natural gas in the natural gas in the of role The Supply chain management chain management Supply h hrn fknowledge sharing of The
CSR matrix mix (environment) energy about energy (society) about energy euiyo delivery Security of (environment) (society)
GAS 1 Develop commercially attractive products
GAS 2 Ensure security of delivery for customers in compliance with the standards in the market and with legislation
GAS 3 Promoting gas as a relevant fuel in the energy mix of the future
GAS 4 Compliance with external legislation and regulations and internal codes of conduct and procedures
GREEN 1 Promoting the efficient use of gas
GREEN 2 Disseminating knowledge about making the energy supply more sustainable, for a better understanding of the role of natural gas in the energy transition
GREEN 3 Promoting sustainable business operations
GRONINGEN 1 Establishing the knowledge base par excellence in Groningen on making the energy supply sustainable
GRONINGEN 2 Having GasTerra actively and visibly participate in the Groningen community 3 / 9 GASTERRA SOCIETY
Since 2013, GasTerra has integrally included the Reporting at G4-level CSR-matrix and the associated activities into the As a company in which the state has a participating Business Plan. As a result, no longer is there a interest, GasTerra wishes to comply with the latest question of separate GasTerra- and CSR policies. The guidelines of the Global Reporting Initiative (GRI) for monitoring of the progress of these aims is thus also sustainability reporting. For the reporting on 2013, included in the regular reporting cycle. the GRI developed the guidelines further, to the fourth generation (G4). G4 gives a good indication CSR BOARD of transparency about topics that the stakeholders The CSR Board, established in 2010, oversees the find important, and contributes to clear, relevant progress and the integration of CSR. The board’s and reliable reporting. In 2013, the CSR Board ultimate aim is to embed CSR so deeply into the examined the kinds of consequences this further organisation that the board becomes superfluous. In development had on the reporting, resulting in GRI 2013, the CSR Board concentrated on three G4-assurance at core level of the Annual Report for important processes: 2013.
Continuous Stakeholder Dialogue Consciousness-raising among Employees GasTerra has integrated its CSR Policy into the Employees play a big role in Corporate Social general conduct of business, but this is not yet Responsibility through their everyday activities. The always clear to all stakeholders. In order to reinforce CSR Board has therefore chosen to point out to the the perception of integration among these employees, in various ways, their own stakeholders, GasTerra no longer wishes to simply responsibilities and the possibilities. In doing so, the consult the stakeholders separately once a year as to board concentrates on concrete matters, such as their view of responsible business conduct. Instead dealing with energy economically, and the of that, we want to have the dialogue linked to the importance of exercise for one’s health - for example regular contacts with stakeholders on a more by using the stairs occasionally, or cycling. continuous basis. The board helps those who maintain these relationships to bring structure into Staff from all levels of the organisation have seats on this continuous dialogue, in order to use the input the board, which is chaired by Chief Financial Officer obtained and to give feedback to the stakeholders. Maurice de Wilde. 4 / 9 GASTERRA SOCIETY
STAFFING LEVELS AND COMPOSITION
In 2013, 200 people worked at GasTerra (186 FTEs).
200 EMPLOYEES
GasTerra workforce 2013
} 29% 71% (57) (143)
AVERAGE AGE 41
Staffing numbers were stable during the year. Of the MANAGEMENT 200 staff, 188 were employees with a permanent GasTerra’s management team consists of four position (134 men and 54 women), 12 colleagues directors, among whom the CEO, and four heads of had a contract for a limited period (9 men and 3 department. women). In 2013, the ICT- and general and technical support services were primarily hired from external sources.
DIRECTORS 4
GasTerra Management Team 2013 1 2 3 4 CEO } 100% (8)
AVERAGE AGE 51 1 2 3 4
OTHER MANAGEMENT TEAM MEMBERS 4 5 / 9 GASTERRA SOCIETY
Two changes took place within the management the organisation as of 1 October. He was succeeded team. Chief Financial Officer Maarten Blacquière by Robert van Rede. Van Rede previously worked as stepped down as of 1 December 2012 and was Sales Manager & Commercial Manager Onshore at succeeded on 15 January 2013 by Maurice de Wilde. the NAM. De Wilde was previously Finance Manager for Shell In 2013, GasTerra’s middle management consisted of in Gabon. Commercial Director Jacob Kielman left 21 persons.
1 2 3 4 5 6 7 8 9 10 GasTerra middle management 2013 }
11 12 13 14 15 16 17 18 19 20 21
AVERAGE AGE 47 19% 81% (4) (17)
COLLECTIVE LABOUR AGREEMENT AND PENSION
On 1 January 2013, the Collective Labour Agreement scheme to an indexed median-salary scheme. of the GasTerra employees expired. In October 2013, GasTerra moreover continues to be affiliated with GasTerra reached agreement with company trade the Stichting Pensioenfonds Gasunie (Gasunie union VPG2 about the new Collective Labour Pension Fund Foundation). At year end 2013, Agreement, for the period 1 January 2013 to Gasunie’s Pension Fund provisional coverage ratio 1 January 2015. In the new Collective Labour was 111.6%. In June 2014, the Board of Directors Agreement, agreements have been made about the will determine the definitive coverage ratio on the rescinding of the existing home loans arrangement basis of the definitive annual results. In 2013, 174 as of 1 January 2015, among other things. employees (87%) were covered by the Collective Furthermore, a new pension scheme is part of the Labour Agreement. Company trade union VPG2 had Collective Labour Agreement, as of 1 January 2014. a high degree of participation, at approximately In this, GasTerra has moved over from a final-salary 85%.
