Gas is becoming customised

The energy and gas world is in full motion. The climate issue has led to a great deal of work being done at international and certainly national level as well to bring about a climate-neutral energy supply. This is a complex problem with many options and major financial consequences. The first yardsticks have been set up: the authorities have been and are taking steps aimed at a substantial and structural reduction in greenhouse gas emissions, especially CO2 emissions. Businesses, often helped by governments, are investing in sustainable alternatives to fossil fuels. Larger wind farms are being created; some people are having solar panels put on their roofs; interest in sustainable projects is increasing; scientific bodies are examining the possibilities of technological innovations; there is an intense social debate on a more rapid transition to fully climate-neutral energy management. In the Netherlands this debate and the sense of urgency is heightened by the earthquakes caused by the extraction of gas from the Groningen field.

A major challenge lies ahead of us. On the one hand the current energy system, in which GasTerra plays an important role as a major gas trading company, must continue to work well. On the other hand we have a role in the responsible implementation of the energy transition. The success or failure of this depends to a significant degree on whether enough support can be gained for what are sometimes far-reaching measures. After all, the transition will take a long time and place heavy demands on people and businesses. Support is not automatic whether it comes to gas extraction, the construction of wind farms or a rise in energy bills.

What does all this mean for the position of gas in the energy mix and for GasTerra?

To start with the latter point: for the time being, less than might be expected. Although the share of natural gas in the energy supply will eventually decline significantly, at present it still meets the heat needs of the vast majority of the Dutch energy market, and of a considerable part of the European energy market, and this is likely to remain the case for a considerable time to come. Gas also plays an important part in European industry, and so GasTerra’s business model has not changed. We buy gas from producers and sell it to market operators such as energy companies and industrial firms. We add as much value as possible to our product by performing additional services to clients.

This of course does not mean that external social developments have no influence on GasTerra’s strategy. We contribute to the energy transition in both tangible and intangible ways, by supporting knowledge institutions, funding projects, marketing green gas and participating actively in the social debate on this topic.

The earthquakes in Groningen continue to demand close attention. The Groningen residents affected are entitled to this. Safe gas extraction and the repair of damage caused must therefore remain our top priority. In addition, security of supply for the millions of households reliant on Groningen gas must be guaranteed.

Climate change and the safety issue have created an image problem for gas in the Netherlands. Fossil fuels, a category which includes natural gas, are part of the problem. But at the same time gas has the capacity to be part of the solution. Our product plays a vital role in the energy transition. The Gas by Design concept devised by the gas sector creates a bridge between the essential process of reducing CO2 emissions and making energy supply sustainable and the need for security of supply and cost-effective measures. The essence of this strategy, which we as a gas sector have developed, is that natural gas will only be used in the energy transition where sustainable alternatives such as wind and solar power are less attractive or impossible for whatever reason. As has been said, we cannot do without gas now and in the near future; renewable gas in particular can make a valuable contribution to the energy supply even in the context of climate-neutral management. In particular cases, combinations of gas and sustainable sources are the best solution. At the same time, green gas can enable emission reductions in other sectors which are harder to make sustainable. In other words: gas is becoming customised.

Finally, GasTerra’s results. Both sales volumes and prices were lower than in the previous reporting period. The amount of gas sold fell to 63.9 billion cubic metres (2015: 70.3 billion cubic metres), and the average price fell to 15.3 cents per cubic metre (2015: 20.8 cents per cubic metre). This means that turnover was 9.9 billion euros (2015: 14.7 billion euros). The fall in income is due primarily to the fall in the gas price, something over which GasTerra has no influence. But wherever GasTerra can make a difference, it does all it can: managing and optimising our portfolio, maximising the value of additional services, renegotiating contracts and managing our budget. I am convinced that this will not change in 2017.

I do not want to end this foreword without thanking my predecessor, Gertjan Lankhorst. He took the helm of GasTerra for ten years, a time marked by many successes but also a period in which robust action had to be taken to adapt our organisation to changing circumstances. He was a conscientious and successful leader of this process, and can be proud of his achievement in leaving behind a strong business that is ready for the future. 

Robert van Rede,
Interim CEO

About GasTerra

GasTerra B.V. is a trading company operating internationally in natural gas and has its registered office at Stationsweg 1 in Groningen. The company operates on the European energy market and accounts for a significant share of the Dutch gas supply. The company also provides services related to gas trading. GasTerra has more than 50 years of experience in natural gas procurement and sales.


GasTerra's mission is to maximise the value of Dutch natural gas. We fulfil a public role with regard to the implementation of the Dutch government's Small Fields Policy. This policy aims to promote natural gas production in the smaller gas fields in the Netherlands.


The company attaches great importance to making the supply of energy sustainable and initiates projects in this area. Gas remains indispensable to this energy transition if we wish to both secure energy supplies and curb CO2 emission levels. Although the part of natural gas in the total energy supply will fall in the decades to come, the Netherlands can continue to be a major producer of natural gas for decades to come. 

GasTerra seeks to achieve a responsible transition to sustainability, i.e. with a view to both economic and environmental interests. We are guided by the principles of corporate social responsibility (CSR). We have translated the three fundamental principles of CSR – People, Planet, Profit – into our own three target areas – Gas, Green and Groningen – where Gas stands for the operating result, Green stands for our ambition to establish a responsible energy transition, and Groningen stands for the community that we are part of.

A focus on customers, a focus on results and a focus on improvement are GasTerra's three core values. These are the values that our staff adopt as a starting point for all their business dealings, working in conformity with a code of conduct in which integrity and respect serve as guiding principles. The company seeks to build long-lasting business relationships with market operators and to enter into agreements that reflect the value of natural gas and its associated services.