STAFF RECRUITMENT AND EMPLOYEE SATISFACTION
One objective of GasTerra’s personnel policies is to collaborative arrangement of various large establish a gradual turnover of its staff. In doing so, employers in the North of the Netherlands, who we strive for a balanced distribution of men and jointly advertise vacancies on Noorderlink’s website. women, and a good distribution as regards origins. In the process of recruitment, GasTerra makes use, among other things, of Noorderlink, the 6 / 9 GASTERRA SOCIETY
SATISFACTION study, it emerges that GasTerra achieves a score of Every other year, GasTerra conducts an employee 7.4. That is comparable with the scores in recent satisfaction survey. Such a survey took place in 2012, years. The response was somewhat lower than last but in connection with the relocation and the new year (64%). Approximately 50% of the employees way of working that is associated with this (see link think that working in the office has become more to HNW), in October 2013 we once again had an enjoyable, while more than 20% disagree with this. employee satisfaction survey carried out. From this
TRAINING AND CAREER DEVELOPMENT
GasTerra strives for an optimal personal development, we reimburse 90% of the training development of all employees. We encourage costs, provided that the diploma is acquired. employees to develop themselves professionally and to acquire competencies that are (and will continue STAFF TURNOVER to be) relevant to our field of work, irrespective of In 2013, nine people left GasTerra. We may assume job role and age. that the low outflow is connected with the high level of employee satisfaction. The advantage of this EDUCATION low outflow is that knowledge and experience The training budget for the year 2013 amounted to continue to be preserved; the disadvantage, in the more than 400,000 euro; that is: 2.3% of the total long term, is an imbalanced personnel structure. In salaries amount. Within that budget, GasTerra this connection, GasTerra believes that job rotation provides a wide range of individual study schemes. creates development. GasTerra therefore encourages We reimburse in full the costs of training courses employees of the enterprise to change job role and/ that are necessary for the fulfilment of the job role. or department after a certain period. Within the Various employees, for example, pursued a course framework of this rotation policy, secondment of study at the Energy Delta Institute, of which outside the organisation is also possible, and we GasTerra is a joint founder. As regards training encourage employees to look beyond GasTerra, if courses that are not directly connected with the job that fits in with their ambitions. role, but which do benefit the employees’ career
GasTerra staff turnover 2013 9 9 LEFT JOINED
33 4 TRANSFERRED SECONDED INTERNALLY 7 / 9 GASTERRA SOCIETY
HEALTH AND SAFETY
The topics safety and health are regularly discussed obligatory for the lease-car drivers, and approximately at GasTerra (six times in 2013) in the special Works 20 employees who travel many kilometres per year on Council commission SOAP (social, organisation, arbo business are given a driving-skills training course every (working conditions), personnel). other year. By providing information about correct working posture, GasTerra tries to prevent RSI RISK INVENTARISATION AND ASSESSMENT complaints among employees. In view of the GasTerra relocated to new office premises in February relocation, in 2013 all employees were given personal 2013. Shortly after the move, a new Risk advice about the optimal arrangement of the Inventarisation and Assessment Evaluation (RIE) was workplace, and information about what to do in the conducted. The results of this received the event of an evacuation. In addition, we held two endorsement of the Works Council. The most evacuation drills. important risks that were mentioned in the RIE, are: traffic, working in shift teams and work-pressure- ABSENTEEISM related and RSI-type complaints. In order to increase GasTerra strives for low absenteeism, and for no safety in traffic, telephoning in the car during working accidents leading to absenteeism. hours is forbidden to employees, winter tyres are
Absenteeism and accidents at GasTerra in 2013
2 ACCIDENTS
2,2% ABSENTEEISM RATE
In 2013, absenteeism amounted to 2.2%. Thereby, employee fell over in the parking basement of the the absenteeism percentage remained below the new office building. This latter accident resulted in norm of a maximum of 2.5%, but the absenteeism absence from work. In response to this, GasTerra has figure was nevertheless higher than last year (1.4%). taken measures to make access to the building That is because in 2013 there were on average more easier, and thereby safer. The aim for the coming prolonged illnesses. The overwhelming majority of year is to stimulate employees’ awareness of the these were not work-related. GasTerra therefore sees theme safety, by means of presentations and no need to adjust the absenteeism policy. In 2013, messages on the intranet, among other things. two accidents were reported within GasTerra. A cabinet fell against one employee’s leg, and another 8 / 9 GASTERRA SOCIETY
THE NEW BUILDING AND NEW-STYLE WORKING
On 23 January, GasTerra received the keys to its new By means of presentations, messages on the office on Groningen’s Stationsweg. Halfway through intranet, internal publications such as a newsletter, February and at the beginning of March, the move special departmental sessions and visits to other took place, and on 4 April the building was officially organisations that had already moved over to this opened by H.R.H. the Prince of Orange. The move way of working previously, the employees were went off smoothly, partly thanks to the extensive prepared for the changeover as well as possible. preparation. The changeover process passed off remarkably smoothly. By now, it can be said that employees are NEW-STYLE WORKING on the whole satisfied with the new working The layout of the new office building (in fact, environment and most of them make full use of the renovated - it was formerly a bank building) is based flexibility that New-Style Working offers. The open on the principles of so-called New-Style Working: it structure appears to be of benefit to mutual is an open office, in which employees do not have a communication between employees. All objectives permanent workplace or office of their own. They that underlay the move to the new building thus can work here, but also at home or while on the appear to have been fulfilled: better facilitation of road. Flexibility regarding both place and time is, all the work, the promotion of internal communication, in all, the guiding principle. the encouragement of employees to take personal responsibility and the marked improvement in the In the two years preceding the move, GasTerra paid energy efficiency of the existing building by means much attention to explaining New-Style Working. of renovation.
OBJECTIONS, COMPLAINTS AND ABUSES
To deal with potential objections, complaints or scheme. In 2013, no use was made of the whistle- abuses that cannot be resolved within regular blower scheme, no abuses or cases of discrimination interaction between colleagues and managers, were reported, and no-one lodged a complaint with GasTerra implemented a system of confidants, the complaints committee. complaints procedures and a whistle-blower
SPONSORSHIP
GasTerra’s sponsorship activities particularly consist of Raising awareness of our name was initially the most financial support in the Groningen region. In 2013, important aim of GasTerra’s sponsorship policy. From we thus once again sponsored in this way the premier a study conducted in 2012, it emerged that 53% of league basketball club GasTerra Flames, the Swingin’ the respondents were aware of GasTerra: a higher- Groningen jazz festival and the Groninger Museum. than-expected score. In 2014 we shall once more be And yet again, GasTerra was the main sponsor of the conducting a study into awareness of our name. In Prins Claus Conservatorium in 2013. New in 2013 was the coming years, we want to increase awareness of our contribution to the second book about the our name still further, but in particular we want to go Scholtenhuis, the headquarters of the German about this in a more in-depth manner: we want more Sicherheitsdienst (Security Service) in Groningen. And people to start understanding what GasTerra is and this year we also made the GasTerra office available does. The accent is thus shifting from awareness of during the Nacht van Kunst & Wetenschap (Night of our name to awareness of our role. For example, by Art and Science). In 2013 we devoted 1.2 million creating more room for this aspect within our euros to sponsorship. The complete list of all the sponsorship policy. organisations and initiatives that GasTerra supported in 2013 can be downloaded. 9 / 9 GASTERRA SOCIETY
ADVERTISING AND LOBBYING
The campaign ‘I am part of the solution’, which placed in various regional magazines and in the daily GasTerra started in 2011, also continued in 2013. As newspaper Dagblad van het Noorden. The script of part of this campaign, people from various the latest video in the series, in which the Groningen backgrounds explain in videos and advertisements city historian Beno Hofman takes the lead role, was how they in their worlds (sports, music, GasTerra conceived by one of the GasTerra employees. itself) are part of the solution. Their message is linked to GasTerra’s core message: that natural gas We spread the message - that gas in general and as a fossil fuel is not part of the problem but is in GasTerra in particular is part of the solution - to all fact part of the solution, because it forms an our stakeholders, and thus to administrators and the indispensable link in the transition to renewable political world too. Within that framework we are energy supplies. The videos are to be seen on active in The Hague and, primarily via the trade www.iampartofthesolution.nl and GasTerra’s organisation Eurogas, in Brussels. GasTerra is also Youtube channel, and are also shown (in shortened affiliated with the national advocacy group form) on RTV Noord. The advertisements were Vereniging Energie-Nederland.