The economic value and social importance of gas determine GasTerra’s role in the use of the domestic gas supply and the Dutch and European energy supply. GasTerra maximises the value of its product by aiming at four goals:

  • Anticipation: we anticipate a changing environment and listen to our stakeholders so that opportunities and threats can be identified and so that GasTerra can continue to fulfil its mission of value maximisation in the future.
  • Volume: we aim to sell the entire volume of gas offered to GasTerra.
  • Price: we aim to achieve a price in line with the market, with the highest possible margin for the entire portfolio.
  • Costs: we try to achieve a correct balance between costs on the one hand and value and care on the other hand.

The company makes the best possible use of its position in the European market, specifically in those market segments where demand for natural gas goes hand in hand with demand for supplemental services. In so doing, use is made of both the volume and the flexibility of gas from Dutch sources and storage facilities. Gas from other sources is procured if it fits into the overall supply and demand portfolio. As a proponent of a free energy market, GasTerra is continuously developing new products and services. In this context, we seek to be a reliable and competitive gas supplier to our customers, aiming to contribute to the strengthening of the position of natural gas within the overall energy mix.

Value creation model




Total volume 63.9 bln m3

  • Groningen field
  • Small fields
  • Virtual trading points
  • Import
  • Green Gas

Gas market

  • Fluctuating gas price
  • Gas contracts
  • Licences
  • Trading partners
  • Underground gas storage


  • 158 FTE
  • 177 employees
  • Diversity
  • Working conditions
  • Groningen head office

Knowledge and systems

  • Knowledge of the gas market
  • IT systems


  • Equity € 216 mln
  • Investments € 1.2 mln


  • Stakeholders
  • Image of gas

Business Model

To maximise the value of Dutch natural gas


GasTerra anticipates a changing environment and listens to its stakeholders so that opportunities and threats can be identified and GasTerra can continue to fulfil its mission of value maximisation in the future.


GasTerra aims to sell the entire volume of gas offered to GasTerra.


GasTerra aims to achieve a price in line with the market with the highest possible margin for the entire portfolio.


GasTerra ensures that there is the right balance between costs on the one hand and value and care on the other hand.

  • Governance
  • Risk management
  • Public Relations
  • Public Affairs




Total volume 63.9 bln m3

  • Gas sales
  • Long-term contracts
  • TTF sales

Gas market

  • 100% compliance with contractual obligations
  • 47.7 bln m3 of gas purchased (Groningen field and small fields)


  • 147 men, 30 women
  • 3% absence due to sickness
  • Employee satisfaction survey: 7.2
  • Safety/accidents

Knowledge and systems

  • Training costs 1.85% of total staff costs
  • Training and career opportunities
  • 99.98% availability of highly critical systems


  • Turnover € 9,865 mln
  • Net profit € 36 mln
  • Working capital € 198 mln
  • S&P credit rating AA+


  • Transparency benchmark score 163 in 2016
  • Sharing and developing knowledge about energy (transition)
  • Support for energy transition projects
  • Making industrial clients more sustainable
  • Sponsors and volunteer funds in the region
  • € 26.4 mln local purchasing of facilities management




  • Security of supply of own portfolio
  • Stable relationship with clients
  • Revenue from natural gas


  • Sharing and developing knowledge of the role of gas in the energy supply inj R&D, education, and public debate
  • Contributing to the rational transition to a climate-neutral energy supply


  • Good region for job opportunities
  • Making a meaningful contribution to the local community

Management information

The Board of Management of GasTerra consists of a Managing Director, nominated on the recommendation of the Supervisory Board and approved by the Minister of Economic Affairs. The Managing Director is appointed for an indefinite period. In addition to the Managing Director, the Board of Management also consists of three further Directors/holders of a general power of attorney: the Financial Director, the Commercial Director and the Portfolio Director. There are also three heads of department responsible for legal affairs, personnel & organisation and communications & public affairs.

Mr. Lankhorst stepped down from his position as CEO of GasTerra on 1 January 2017. He now works for the Energy, Environment and Water Association (VEMW). Mr. Van Rede has been appointed interim CEO until such time as a new permanent CEO is appointed.

  • R.E. van Rede MSc
    1. R.E. van Rede MSc
    2. Commercial Director/Interim CEO

  • M.W.J. de Wilde MA
    1. M.W.J. de Wilde MA
    2. Director of Finance, Projects and ICT
  • F.F. van Koten MA
    1. F.F. van Koten MA
    2. Director of Portfolio

* Mr. A.E.M. Broenink MSc was Director of Portfolio until the middle of January 2016. Mr. Lankhorst performed this role until Mr. Van Koten was appointed.

Heads of Department

A.J.P. Buijs, Communications & Public Affairs Manager

B.A. Westmaas MA, Personnel & Organisation Manager

H.J. van Zijll de Jong LLM, Legal Affairs & Regulation Manager and Secretariat

Message from the Board of Supervisory Directors

Composition of the Board of Supervisory Directors

The Board of Supervisory Directors oversees the policy of the Board of Management and the general business performance at GasTerra. The Board of Supervisory Directors comprises eight members, one of whom is appointed by the Minister of Economic Affairs. The Board appoints a chairperson from among its midst; this appointment has to be approved by the Minister of Economic Affairs.

The Board of Supervisory Directors appoints from among its midst a College of Delegate Supervisory Directors, comprising five members, one of whom is appointed by the Minister of Economic Affairs. The Board may delegate its powers to the College, in so far as this delegation does not infringe the duties and powers of the Board of Supervisory Directors.