SER-PACT (SOCIAL ECONOMIC COUNCIL)
On 6 September 2013, more than 40 parties signed CONSEQUENCES OF SER-PACT the SER-pact, including the Cabinet, employers, In the short term, the pact has few direct trades unions and environmental organisations. In consequences for GasTerra as a company, but it does this energy pact, important agreements were made have consequences for the gas market as a whole. concerning far-reaching energy savings, the As regards the energy-saving objectives that have reduction of CO2-emissions and further measures been agreed for the built environment, both gas and towards making Dutch energy consumption electricity consumption in the built environment will sustainable. In the negotiations, GasTerra was decrease. represented by the Vereniging Energie-Nederland. GasTerra applauds the attainment of the SER-pact. The energy pact also has consequences for With this energy pact, there will in the short term be electricity production. The objective of 14% a concrete working plan for attaining in 2020 the sustainably-generated energy in 2020 means that in energy objectives agreed within Europe. As regards 2020 approximately 35% of electricity production attaining the climate objectives after 2020, the must be generated in a sustainable manner (In 2012, parties are particularly striving for a reform of the this was still 12%). In the course of achieving this, European Emission Trading System (ETS). GasTerra effort will be put particularly into wind energy at sea finds that a good strategy, because the ETS makes and decentralised sustainable energy generation, itself felt on the European energy market as a whole, such as solar energy. In conclusion, it was agreed and can reduce CO2-emission efficiently. that 5 of the most inefficient coal-fired power stations in the Netherlands will be closed between 2016 and 2017. The SER-pact pays little attention to the possibilities of cogeneration, or combined heat and power (CHP), in which gas is efficiently used for the generation of electricity and heat. The efficient use of fossil energy is an important condition for a sustainable energy policy. CHP-installations in the Netherlands could make a contribution to this. 1 / 18 GASTERRA EXPLANATORY NOTES TO THE ANNUAL REPORT 2013
EXPLANATORY NOTES TO THE ANNUAL REPORT
This Annual Report is a translation of the original Dutch Annual Report. The Dutch Annual Report is adopted and approved by the General Meeting of shareholders as at 13 February 2014. This translation is for information purposes only and no rights can be derived from its content. The Dutch Annual Report takes precedence.
With the Annual Report, GasTerra aims to inform its In 2013, GasTerra interviewed 27 parties in ten stakeholders about the vision and activities of the different stakeholder categories. Various topics were organisation. For three years, GasTerra has provided reviewed. These topics were subdivided into five information about both the financial and the social themes: results & management, energy transition, elements of the company in a single report. And for compliance, society and supply chain management. good reason. Corporate Social Responsibility (CSR) From the interviews, it emerged that the stakeholders at GasTerra has been embedded in policy and in the find all these themes important, to a greater or lesser day-to-day activities of the employees. Reporting on degree, with relatively small differences in relation to this takes place on the basis of guidelines. each other. In this Annual Report on 2013, GasTerra has therefore chosen to treat these five themes as GasTerra has translated the three basic principles of keynotes. The comprehensive results of the CSR - People, Planet, Profit - into three areas of stakeholders analysis and the translation of the endeavour of its own: Gas, Green and Groningen. analysis into material (important) topics for the Here, Gas stands for optimal company operating Annual Report can be read online. results, Green for the ambition to bring about socially responsible energy transition, and Groningen, for the GLOBAL REPORTING INITIATIVE community of which GasTerra is a part. Our GasTerra issues an Annual Report every year. This stakeholders (interested parties) play an important report addresses the calendar year 2013. The role in the formulation of these areas of attention. previous report was issued on 14 February 2013. In They form a valuable source of information about relation to this reporting period, there were no what society expects of GasTerra. In 2013, a number significant changes in terms of the scope, of stakeholders were asked for their opinion on delineation or measurement methods that were various current topics which are important to applied for the report. Also, there were no GasTerra in the so-called stakeholder dialogue. reformulations of previously-issued information.
GasTerra is presenting the Annual Report for 2013 - This Annual Report was drawn up on the basis of the in entirely digital form, for the first time: a conscious fourth generation guidelines of the Global Reporting choice. By creating an online publication, with a Initiative for sustainability reporting (GRI G4), which clear navigation and search function, we are making was presented in 2013. As compared with the third the information orderly and easily findable for the generation guidelines (GRI G3), in G4 more attention reader. In addition, it offers the possibility of is paid to the material aspects. These are topics that measuring which topics are most read by our are important to the stakeholders and to GasTerra. stakeholders, so that we can draw (further) These topics thus also form the basis for the CSR attention to them in the dialogue. Policy. In this way, G4 contributes to clear, reliable and relevant reporting. GasTerra has, among other STAKEHOLDER DIALOGUE things, consulted its stakeholders in order to Every year, GasTerra conducts a stakeholder determine the material aspects. Additionally, in dialogue, in which various internal and external determining the material aspects we have of course stakeholders are interviewed. Hereby, we map out also taken our own vision into account. the stakeholders’ expectations in respect of the topics which they experience as important. We use With G4, two different levels are employed: core this information in drawing up the company and comprehensive. At the comprehensive level, all objectives in the annual Business Plan, and for indicators concerning the material topics should be determining the content of the Annual Report. reported on; at core level, a single indicator per 2 / 18 GASTERRA EXPLANATORY NOTES TO THE ANNUAL REPORT 2013
material topic should be reported on. More GasTerra also participates annually in the information about this is to be found on the transparency benchmark of the Ministry of Economic GRI website. GasTerra has chosen to report at core Affairs (EZ). The report on 2012 scored 132 points level of GRI G4. KPMG has verified this for the topics out of the maximum achievable 200 points. This is that are related to sustainability. These have been an improvement of 16 points as compared with the marked with ASSURED In the accompanying preceding year. GasTerra strives continually to GRI-index, an overview is provided of the included improve transparency. GRI-indicators.