The company's Articles of Association lay down that two members of the Board of Supervisory Directors are to step down each year at the General Meeting of Shareholders according to a rotation schedule determined by drawing lots. The members who step down may be re-elected or reappointed immediately. Successive members of the Board of Supervisory Directors take the place of their predecessors on the rotation schedule.

On 1 January 2016 Mr. D.A. Benschop MA stood down as a member of the Board and the College of Delegate Supervisory Directors. He is succeeded by Ms. J.M.W.E. van Loon MSc.

The vacancy in the composition of the Board which arose in 2013 is filled with effect from 15 February 2016 with the appointment of T.W. Langejan LLM as a member of the Board of Supervisory Directors.

As of 1 March 2016 Mr. J.W. van Hoogstraten MSc succeeded Mr. T.W. Starink MSc as a member of the Board and the College of Delegate Supervisory Directors.

As of 1 April 2016 Mr. P. Dekker MSc stood down as member of the Board and is succeeded by Mr. R.G. de Jongh MA.

As of 1 July 2016 Mr. M.E.P. Dierikx MA stood down as member of the Board and the College of Delegate Supervisory Directors. He is succeeded by Ms. B.E. Westgren MA.

As of 1 August 2016 Mr. J.M. Van Roost MSc stood down as member of the Board and the College of Delegate Supervisory Directors. He is succeeded by Mr. R.M. de Jong MA.

As of 15 September 2016 Ms. B.E. Westgren MSc stood down as member of the Board and the College of Delegate Supervisory Directors. She is succeeded by Mr. A.F. Gaastra LLM.

The Board would like to thank all departing members of the Board and the College for their efforts on behalf of the company.

Name Term of office Capacity Date of appointment
C.W.M. Dessens LLM Re‑electable in 2017 Delegate Supervisory Director 1 January 2006
R.M. de Jong MA
(from 1 August 2016)
Re‑electable in 2018 Delegate Supervisory Director 1 August 2016
R.G. de Jongh MA
(from 1 April 2016)
Re‑electable in 2017 Member of the Board of Supervisory Directors 1 April 2016
A.F. Gaastra LLM
(from 15 September 2016)
Re-appointable in 2018 Member of the Board of Supervisory Directors 15 September 2016
J.W. van Hoogstraten MSc
(from 1 March 2016)
Re‑electable in 2019 Member of the Board of Supervisory Directors 1 March 2016
T.W. Langejan LLM
(from 15 February 2016)
Re‑electable in 2020 Member of the Board of Supervisory Directors 15 February 2016
J.M.W.E. van Loon MSc
(from 1 January 2016)
Re‑electable in 2020 Member of the Board of Supervisory Directors 1 January 2016
F.A.E. Schittecatte MSc Re‑electable in 2019 Member of the Board of Supervisory Directors 15 February 2014
P. Dekker MSc
(until 1 April 2016)
- Member of the Board of Supervisory Directors 1 July 2005
M.E.P. Dierikx MA
(until 1 July 2016)
- Delegate Supervisory Director 2 July 2011
T.W. Starink MSc
(until 1 March 2016)
- Delegate Supervisory Director 1 November 2015
J.M. Van Roost MSc
(until 1 August 2016)
- Delegate Supervisory Director 1 July 2005
B.E. Westgren MA
(from 1 July 2016 until 15 September 2016)
- Delegate Supervisory Director 1 July 2016


The Board (including the College of Supervisory Directors) met 13 times in the presence of the Board of Management. All members of the Board were present at all but two of the meetings. At two meetings the Audit Committee was also represented by its chairperson. At the invitation of the Board, the external auditor was present at the meeting in which the Annual Report and Accounts relating to 2015 were dealt with.

Attendance at meetings

Attendance at meetings
  Board of Supervisory Directors College of Delegate Supervisory Directors Audit Committee
mr. drs. C.W.M. Dessens 2/2 11/11  
ir. J.M.W.E. van Loon 2/2 11/11  
ir. T.W. Starink
(tot 1 maart 2016)
1/1 2/2  
ir. J.W. van Hoogstraten
(vanaf 1 maart 2016)
1/1 9/9  
drs. M.E.P. Dierikx
(tot 1 juli 2016)
1/1 4/5  
mr. A.F. Gaastra
(vanaf 15 september 2016)
1/1 2/3  
ir. J.M. Van Roost
(tot 1 augustus 2016)
1/1 6/6  
drs. R.M. de Jong
(vanaf 1 augustus 2016)
1/1 5/5  
ir. P. Dekker
(tot 1 april 2016)
1/1 n/a  
drs. R.G. de Jongh
(vanaf 1 april 2016)
1/1 n/a  
ir. F.A.E. Schittecatte 2/2 n/a  
drs. B.E. Westgren
(Commissaris vanaf 1 juli tot 15 september 2016)
0/0 3/3 1/1
mr. drs. T.W. Langejan 2/2   3/3
drs. T.P.K. Huysinga     4/4
drs. A.J. van der Linden     4/4
drs. A.J. Boekelman     4/4

* The first number shows the number of meetings attended, the second number is the number of meetings that took place during the period in which the supervisory director was in post. 

Strategy and Objectives

Discussions with the management took place regarding the company’s strategy and how to translate this into objectives for the future. Maximisation of the value of Dutch gas remains our top priority. Only minor changes to the strategy have been made. Discussions also took place on the extent to which the objectives for 2016 have been achieved and the objectives for 2017 are fixed. GasTerra contributes actively to ensuring that natural gas continues to play an important role in the transition towards a fully sustainable energy supply. 

The decisions taken since the beginning of 2014 by the Minister for Economic Affairs on how much of the potential gas in the Groningen Gas Field may be extracted, as a consequence of the developments in the Groningen earthquakes dossier, had no direct impact on GasTerra’s mission and strategy but have had a major influence on how the company is able to carry out its strategy. This topic was a major point of discussion at the meetings of the Board of Supervisory Directors and the College of Delegate Supervisory Directors.

The maximum production figure set in calendar year 2016 for the Groningen gas field for the 2015/2016 gas year was 27 billion m3. The corresponding figure for the 2016/2017 gas year is 24 billion m3. In the context of security of supply, the production decisions taken leave room for a higher ceiling if the gas year is colder than average. In addition, if certain technical limitations in the installations of Gasunie Transport Services (GTS) occur, extra production may be necessary at the request of GTS. In addition to the production limits in force, there are also other conditions relating to the distribution of production among the sections of the Groningen field, and with regard to the extent of month-to-month fluctuations within the gas year. NAM is required to comply with these requirements. GasTerra makes an important contribution to developing the planning systems needed for this, and for their day-to-day implementation.

Good progress was made in 2016 towards the goals set out within the GasTerra 2018 reorganisation project. The approach to and results of this project are discussed with the Board of Supervisory Directors at set times.

Risk Management

In 2016 the Board of Supervisory Directors discussed the risks associated with business activities. As part of this process, the management’s assessment of the set-up and operation of the internal risk management and control systems was discussed, as well as the document of representation, along with a presentation about these systems. Attention was also paid to the management letter from the external auditor, and the social aspects relevant to GasTerra were taken into consideration too. The Board concludes that GasTerra has a robust control system, that this functions effectively, and that it is subject to continuous improvement.

Staffing Matters

Mr. Lankhorst stood down as CEO on 1 January 2017 after serving since 1 September 2006. We should like to thank him for his outstanding leadership of the company during this period, and for the very good cooperation with the Board and College. The Board wishes him every success in his future career.

The College of Delegate Supervisory Directors appointed Mr. Van Rede as interim CEO with effect from 1 January 2017. The process of finding a successor for Mr. Lankhorst has begun.

Each year the Board of Supervisory Directors and the management together discuss potential successors present within the organisation who could fulfil management functions. Remuneration policy is approved by issuing a Collective Labour Agreement mandate.

Where necessary, the Board gets involved in updates relating to ancillary positions held by members of the Board of Management, and once a year discusses the complete overview of these ancillary positions. The overview of ancillary activities of members of the Board of Supervisory Directors is also reviewed once a year.

Audit Committee

The Board of Supervisory Directors has set up an Audit Committee. This committee oversees the workings of the internal risk management and control systems, all financial affairs, relations with the external auditor and the application of information and communication technology. At one of the meetings of the Supervisory Board, the Audit Committee reported on the activities it had undertaken.

The Audit Committee met on four occasions during the reporting year.

As of 1 March 2016 B.E. Westgren MA was replaced as a member of the Audit Committee by T.W. Langejan LLM. At year-end 2016 the composition of the Committee was as follows:

A.J. Boekelman MA (Chairperson)
T.P.K. Huysinga MA
A.J. van der Linden MA
T.W. Langejan LLM


In 2015 the Board of Supervisory Directors discussed its own performance, and in 2016 ensured that the recommendations made during this process were implemented. These recommendations have now been carried out.

Contacts with the employees

The Board of Supervisory Directors has informed employees on the company’s activities in informal conversations. With a few exceptions, the Board always meets in the company’s building.

Board members attended two consultative meetings between the management and the Works Council in 2016. One of the topics on the agenda of these meetings was ‘GasTerra 2018’.

Annual Accounts

The recommendations from the Board of Supervisory Directors to the General Meeting of Shareholders, to be held in Groningen on 16 February 2017, are as follows:

We have examined the Annual Accounts for 2016, prepared by the interim CEO in accordance with Article 23 of the Articles of Association. We concur with these Annual Accounts and recommend that:

  • the net profit for 2016 - set at €36 million - be entirely appropriated for payment to the shareholders;
  • the 2016 Annual Accounts be adopted without alteration.

The Board of Supervisory Directors wishes to express its appreciation for the results attained in 2016 and is grateful for the way in which the Board of Management and employees devoted themselves to the objectives of the enterprise during the financial year, and for the results that were achieved. The Board wishes every success to everyone working at GasTerra in their endeavours to achieve the objectives set for 2017.

The Board of Supervisory Directors 

C.W.M. Dessens LLM, Chairperson
A.F. Gaastra LLM
J.W. van Hoogstraten MSc
R.M. de Jong MA
R.G. de Jongh MA
T.W. Langejan LLM
J.M.W.E. van Loon MSc
F.A.E. Schittecatte MSc


GasTerra B.V. is a private limited company with registered offices in Groningen, the Netherlands. The company was founded on 1 July 2005 when N.V. Nederlandse Gasunie was legally split into a transmission system operator and a trading company. In the process, the infrastructure (the gas pipelines) and all transmission-related activities remained with Gasunie while the newly formed GasTerra continued with all gas trading activities.

GasTerra B.V.'s authorised share capital is €180 million, split into 40,000 shares of €4,500 each. All shares have been subscribed, fully paid up and registered, and can only be transferred by unanimous approval of the General Meeting of Shareholders. The shares are held by the State (10%), EBN B.V. (40%), Shell Nederland B.V. (25%) and Esso Nederland B.V. (25%). No depositary receipts are issued.

GasTerra is not a listed company, as a result of which the Corporate Governance Code does not apply to the organisation. However, where possible and relevant, GasTerra is guided by the principles of the code and takes the best practice provisions as a guide. In this chapter, we report on the appropriate principles of the Code.