STAKEHOLDER DIALOGUE
GasTerra places great importance on the opinions of The following four topics were considered, both by its stakeholders. Therefore, in 2013 GasTerra for the the stakeholders and by GasTerra, to be material third time conducted a stakeholder dialogue, in (important): order to gauge social support among its 1. The role of natural gas in the energy mix stakeholders, to expose social concerns and to 2. The sharing of knowledge about energy strengthen the support where possible. 3. Security of delivery 4. Supply chain management
Stakeholder overview
Customers Producers & suppliers Staff
Trade organisations Management & politics
Shareholders Knowledge institutions
Authority for Consumers & Markets NGOs (ACM)
Local residents & Media surrounding area 3 / 18 GASTERRA EXPLANATORY NOTES TO THE ANNUAL REPORT 2013
STAKEHOLDERS CONSULTED stakeholders about their opinions on the content of For the Stakeholder dialogue 2013, GasTerra our policy. We shall adjust the Annual Report and interviewed 27 parties, subdivided into the following the Business Plan to this, if necessary. In 2014, 10 categories: GasTerra will adapt and improve the methodology for conducting the stakeholders analysis. The aim is • Shareholders (4 parties) to have the stakeholder dialogue included in the • Trade organisations (2 parties) regular contacts with stakeholders, and • Groningen / people living in the vicinity (2 parties) consequently to carry it out on a continuous basis. • Clients (3 parties) GasTerra will also use this continuous dialogue in • Knowledge institutions (3 parties) order to explain that for GasTerra, CSR goes further • Suppliers (2 parties) than the ‘greening’ of the organisation. • Market supervisor (1 party) • Employees (5 employees) THEMES • Media (3 parties) In the stakeholder interviews, various topics were • Non-governmental organisations (2 parties) reviewed. And in this context, 5 themes were central: (1) Results/management, (2) Energy This time, GasTerra chose not to approach the Transition, (3) Compliance, (4) Society and (5) Supply stakeholder group government/politics separately chain management. In the Stakeholder dialogue for the stakeholder dialogue. In 2014, GasTerra aims 2012, the first four themes emerged as points of to approach these stakeholders again. With this attention for GasTerra’s CSR Policies. After internal selection of stakeholders, we fulfilled the aim of discussion, the theme ‘Supply chain management’ interviewing at least 10 sufficiently diverse and was added to these, in view of the central role that relevant stakeholders. For the coming years, this theme occupies within CSR. GasTerra will examine whether there are stakeholder groups which do not yet have a voice in the Within each of the five themes, a number of topics dialogue, such as the ‘future generations’. were mentioned about which we consulted the stakeholder groups. These topics concerned both a The stakeholder dialogue 2013 adopted the number of recent developments, such as the recommendations from the stakeholder analysis of earthquakes in Groningen and the Energy Academy 2012, namely: to put the five themes on the agenda Europe (EAE), and general topics that are less bound in the interviews with stakeholders, instead of a to current affairs, such as the financial results and limited list of partial topics. As a result, in the 2013 the role of GasTerra in the security of supply and analysis, more space was created for the provision. stakeholders themselves to introduce topics that they deem important for GasTerra’s CSR Policies. In the coming years, we shall continue to ask the 4 / 18 GASTERRA EXPLANATORY NOTES TO THE ANNUAL REPORT 2013
Stakeholder dialogue 2013 topics subdivided into themes
Topics Themes
GasTerra’s CSR vision 1
Financial results 2
Benefits of natural gas 3 Results & management Energy price developments 4
CSR banking 5
Coal/gas competition 6
Position of gas 7
(more) Sustainable products 8 Energy transition Education (sharing of energy knowledge) 9
Efficient gas applications 10
Security of delivery (short term) 11
Security of supply (long term) 12 Compliance Internal business operations / compliance 13
Transparency 14
Personnel and organisation 15
Sponsorship 16 Society
Energy Academy Europe 17
Sustainable procurement / internal footprint 18
Footprint chain 19
Responsible supply chain management upstream*1 20 Supply chain management
Responsible supply chain management downstream 21
HSE local residents / environment*2 22
*1(inter alia, shale gas) *2(inter alia, earthquakes)
EXPLANATORY NOTES TO THE TOPICS RESULTS/MANAGEMENT So as to give the interviewed stakeholders more of 1) GasTerra’s CSR vision an explanation and in order to prevent differences in GasTerra thinks that the manner in which and the interpretation as regards the content of the topics, context within which company operating results GasTerra clarified the topics (formulated per theme) come about is just as important as the operating in the following way to the stakeholders who were result itself. On the basis of that vision, the to be interviewed. enterprise gives substance to CSR. 5 / 18 GASTERRA EXPLANATORY NOTES TO THE ANNUAL REPORT 2013
2) Financial results ENERGY TRANSITION GasTerra’s core business is the procurement and sale 7) Position of gas of natural gas. GasTerra endeavours to maximise the GasTerra devotes itself to gas advocacy in order thus value of Dutch natural gas. This is expressed in the to reinforce the position of gas in relation to agreements concluded with the customers. competing fuels, and to emphasise the role of gas in the energy transition process. 3) Benefits of natural gas 8) (more) Sustainable products GasTerra makes an important economic social GasTerra actively contributes to making Dutch contribution through the procurement and sale of a energy supply sustainable by offering products that large proportion of the natural gas produced in the fit in with the needs of producers, who also supply Netherlands. The scale of the benefits of natural gas sustainable energy. An example of this is the trading is made known by the government. in green gas.
4) Energy price developments 9) Education (sharing of energy knowledge) Energy prices are an important social theme. These Knowledge and education enable the energy sector prices are determined by the market, by taxes and and society to find answers to current and future by levies. GasTerra principally supplies the wholesale energy-related issues. GasTerra sees it as its duty to market, which in the Netherlands is determined by help spread and deepen this knowledge, and to TTF (Title Transfer Facility) prices. The prices on TTF support educational activities in this area. come about in accordance with the principle of supply and demand. As regards export contracts, 10) Efficient gas applications these are usually renegotiated every three years. The GasTerra supports the development and market basis of such renegotiations differs per contract. introduction of innovative gas applications. With its expertise and financial support, GasTerra actively 5) CSR banking contributes to the development and introduction of Banks play an important role in social intercourse new energy-related technologies. Examples of this and, in their role as investors and product are Fuel Cells and High-Efficiency Eco-Boilers. In developers, can stimulate a sustainable economy. addition, GasTerra, together with the Noordelijke GasTerra, in the choice of a bank (as a provider of Ontwikkelingsmaatschappij, is involved in fuel cell services to GasTerra) should opt for a bank which field tests in Veenkoloniën, Heerhugowaard and on stimulates a sustainable economy. Ameland.
6) Coal/gas competition COMPLIANCE Despite the current developments, natural gas 11) Security of delivery (short term) remains the ultimate transition fuel. Presently, the GasTerra accepts its responsibility of seeing to it European market frequently opts for the use of the that, within contractual limits, its customers have cheaper coal as a fuel for generating electricity. sufficient natural gas at their disposal at all times Gas-fired power stations are consequently deployed during the year. at minimum capacity or sometimes even decommissioned entirely. From an environmental 12) Security of supply (long term) perspective this is undesirable, since the burning of GasTerra ensures that it can meet its (long-term) gas- coal releases much more CO2, making it more supply commitments. difficult to achieve climate objectives. 13) Internal business operations / compliance GasTerra occupies an important position in the gas-trading market. The enterprise has an internal compliance policy, in which it actively sees to it that all employees scrupulously adhere to the regulations relating to competition, such as the cartel 6 / 18 GASTERRA EXPLANATORY NOTES TO THE ANNUAL REPORT 2013
prohibition and the ban on abuse of a dominant possible, among other things by restricting the position, and that they adhere to other regulations consumption of electricity, gas, water and paper as that are applicable to GasTerra. much as possible.