These are to be implemented in the main when it comes to the principles and provisions included under the task and manner of working of the Board of Management. The tools that the Board of Management uses for this consist specifically of the annual activity plan, the budget, monthly and quarterly reports and the Business Risk Analysis (BRA) tailored to the organisation. The structure and operation of risk management at GasTerra are described in these documents (see also the risk section, which contains a description of the most important risks. Risk management has been delegated to the line management. Reports are made to the Board of Management concerning implementation. The Board of Management reports at least once a year to the Audit Committee via the BRA. The external auditor assesses the compliance of this system to the extent relevant in the context of the audit of the accounts.

In formal terms the Board of Management of GasTerra consists of a Managing Director, nominated on the recommendation of the Supervisory Board and approved by the Minister of Economic Affairs. The Managing Director is appointed for an indefinite period. In addition to the Managing Director, the Board of Management also consists of three further Directors/holders of a general power of attorney: the Financial Director, the Commercial Director and the Portfolio Director. In the light of the departure of the current Managing Director, the College of Delegated Supervisory Directors has appointed an acting Managing Director.

The remuneration of the Managing Director is set by the Board of Supervisory Directors and, in addition to a fixed remuneration, it also has a variable component that is dependent on the financial and general performance of the organisation. The Board of Supervisory Directors decides whether the Managing Director is eligible for a variable remuneration and its amount. The variable remuneration may not exceed 30% of the Managing Director's fixed salary. In view of government policy on state shareholdings, it has been decided that the maximum variable remuneration in 2016 may not exceed 20% of the fixed salary. The amount of the Managing Director's remuneration is given elsewhere in the Annual Report (see Annual Accounts). With regard to the Managing Director, the provisions relating to the maximum number of allowable supervisory board memberships in the Management and Supervision Act are observed.

Supervision of the Board of Management of GasTerra is exercised by the Board of Supervisory Directors, which consists of eight members. One member is appointed directly by the Minister of Economic Affairs, the remaining members are appointed by the Annual General Meeting of Shareholders on the recommendation of the individual shareholders. The number of Supervisory Board memberships that one person may hold is limited to ensure the proper performance of the duties. The Supervisory Board has appointed its own secretary, who is supported, where necessary, by the Company Secretary.

The duty and manner of working of the Supervisory Board are in accordance with the Code set out in its own regulations. It is standard procedure that the Annual Report contains a report from the Supervisory Board. A (brief) profile of the members of the Supervisory Board is included in the Annual Report. The provisions relating to the supervision of the Board of Management by the Supervisory Board are effected at the regular meetings of the Supervisory Board. Furthermore, at least once a year without the Board of Management being present, the Supervisory Board discusses its own performance (and desired competencies) as well as that of its own individual members and individual members of the Board of Management.

The Articles of Association stipulate that decisions which are important to GasTerra must be approved by the Supervisory Board or the College of Delegate Supervisory Directors. The College of Delegate Supervisory Directors is a corporate body. The College is formed by members of the Supervisory Board and consists of five supervisory directors including the supervisory director who has been appointed by the Minister of Economic Affairs.

The Supervisory Board has established an Audit Committee. The Audit Committee is a non-corporate body composed of four members appointed by the Supervisory Board. The Supervisory Board, or the College of Delegate Supervisory Directors, may refer matters for the consideration of the Audit Committee. Whether requested to do so or not, the Audit Committee advises the Supervisory Board or the College of Delegate Supervisory Directors on matters within its remit and prepares the decisions of the Supervisory Board in relation to those matters. The Audit Committee generally meets four times a year, and did so in 2016.

The duty and method of working of the Audit Committee are set out in regulations that essentially follow best practice provisions mentioned in the Code. Thus, the duties of the Audit Committee include supervision regarding the financing of the company, operating expenses and capital expenditures in relation to the agreed budgets, the provision of financial information, the operation of the internal risk management and control systems, compliance with recommendations and observations of internal and external auditors, the role and functioning of the internal audit department, and maintaining the relationship with the external auditor. Matters covered in particular by this latter topic are the independence of the auditor, remuneration and the potential provision of work that is not audit-related.

The (system of) remuneration of the Board of Supervisory Directors is approved by the Annual General Meeting of Shareholders. The total amount of remuneration of the Board is stated in the Annual Report.

With regard to the powers of the shareholders, the Articles of Association stipulate that resolutions of shareholders may only be adopted by a majority of three-quarters of the votes cast. For certain resolutions, in particular the transfer of shares, suspension or dismissal of the Managing Director, amendment of the Articles of Association and dissolution of the company, unanimity is required.

As regards disclosure of information to shareholders and the potential impact on the share price, it should be noted that the 'GasTerra share' is not traded on the financial markets.

With regard to financial reporting, several times a year (at regular meetings), the Supervisory Board, the College of Delegate Supervisory Directors and the Audit Committee supervise compliance with the internal procedures relating to the preparation of the quarterly reports and the preparation and publication of the Annual Report and the Annual Accounts.

The Annual General Meeting of Shareholders appoints the external auditor. It is standard procedure for the Audit Commission to interrogate the external auditor with regard to his declaration on the accuracy of the financial statements. Furthermore, the Board of Management and the Supervisory Board report to the Annual General Meeting of Shareholders on the independence of the external auditor and a recommendation is issued for the appointment of an external auditor For this purpose, the Board of Management and the Supervisory Board assess the functioning of the external auditor periodically, at least once every four years. From the 2015 financial year, EY (Ernst & Young) will be GasTerra’s auditor.

The external auditor has an understanding of the Internal Audits working plan, which is discussed in the Audit Committee. Findings concerning the internal audit function are included where necessary in the external auditor’s management letter, which is discussed at a meeting of the Supervisory Board. The external auditor reports anything it wishes to bring to the attention of the Board of Management and the Supervisory Board in relation to its audit of the financial statements and the related audits. This gives effect to the provisions pertaining to the principle in the Code on the relationship and communication of the external auditor with the company's bodies.

CSR and governance

CSR is an integral part of the strategy at GasTerra and is therefore embedded into our day-to-day operations. GasTerra has integrated the materiality matrix and associated objectives and activities into the Business Plan which is approved by the Board of Supervisory Directors, the governance body with the highest degree of responsibility. Monitoring of progress is included in the regular reporting cycle. The quarterly reports are discussed by the College of Delegate Supervisory Directors and the Audit Committee.

Personnel and Organisation

Gas volumes are falling and market conditions are changing, so the size of the workforce has to adapt. This is why the reorganisation process ‘GasTerra 2018’ was started in 2014, focusing on the themes of strategy, efficiency, organisation and personnel. The project resulted in a new, process-focused organisation and a planned staff reduction from approximately 200 FTE in 2015 to approximately 160 FTE in 2018.

GasTerra continued implementing measures arising from the ‘GasTerra 2018’ project in 2016, focusing on efficiency, cost reduction and the necessary staff departures. A ‘social charter’ was agreed with the trade union in 2015, under the terms of which the necessary staff departures will take place on a voluntary basis. A package of measures, including secondment, career guidance, coaching, courses, training and a conditional guarantee of a job to come back to, is also available. Seven employees chose to leave GasTerra for alternative employment in 2016. The results are reported to a monitoring committee of the trade union once a quarter. GasTerra expects to be able to achieve the necessary staff departures on schedule, partly thanks to the social charter.


As at 31 December 2016, 177 people were working at GasTerra (158 FTE) (2015: 186 people (169 FTE)), of whom 30 were women and 147 were men. All were employed in permanent positions. One employee made use of the guarantee of being able to return to GasTerra. To further flexibility, since 2014 it has been company policy to only take on new staff via the 'payrolling system'. This means that the staff are employed by the payroll firm under similar conditions of employment as GasTerra employees. No new employees were taken on in 2016.

Employee satisfaction

GasTerra conducted an employee satisfaction survey in the beginning of 2016. This survey is carried out every two years. The general satisfaction among employees had fallen slightly (from 7.4 to 7.2). Scores had fallen in particular for secondary working conditions, leadership, career opportunities and appreciation. The results of the survey were discussed with the employees.

Internships and work experience positions

GasTerra offers internships and work experience positions, giving students and recent graduates the chance to gain some work experience and because they can enrich the organisation with their fresh eyes. Interns are recruited locally, especially from the Energy Academy Europe, the Hanzehogeschool Groningen and the Groningen University.

In 2016 GasTerra offered employment to three people ‘distanced from the labour market’ under the Participation Act (2015: 1 employee).

GasTerra is a member of Noorderlink. Noorderlink is made up of the 40 biggest employers in the north of the Netherlands that cooperate on P&O.


GasTerra is no longer growing in terms of the number of jobs and few employees leave the company. Career progression can therefore no longer be taken for granted. This is why secondment played an even more important role in 2016. GasTerra encourages its staff to gain experience with other companies. We offer them the opportunity to go and work for another company for one or two years. In 2016, six employees got temporary jobs with Gasunie, NAM, ExxonMobil, the Energy Delta Institute (EDI) and Holthausen. In two cases this resulted in people leaving the company.

Collective labour agreement and pension

GasTerra has its own collective labour agreement and the company's staff are actively involved in the sectoral trade union, the VPG2. Over 80% of the employees belong to the union. In 2016, 152 employees were covered by the collective labour agreement, which expired on 1 January 2016. On the basis of the previous agreement, GasTerra held a benchmark survey in 2016 to ascertain whether its working conditions were still in line with the market. The results of this survey have been presented to the organisation and formed a starting point for GasTerra in the collective labour agreement negotiations. These negotiations have proved difficult, and are still ongoing. The old collective labour agreement remains in force until a new one has been approved.

GasTerra’s pension scheme requires the company to pay a fixed contribution that is set in advance. This contribution is based on a conditionally indexed career average system. GasTerra has an administration agreement with GasUnie's pension administrator (Stichting Pensioenfonds Gasunie) that runs until 31 December 2017.

Health and safety

There was one workplace accident resulting in time off work in 2016. It concerned an employee who fell and broke an arm. 

Illness-related absenteeism was higher than in previous years, at 3 % (2015: 2.1 per cent). Most of this was due to non-work-related long-term absence.

GasTerra's occupational health and safety policy identifies the following risks: traffic, stress, RSI and minor accidents. All employees were offered a voluntary safe driving course in 2016, and 25 employees took part in it.


The company’s occupational health and safety unit offered a ‘fit at work’ pilot scheme which was attended by all shift workers and a number of other employees (29 in total). The pilot scheme involved testing the mental and physical fitness of employees and offering advice on how they could achieve any improvements needed.

Two evacuation exercises were carried out successfully in 2016.

Objections, Complaints and Abuses

GasTerra has appointed confidential advisers and the company has a complaints procedure and whistle-blower policy and procedures. If employees have objections or complaints or if they detect abuses and solutions cannot be found with colleagues and managers, they can make use of these procedures. There were no reports of abuses or discrimination in 2016, no-one filed a complaint with the complaints committee and no-one made use of the whistle blowing arrangements.