14) Transparency 19) Footprint chain GasTerra wants to communicate as clearly and Within the framework of its CSR policies, GasTerra openly as possible about its activities and has conducted studies into the ‘footprint’ of gas management objectives, without however harming procurement. From these, it emerged that Dutch gas its commercial and other interests (including is extracted in accordance with the highest privacy). international standards and is transported over short distances. Therefore, gas produced in the SOCIETY Netherlands has a smaller ‘footprint’ than gas which 15) Personnel and Organisation Europe imports from other countries. GasTerra deems it important that employees are satisfied with regard to their work and 20) Responsible supply chain management opportunities. So, an employee satisfaction survey is upstream (among other things, shale gas) regularly conducted. GasTerra is striving towards a GasTerra trades in natural gas. Principally, Dutch balanced personnel structure and an equal natural gas, and additionally, natural gas from treatment of every employee. GasTerra invests in Norway and Russia in particular. By supply chain career development. Personal health and safety have management is to be understood: all activities from top priority at GasTerra. extraction to consumption of natural gas. In this, GasTerra is responsible for the trading part. 16) Sponsorship Production companies are responsible for the GasTerra has an extensive sponsorship programme. extraction, network managers for transport, and The largest part of GasTerra’s contribution is users for the consumption. expended on activities and institutions that play an The division of responsibilities in the chain is active role in the Groningen region. In addition, contractually determined, and parties can only point GasTerra also contributes through the sharing of out to each other the fulfilment of contractual knowledge and resources with the local community. commitments. GasTerra refrains from introducing political or social discussions, for example, into the 17) Energy Academy Europe (EAE) contractual relationships that GasTerra has with its The Energy Academy Europe (EAE) in Groningen is a suppliers but also with its customers. leading institution where energy-related education, research and innovation come together. GasTerra, Given the potentially large economic value of shale Energy Valley, the University of Groningen and the gas, GasTerra is an advocate of thorough research Hanze University of Applied Sciences Groningen into the possibilities of extracting shale gas. Social work closely together within the EAE, with the aim support and safe extraction techniques are of giving the Netherlands and Groningen a preconditions for potential extraction. prominent position in the field of energy and sustainable fuels. 21) Responsible supply chain management downstream SUPPLY CHAIN MANAGEMENT GasTerra understands responsible supply chain 18) Sustainable procurement / internal footprint management as the support of customers in the With requests for quotes, GasTerra pays attention resolution of energy issues. not only to price and quality, but also to the “CSR score” of the potential supplier. Depending on the 22) HSE (Health, Safety, Environment) quotation request, specific questions are asked Personal health and safety of employees and service about the company’s CSR Policies. providers has top priority at GasTerra. GasTerra strives to keep the burden on the environment caused by its operations as small as 7 / 18 GASTERRA EXPLANATORY NOTES TO THE ANNUAL REPORT 2013
GENERAL CONCLUSIONS The stakeholders themselves did not introduce any Based on the interviews, GasTerra has allocated a new themes. score per stakeholder to each theme, which • The stakeholders found the theme ‘Energy reflected the degree of importance of the theme. transition’ most important, and in particular the Subsequently, all data were analysed per topics ‘position of gas in the future energy mix’ stakeholder, per stakeholder group and with and ‘education about gas and energy’. reference to the stakeholders as a whole. From this • The theme that came in second place is it emerged that the stakeholders find all five themes ‘Compliance’. In particular, GasTerra’s supposed important and relevant, to a greater or lesser role in guaranteeing the security of delivery was degree, with relatively small differences in relation to deemed of importance. each other. • Within the theme ‘Society’, the materiality of education about energy topics cropped up again, The addition of the theme ‘Supply chain just as it did in the theme ‘Energy Transition’. This management’ was a well-timed choice, in view of was supported by the importance that the fact that this topic emphatically came onto the stakeholders attach to GasTerra’s support of social agenda in 2013. Among other things, the Energy Academy Europe. social turmoil concerning the topics shale gas and • ‘Results & management’ scored lowest. From the the earthquakes in the province of Groningen interviews, it emerged that many stakeholder provided an important focus on the definition and groups still see CSR as the ‘greening’ of the communication of GasTerra’s degree of upstream organisation, and not as the balance within supply chain management responsibility. We saw the business operations of the three elements Green, same interest among stakeholders regarding the Gas and Groningen. theme ‘Supply chain management’ in connection with the procurement of Russian gas, in view of the Within the themes, the topics scored as follows: current social discussions concerning Russia.
Average score by theme in stakeholder dialogue 2013
Very important
Important
Not very important
Unimportant Results & Energy transition Compliance Society Supply chain management management 8 / 18 GASTERRA EXPLANATORY NOTES TO THE ANNUAL REPORT 2013
The Stakeholder dialogue 2013 differed in set-up Knowledge institutions from the preceding years. The quantitative results, From the interviews with knowledge institutions, it consequently, are not comparable one-on-one. emerged that this stakeholder group found the However, it did emerge that the stakeholders think themes ‘Energy transition’ and ‘Compliance’ to be that the themes which were defined as important in the most important, followed by ‘Society’. Within 2012 are still important for GasTerra’s CSR Policies. these themes, ‘Energy Academy Europe’, ‘Position of In addition, just as in 2012, the theme ‘Energy gas’ and ‘Security of supply’ scored highest. transition’ was thought to be the most important for the CSR Policies and social role of GasTerra. Suppliers ‘Benefits of natural gas’, ‘Coal/gas competition’, ‘Position of gas’, ‘Education’ and the ‘Energy Academy Europe’ emerged as the most important themes among the suppliers.
Market supervisor As expected, this stakeholder group stated that they CONCLUSIONS PER STAKEHOLDER GROUP find ‘Internal business operations / compliance’ and Shareholders ‘Transparency’ very important. In addition, the The shareholders interviewed stated that they find development of energy prices was characterised as the theme ‘Energy transition’ to be particularly important. important, and then especially the topic ‘Position of gas’. Shareholders are of the opinion that the role of Staff gas in the energy transition and the fact that gas is The employees interviewed stated that they find the the cleanest fossil fuel should hold a prominent ‘Position of gas’, ‘Education/EAE’ and Efficient gas position. This is reflected in a high score for ‘Coal/ applications’ very important for GasTerra. gas competition’. Media Trade organisations Spreading knowledge about the role of gas, the The ‘Energy price developments’ and the sharing of knowledge about energy, and following ‘Competitive position of gas’ were regarded as very on from that, the Energy Academy Europe, were important by the trade organisations. In addition, attributed an important role by the media. they indicated that they placed much importance on the role that they expect GasTerra to play in the Non-governmental organisations (NGOs) security of supply and provision of gas. The NGOs stated that they placed most importance on the ‘Energy Academy Europe’, ‘Responsible Groningen / people living in the vicinity supply chain management’ (up- and downstream) Among the stakeholder group Groningen / people and ‘HSE local residents / environment’. These topics living in the vicinity, the theme ‘Society’ logically belong in the categories ‘Society’ and ‘Supply chain emerged as the most important. In addition, those management’. interviewed stated that they find the sharing of knowledge to be very important.