Stakeholder dialogue

GasTerra has translated the three fundamental principles of CSR – People, Planet, Profit – into its own three target areas – Gas, Green and Groningen, where Gas stands for the operating result, Green stands for our ambition to bring about a responsible energy transition, and Groningen stands for the community that we are part of. Stakeholders are a valuable source of information on what society expects of GasTerra. We have identified the following stakeholders

In 2016 GasTerra had an external image survey carried out among a selection of its business-related stakeholders (including knowledge institutes, NGOs, sectoral organisations, customers, administration and political groups). In addition to investigating GasTerra’s image, this survey also looked at relationships with GasTerra, its role in the gas debate and its social role. The survey found that stakeholders had a generally positive opinion of GasTerra. Most stakeholders think that GasTerra should play an active role in the gas debate, for instance by increasing the understanding of gas, but should also explain the role of gas in the transition to sustainable energy. Opinions as to GasTerra’s social role differ. Those stakeholders who regard this as important think that GasTerra should act as a sponsor, but also that the company should initiate and/or fund innovative projects in the field of sustainable energy.

In addition to the survey among business-related stakeholders, the profile and image of GasTerra was examined in a survey among the population of the province of Groningen, looking at its sponsorship activities and expectations and needs with regard to its social role. A similar survey was conducted in 2014. The results of the most recent survey show that there has been little change in the recognition of the company’s name and role. These stakeholders think that sponsorship is an appropriate activity for a company like GasTerra. The company is also expected to be active in the environmental field, and to treat safety in gas extraction as a priority.

The annual internal stakeholder dialogue was carried out in addition to these two external surveys. In this process, 'relationship managers' are appointed for each stakeholder group. These people are GasTerra employees who represent one or more stakeholders. They monitor their opinions and preferences. We decided on this internal method, because our employees talk to stakeholders every day and know what issues they think are important (see also the stakeholder table). All relationship managers complete a questionnaire before the stakeholder dialogue meeting, in which they prioritise the CSR topics under the three Gs and have the opportunity to put forward topics themselves. This quantitative input is used as the basis for discussions which go into the most important issues in more depth. This dual quantitative and qualitative approach produces a number of issues that the stakeholders consider to be material to GasTerra.

We will be launching a project in 2017 to assess the current methodology and adjust it where necessary.

Stakeholder table

The table below shows all of the topics that were put to the stakeholders. Each topic comes under one or more themes: Gas, Green or Groningen.

1. Position of gas
  • Gas
  • Green
  • Groningen
2. Health & Safety
  • Gas
  • Green
  • Groningen
3. Energy price trends
  • Gas
  • Green
  • Groningen
4. Transparency
  • Gas
  • Green
  • Groningen
5. Security of supply (long-term)
  • Gas
  • Green
  • Groningen
6. GasTerra’s CSR policy
  • Gas
  • Green
  • Groningen
7. Sustainable or more sustainable products
  • Gas
  • Green
  • Groningen
8. Responsible chain management upstream (incl. shale gas and Russia)
  • Gas
  • Green
  • Groningen
9. Security of supply (short-term)
  • Gas
  • Green
  • Groningen
10. Financial results
  • Gas
  • Green
  • Groningen
11. Income from natural gas
  • Gas
  • Green
  • Groningen
12. Sponsorship
  • Gas
  • Green
  • Groningen
13. Responsible chain management downstream
  • Gas
  • Green
  • Groningen
14. Education (sharing knowledge about energy)
  • Gas
  • Green
  • Groningen
15. Efficient gas applications
  • Gas
  • Green
  • Groningen
16. Compliance
  • Gas
  • Green
  • Groningen
17. Sustainable purchasing/internal footprint
  • Gas
  • Green
  • Groningen
18. Future of GasTerra
  • Gas
  • Green
  • Groningen
19. Personnel and Organisation
  • Gas
  • Green
  • Groningen

The results of the dialogue show that, as in previous years, the stakeholders regard the position of gas as material. Most stakeholders regard stimulating the position of gas as a transition fuel as an important role for GasTerra. Gas is seen as a transition fuel that should play an important role in both the short and the medium to long term. However, some stakeholders believe that the negative consequences of gas extraction in Groningen is not sufficiently taken into account in the debate on the position of natural gas in the Dutch energy mix, though they do not see GasTerra as having a direct role in remedying this. Stakeholders also consider transparency to be material. They think that it is important for GasTerra to be open with regard to its business practices, income from natural gas, developments on the gas market and gas extraction from Groningen.

Other topics regarded as important for GasTerra are sustainable or more sustainable products, short-term security of supply and responsible chain management upstream. As in previous years, the possibility of increasing dependence on Russia was mentioned as one of the consequences of declining Groningen production in the context of chain management. There is also increasing interest in methane emissions caused by gas extraction.

In previous years, health, safety & environment (HSE) and energy price trends were also mentioned as important topics. As far as HSE is concerned, there is still considerable interest associated with the earthquake issues, although most stakeholders do not see a prominent role for GasTerra in this regard. Many stakeholders also regard energy price trends as still important, but are aware that GasTerra does not and cannot influence them.

The GasTerra management team decides on the material issues, based in part on the outcomes of the stakeholder dialogue. These outcomes are discussed at a session organised especially for this purpose, at which the Board of Management ranks all topics by how important they are. This produces the materiality matrix. The material issues then serve as the basis for GasTerra’s business objectives (see also the strategy table).

The following issues are material according to GasTerra’s Board of Management:

•          Position of gas (1)

•          Health & Safety (2)

•          Transparency (4)

•          Sustainable or more sustainable products (7)

•          Short-term security of supply (9)

•          Future of GasTerra (18)

Position of gas (1)
The world is facing the challenge of switching from the current energy mix based on fossil fuels to an energy mix based on renewable sources. GasTerra and its stakeholders believe that it is important to facilitate as smooth a transition as possible from fossil fuels to renewables and see an important role for natural gas in this. This is why the position of gas is regarded as a material issue.

We are taking various initiatives whose purpose is to emphasise the importance of gas in energy transition. GasTerra’s approach in this area is described in the Green section.