Customers Among the customers interviewed, a considerably varied picture emerged. The topics ‘Financial results’ (in the context of creditworthiness), ‘Energy prices’ and ‘Coal/gas competition’ scored highly. Additionally, great importance was placed on ‘HSE local residents/environment’. 9 / 18 GASTERRA EXPLANATORY NOTES TO THE ANNUAL REPORT 2013
Average score by topic in stakeholder dialogue 2013 Not very important Not very Very important Unimportant Important Themes
Topics
GasTerra’s CSR vision 1 Results & management
Financial results 2
Benefits of natural gas 3
Energy price developments 4
CSR banking 5
Coal/gas competition 6 Energy transition Energy Position of gas 7
(more) Sustainable products 8
Education (sharing of energy knowledge) 9
Efficient gas applications 10
Security of delivery (short term)
11 Compliance
Security of supply (long term) 12
Internal business operations / compliance 13
Transparency 14
Personnel and organisation 15 Society
Sponsorship 16
Energy Academy Europe 17
Sustainable procurement / internal footprint 18 management Supply chain Supply Footprint chain 19
Responsible supply chain management upstream*1 20
Responsible supply chain management downstream 21
HSE local residents / environment*2 22
*1(inter alia, shale gas) *2(inter alia, earthquakes)
MATERIAL TOPICS topics were characterised as being of material Annual Report interest. The stakeholder dialogue is one of the pillars on which the content and arrangement of the Annual The material topics, in order of importance to the Report is based. In view of the fact that all 5 themes stakeholders, are: (Results and Management, Energy Transition, 1. The role of natural gas in the energy mix Compliance, Society and Supply chain management) (G4 category: Environment) emerged as important to a greater or lesser degree, 2. The sharing of knowledge about energy and that the differences in levels between the (G4 category: Society) themes were relatively small, GasTerra has chosen to 3. Security of delivery (G4 category: Economy) treat these five themes as keynotes in this Annual 4. Supply chain management (G4 category: Report. Within those themes, the following four Environment) 10 / 18 GASTERRA EXPLANATORY NOTES TO THE ANNUAL REPORT 2013
In establishing the material topics, the stakeholder Reporting Initiative, per material topic, GasTerra dialogue and GasTerra’s own vision have played an defines within which category of the guideline the important role. From the stakeholder analysis, the topic falls (Economy, Environment or Society), role of natural gas in the energy mix and the sharing GasTerra expounds its approach towards this topic of knowledge about energy emerged as the most (“management approach”), explains how the important topics. Both topics fit in well with the role responsibility is defined (“boundaries”) and GasTerra that GasTerra sees as reserved for itself in the energy defines an indicator for measuring progress. transition. In the vision of energy transition which was reformulated in 2013, ‘energy knowledge’ and 1. THE ROLE OF NATURAL GAS IN THE ENERGY ‘the system function of gas’ were designated as the MIX. spearheads. The role of natural gas in the energy Natural Gas is the cleanest fossil fuel, and can play a mix and the sharing of knowledge about energy key role in the transition to a more sustainable have therefore been characterised as material in the provision of energy. It can also play a lasting role in 2013 Annual Report. an economy in which the emission of greenhouse gasses has largely been eliminated. All initiatives In the stakeholder analysis, the theme ‘Compliance’ which draw attention to this role of natural gas fall ended up in second place - after ‘Energy transition’ under this materiality. All parties in the chain have - in terms of importance, primarily because of the an interest in propagating this message, and in role that stakeholders attribute to GasTerra in giving substance to this message. guaranteeing security of delivery. For our GasTerra’s management approach as regards this stakeholders, security of delivery means the ability topic is described in the section: Advertising and to meet the demand for gas in North-West Europe lobbying. As an indicator, GasTerra made a at all times. As a consequence of free-market contribution in 2013 by means of eight initiatives operation, the role of GasTerra in this sphere is and will strive to make an equal effort in 2014. limited to ensuring that there is sufficient gas to meet the commitments entered into with its 2. THE SHARING OF KNOWLEDGE ABOUT customers. Nevertheless, GasTerra has chosen to ENERGY designate security of delivery as a material aspect in Both education and the Energy Academy Europe the Annual Report: GasTerra wants to be a reliable scored high in the Stakeholder Dialogue. This and competitive gas supplier for its customers, and involves all initiatives that aim at broadening and the enterprise acknowledges the importance of a deepening knowledge about energy. This may be reliable gas supply in the service area. In the through activities in the sphere of schooling but business plan, objectives have thus been included also, for example, through the support of research which relate to guaranteeing our customers security into effective ways of getting the citizen to become of delivery, in accordance with legislation and the more familiar with energy knowledge. All parties in norms in the market. the chain have an interest in this, and have a Supply chain management was characterised as the responsibility in this sphere. fourth material topic in the Annual Report for 2013. GasTerra’s approach to this topic is described in the This topic was chosen in response to the social section: GasTerra’s vision as regards energy discussion regarding this sphere, in combination transition. As an indicator, GasTerra made a with the results from the stakeholder analysis and contribution in 2013 via twelve initiatives and will the importance that GasTerra itself attaches to the strive in 2014 to make an equal effort. topic. Formally, GasTerra is only responsible for the procurement and sale of gas; nevertheless, the 3. SECURITY OF DELIVERY enterprise accepts its responsibility in this sphere. For our stakeholders, security of delivery means the Upstream, by stimulating the production of Dutch ability to meet the demand for gas in North-West natural gas. And downstream, by promoting an Europe at all times. The role of GasTerra in this efficient use of gas and by supporting our customers sphere is limited to ensuring that there is sufficient in resolving energy questions. In this way, GasTerra gas to meet the commitments entered into with its is giving specific substance to social responsibility. customers. For small domestic users, that means: up In line with the G4 guidelines of the Global to the gas requirement appropriate to an average 11 / 18 GASTERRA EXPLANATORY NOTES TO THE ANNUAL REPORT 2013
effective daily temperature of -9 degrees Celsius. For respect to the environment and must comply with customers with consumption flexibility, that means: good employment practices. In 2013, GasTerra made up to the maximum contract capacity. In 2013, a contribution to supply chain management GasTerra entirely fulfilled its commitments and will upstream by giving the producers of gas from small strive to do this yet again in 2014. For 2014, Dutch fields more flexibility as regards the volume to GasTerra has not established any other indicators in be supplied. the sphere of security of delivery. GasTerra’s GasTerra’s approach to this topic is further described approach to this topic is further described in the in the section: GasTerra’s vision as regards energy section: GasTerra’s vision as regards energy provision. provision. POLICY AND BUSINESS PLAN 4. SUPPLY CHAIN MANAGEMENT GasTerra uses the stakeholder dialogue not only as a This topic was chosen in response to the social guiding principle for the Annual Report, but also as discussion concerning this sphere, in combination input for the policy and the Business Plan. Based on with the results from the stakeholder analysis and the results of the stakeholder dialogue, GasTerra has the importance that GasTerra itself attaches to the accentuated the previously-formulated main topic. objectives for each of the three G’s (Gas, Green and Groningen). In the matrix below, the link between By supply chain management is to be understood: all the objectives and material aspects are reproduced activities from extraction to consumption of natural schematically. The matrix does not contain all of gas. In this, GasTerra is responsible for the trading GasTerra’s objectives, but does contain the most part. Production companies are responsible for the important objectives that relate to the material extraction, network managers for transport, and aspects from the stakeholder dialogue. users for the consumption. In addition, with supply chain management there is also a role set aside for national and international politics, which, by (means of) regulation, can exercise influence. GasTerra’s formal responsibility in the sphere of supply chain management may thus be limited, but GasTerra does indeed accept its responsibility. In doing so, the enterprise mainly concentrates on downstream, fitting in with the ambition to contribute to the purposeful application of gas. In 2013, GasTerra gave substance to this by contributing to projects that promote a purposeful application of gas and by implementing six projects among industrial clients, within the framework of the Environmental Plan for Industry (EPI). For GasTerra, the number of EPI projects executed is an indicator for measuring progress in the sphere of supply chain management. GasTerra will strive to make an equal effort in the EPI sphere in 2014. The concept of supply chain management is however much broader than EPI, as is also apparent from the qualitative description that GasTerra gives in this Annual Report of all its activities in this sphere. For 2014, GasTerra is striving to formulate more measurable indicators that are applicable to this topic. Upstream, there is less room for GasTerra to exercise influence. GasTerra does business primarily with Dutch gas producers, who, inter alia, have to meet strict requirements with 12 / 18 GASTERRA EXPLANATORY NOTES TO THE ANNUAL REPORT 2013 The role of natural gas in the natural gas in the of role The Supply chain management chain management Supply h hrn fknowledge sharing of The
CSR matrix mix (environment) energy about energy (society) about energy euiyo delivery Security of (environment) (society)
Objectives related to substantive matters in GasTerra‘s Business Plan
GAS 1 Develop commercially attractive products
GAS 2 Ensure security of delivery for customers in compliance with the standards in the market and with legislation
GAS 3 Promoting gas as a relevant fuel in the energy mix of the future
GAS 4 Compliance with external legislation and regulations and internal codes of conduct and procedures
GREEN 1 Promoting the efficient use of gas
GREEN 2 Disseminating knowledge about making the energy supply more sustainable, for a better understanding of the role of natural gas in the energy transition
GREEN 3 Promoting sustainable business operations
GRONINGEN 1 Establishing the knowledge base par excellence in Groningen on making the energy supply sustainable
GRONINGEN 2 Having GasTerra actively and visibly participate in the Groningen community
STATUTORY PROVISION CONCERNING PROFIT ALLOCATION
Pursuant to Article 24 of the Articles of Association of GasTerra, the profit is at the disposal of the General Meeting of Shareholders, subject to the provision that such amounts are reserved from the profit available for distribution as the Board of Supervisory Directors shall determine. 13 / 18 GASTERRA EXPLANATORY NOTES TO THE ANNUAL REPORT 2013
KPMG AUDITORS DECLARATION
Independent Auditor’s Report internal control that is relevant to the drawing up of the Annual Accounts and to the true and fair picture To: the Management of GasTerra B.V. thereof, aimed at setting up control activities that are suitable in the circumstances. These risk Declaration regarding the Annual Accounts estimates are not however aimed at expressing a We have checked the Annual Accounts included in judgement concerning the effectiveness of the this report on 2013 by GasTerra B.V., of Groningen. company’s internal auditing. An audit also consists These Annual Accounts consist of the balance sheet of evaluating the suitability of the bases used for as at 31 December 2013 and the profit and loss financial reporting and of the reasonableness of the account for 2013, together with the explanatory estimates made by the management of the notes, included in which are an overview of the company, as well as an evaluation of the overall bases used for financial reporting and other picture of the Annual Accounts. explanations. We are of the opinion that the auditing information Responsibility of the Management obtained by ourselves is sufficient and suitable for The management of the company is responsible for offering substantiation to our judgement. drawing up the Annual Accounts, which must give a true and fair picture of the capital and the results, Judgement and for drawing up the Annual Report, both in In our judgement, the Annual Accounts give a true conformity with Part 9, Book 2 of the Civil Code and fair picture of the size and composition of the (Burgerlijk Wetboek [BW]) applicable in the capital of GasTerra B.V. as at 31 December 2013, and Netherlands. The management is also responsible for of the results concerning 2013, in accordance with such internal auditing as it deems necessary in order Part 9, Book 2 of the Civil Code (Burgerlijk Wetboek to make possible the drawing up of the Annual [BW]). Accounts without deviations of material importance as a consequence of fraud or errors. Declaration concerning other stipulations required under or in pursuance of the law Responsibility of the Auditor In compliance with Article 2:393 paragraph 5 under Our responsibility is to give an opinion on the (e) and (f) of the Civil Code (BW), we declare that no Annual Accounts, on the basis of our audit. We have shortcomings have emerged in relation to the audit performed our audit in accordance with Dutch law, or the Annual Report, in so far as we have been able including the Dutch auditing standards. This requires to judge, in accordance with Part 9, Book 2 of the that we comply with the ethical regulations Civil Code (Burgerlijk Wetboek [BW]) and/or that the applicable to us, and that we plan and execute our data required in Article 2:392 paragraph 1 under (b) audit in such a way that a reasonable measure of up to and including (h) of the Civil Code (BW) have certainty is obtained that the Annual Accounts do been added. We also declare that the Annual not contain any deviations of material importance. Report, in so far as we have been able to judge, is compatible with the Annual Accounts, as required in An audit comprises the execution of activities for the Article 2:391 paragraph 4 of the Civil Code (BW). obtaining of auditing information concerning the amounts and the explanatory notes in the Annual 13 February 2014 Accounts. The activities selected are dependent on KPMG Accountants N.V. the formulation of judgement applied by the auditor, including the estimation of the risks that the Annual J. F. G. Morsink, RA Accounts contain a deviation of material importance as a consequence of fraud or errors. In making these risk estimates, the auditor takes into account the 14 / 18 GASTERRA EXPLANATORY NOTES TO THE ANNUAL REPORT 2013
KPMG DECLARATION AS REGARDS SUSTAINABILITY
Independent assurance report Assurance standard We carried out our engagement in accordance with To the readers of the Annual Report 2013 of Standard 3410N ‘Assurance engagements relating to GasTerra B.V. sustainability reports’ of The Netherlands Institute of Chartered Accountants. This Standard requires, Introduction amongst others, that the assurance team possesses The management of GasTerra B.V. (hereafter: the specific knowledge, skills and professional ‘GasTerra’) engaged us to provide assurance on the competencies needed to understand the CSR information in the GasTerra Annual Report 2013 information, identify and collect the required (hereafter: ‘The Report’). For this purpose we assurance information, and that they comply with reviewed the information preceding with the icon the requirements of the IFAC Code of Ethics for ASSURED and for the remaining information in The Professional Accountants, including independence. Report we checked whether that information is consistent with the information in these parts. The Work undertaken management of GasTerra is responsible for preparing Our work included the following activities: The Report, including the identification of material • A media analysis and internet search on issues. Our responsibility is to issue an independent environmental, safety and social issues for assurance report on the indicated parts in The GasTerra, in order to deepen our insight in relevant Report. sustainability issues and topics in the reporting period. Context and scope • Interviews with members of the CSR Steering Our engagement was designed to provide the Committee responsible for the implementation of readers of The Report with limited assurance on the CSR strategy and other staff at corporate level whether the information in the information responsible for providing the information in The preceding with the icon ASSURED, in all material Report. respects, is fairly presented. We do not provide any • A review of internal and external documentation, assurance on the achievability of the targets, based on sampling, to determine whether the expectations and ambitions of GasTerra. Procedures information in The Report is supported by performed to obtain a limited level of assurance are sufficient evidence; aimed at determining the plausibility of information • Assessing the consistency of the remaining and are less extensive than those for a reasonable information in The Report with the information in level of assurance. To obtain a thorough the information preceding with the icon ASSURED. understanding of the financial results and financial position of GasTerra the reader should read The During the assurance process we discussed Report entirely. We have also reviewed, to the necessary changes in The Report with GasTerra and extent of our competence, whether the information reviewed the final version of The Report to ensure on sustainability in the other parts of The Report is that it reflects our findings. consistent with the information preceding with the icon ASSURED. Conclusion Based on our work as described above nothing has Reporting criteria come to our attention to indicate that the GasTerra applies the Sustainability Reporting information in The Report preceding with the icon Guidelines (G4) of the Global Reporting Initiative ASSURED is not fairly presented, in all material (GRI) for sustainability information in The Report. respects, in accordance with the G4 Guidelines of the Global Reporting Initiative. 15 / 18 GASTERRA EXPLANATORY NOTES TO THE ANNUAL REPORT 2013
We also report, to the extent of our competence, that the CSR information in the other parts of The Report is consistent with the information preceding with the icon ASSURED.
Amstelveen, 13 February 2014 KPMG Sustainability part of KPMG Advisory N.V.
Drs. W.J. Bartels RA, Partner 16 / 18 GASTERRA EXPLANATORY NOTES TO THE ANNUAL REPORT 2013
GLOSSARY
Acer EMIR Agency for the Cooperation of Energy Regulators, European Market Infrastructure Regulation, European regulator of the gas market. European regulation to make trade in OTC derivatives (over the counter, with parties doing ACM business directly with each other off-exchange) Authority for Consumers and Markets (previously the more transparent and safer. Dutch Competition Authority, Nederlandse Mededingingsautoriteit, NMa), the Dutch regulator Energy transition that maintains market rules and ensures a proper Transition from energy derived from fossil fuels to and fair operation of the market. energy from renewable resources.
Allocation ETS Assignment of energy volumes to various gas Emission Trading System, trading in emission rights transmission network users. that give countries or companies the right to emit certain greenhouse gases or other harmful gases. Balancing Maintaining the gas transmission network in a state Footprint of equilibrium. Emission of CO2 equivalents that relate to an individual’s or organisation’s activities. Biogas Gas produced by the fermentation of waste and Gaspool manure or by biomass gasification. German virtual trading point for natural gas.
CAM Structured product Capacity Allocation Mechanism, a set of rules, laid Product tailored to the needs of the customer, down in a regulation of the European Union, for where flexibility and/or profiling can be added to the allocating transmission capacity at the delivery at will. interconnection points between the various European gas transmission networks to market Governance operators. Indicates the act or manner of managing, the code of conduct and the surveillance over organisations. Congestion Build-up or blockage of the transmission network. GRI Global Reporting Initiative, worldwide guidelines for Compliance reporting on sustainability. This indicates that a person or organisation is operating in accordance with the applicable Green Gas legislation and regulations. Biogas produced with the same quality properties as conventional natural gas. EDF Électricité de France is an electricity company in Groningen extraction ceiling France and the operator of the nuclear power Limit set by the government for the purchase of stations in France. natural gas from the Groningen Gas Field.
GTS Gas Transport Services, a transmission system operator and subsidiary of Gasunie. 17 / 18 GASTERRA EXPLANATORY NOTES TO THE ANNUAL REPORT 2013
H-Gas Netcodes High-calorific gas, natural gas containing relatively European codes relating to natural gas transmission, low levels of nitrogen causing it to have a higher detailing Third Energy Package regulations. calorific value than other kinds of natural gas. NGOs HSE A Non-governmental organisation is an organisation Health, Safety and Environment, umbrella term for that is independent of the government and focuses matters falling under health, safety and the somehow or other on an assumed public interest. environment (gezondheid, veiligheid en milieu in Dutch). NGSA Natural Gas Sales Agreement, agreement between Hub two parties (in this case GasTerra and the producers A (virtual) trading point within a given region where of gas from the small fields). suppliers and customers transfer/trade gas. OTC derivatives Small Field Policy Over-the-counter derivative that is not traded and Government policy aimed at promoting the settled on an exchange. production of natural gas from the smaller gas fields in the Netherlands. PEG Virtual trading point for natural gas in France. L-Gas Low-calorific gas, natural gas containing relatively PRISMA high levels of nitrogen causing it to have a lower A booking platform, launched in 2013, where gas calorific value than other kinds of natural gas. traders can book transmission capacity with various transmission system operators. LNG Liquefied Natural Gas (vloeibaar aardgas in Dutch). PSV Virtual trading point for natural gas in Italy. Tangible Issues Issues affecting the degree of corporate social SBU responsibility. Standard Bundled Units, a product for contracting natural gas storage. MiFID Markets in Financial Instruments Directive, European Shale Gas investment directive to protect investors and the Natural gas extracted from a dense type of rock integrity of the financial markets, to promote fair, (shale). transparent, efficient and integrated financial markets and to further harmonise the European Stakeholders trading and investment market. Interested parties, parties whose interests may potentially be affected by GasTerra’s activities or Environmental Plan for Industry parties that affect GasTerra’s interests themselves. EPI (Milieu Plan Industrie or MPI in Dutch), a programme that GasTerra offers industrial TSO customers, providing insight into energy usage Transition System Operator is the operator of the complemented by technical support in the field of national gas transmission network. improved energy efficiency, process optimisation and sustainability. REMIT Regulation in Energy Markets Integrity and NCG Transparency, European regulation for the energy NetConnect Germany, German virtual trading point sector stating that insider trading and market for natural gas. manipulation are prohibited. 18 / 18 GASTERRA EXPLANATORY NOTES TO THE ANNUAL REPORT 2013
TTF Virtual Storage Service (VSS) Title Transfer Facility, virtual natural gas trading point A service provided by GasTerra whereby market in the Netherlands. operators can contract virtual storage for up to 1.95 billion m³ of natural gas. Virtual Trading Point A (virtual) trading point within a market region where suppliers and customers transfer/trade a product.
Groningen, 13 February 2014
COLOPHON
Publisher: GasTerra B.V. Concept and production: Scripta Communicatie Design: Studioveer, Utrecht Web programming: iWink Photography: Reyer Boxem and others