Health & Safety (2)
Safety in the context of gas extraction in Groningen is an important issue for both stakeholders and GasTerra. Stakeholders are aware that GasTerra is part of the chain.

In addition to safety in the context of gas extraction, the personal health and safety of employees and service providers is a priority for GasTerra, and so is a material issue, as it was in 2015.

Transparency (4)
Both management and stakeholders regard it as important for GasTerra’s activities and aims to be communicated as clearly and openly as possible, and for a dialogue with stakeholders to be maintained. For that reason GasTerra will in 2017 once again produce its annual report in accordance with GRI guidelines, and will aim to achieve a score of between 150 and 170 points on the transparency benchmark in the years to come.

Sustainable or more sustainable products (7)
Stakeholders regard it as important for GasTerra to make an active contribution to boosting the sustainability of the Dutch energy supply, and believe that GasTerra should first and foremost encourage the production of sustainable gas products. GasTerra considers it important for (green) gas to play its logical role in the energy supply of the future, and so has decided that this issue is material.

Short-term security of supply (9)
The stakeholder dialogue showed that a number of stakeholders consider guaranteeing short-term security of supply as an important task for GasTerra. However, it is often also thought that the market can regulate this. GasTerra sees its responsibility as making sure that clients can have access to natural gas at any time in the year within the contractual limits.
GasTerra does have a role in security of supply as the sole vendor of Groningen gas.

Future of GasTerra (18)
GasTerra is in a reorganisation trajectory as a consequence of the fall in sales volume and turnover in the past few years. This issue is very important for ‘employee’ stakeholders, but suppliers and knowledge institutions are also interested in the future of GasTerra and the contribution that the company can continue to make. The uncertain future has made this issue more important to both GasTerra and a number of stakeholders.

Looking at the degree of importance of each material issue to stakeholders and comparing that with their importance to GasTerra procuduces the following materiality matrix:

1. Position of gas

GasTerra engages in gas advocacy in order to strengthen the position of gas against competing fuels and to emphasise the role of gas in the energy transition process.

2. Health and Safety - local residents / environment (including earthquakes)

Due account must be taken here of safety around gas extraction in Groningen. As a company that is part of the chain causing the damage, we are well aware of this. In addition, GasTerra sees the personal health and safety of employees and service providers as a top priority.

3. Energy price trends

Energy prices are an important issue in society. They are determined by the market, taxes and levies. GasTerra mainly supplies the wholesale market that is determined by TTF prices in the Netherlands. Prices on the TTF are based on the principle of supply and demand. Contract prices for export contracts can usually be renegotiated every three years. The basis for the renegotiations is different for each contract.

4. Transparency

GasTerra aims to communicate about its activities and management objectives as clearly and openly as possible, but without harming its commercial and other interests (including privacy).

5. Security of supply (long-term)

GasTerra ensures that it can meet all of its obligations to supply gas, including its long-term obligations.

6. GasTerras CSR policy

GasTerra takes the view that profits are not the only important thing, the context in which profits are made is also important. The company gives substance to its CSR policy based on that vision.

7. Sustainable or more sustainable products

GasTerra is actively contributing to making the Dutch energy supply more sustainable by offering products for sale which tie in with the needs of producers which also supply green energy. An example of this is the trade in green gas.

8. Responsible chain management upstream (including methane emissions, shale gas and Russia)

GasTerra trades in natural gas, principally Dutch natural gas plus some natural gas mainly from Norway and Russia. Chain management means all activities from production to the use of natural gas. GasTerra is responsible for the trading activities. Production companies are responsible for the extraction, network operators for transmission and consumers for its use. The division of responsibilities in the chain is contractually defined and parties can only inform each other of any failures to fulfil contractual obligations. GasTerra refrains from, for example, bringing political or social discussions into its contractual relationships with its suppliers and customers. GasTerra has no direct role in methane emissions, but is part of the chain, because this also affects the position of gas and so can influence the retail market. Given the potentially huge economic value of shale gas, GasTerra supports thorough research into the possibility of extracting the gas. Community support and safe production techniques are preconditions for any future extraction.

9. Security of supply (short-term)

GasTerra is responsible for ensuring that its customers have sufficient gas at all times throughout the year within their contractual limits.

10. Financial results

GasTerra's core activity is the purchase and sale of natural gas. GasTerra seeks to maximise the value of natural gas reserves in the Netherlands. This is expressed in the agreements concluded with customers.

11. Income from natural gas

GasTerra makes an important economic contribution to society by purchasing and selling a large proportion of the natural gas produced in the Netherlands. The amount of the income from natural gas is published by the government.

12. Sponsorship

GasTerra has a sponsorship programme. Most of GasTerra's sponsorship funds are spent on activities and institutions that play an active role in the Groningen region. GasTerra also contributes to the local community by sharing knowledge and resources.

13. Responsible chain management downstream

By responsible chain management downstream, GasTerra means helping customers to find solutions to their energy issues.

14. Education (sharing knowledge about energy)

Knowledge and education enable the energy sector and wider society to find answers to current and future energy issues. GasTerra sees it as its duty to help to broaden and deepen this knowledge and to support educational activities in this field.

15. Efficient gas applications

GasTerra supports the development and marketing of innovative gas applications. GasTerra actively contributes to the development and introduction of new energy technologies with knowledge and financial support. Examples are the fuel cell and electricity-generating condensing boilers (HRe boilers). GasTerra is also involved with field testing in the Veenkoloniën area, Heerhugowaard and on Ameland in conjunction with NOM (the development agency for the North Netherlands).

16. Compliance

GasTerra occupies an important position on the gas trading market. The company has an internal compliance policy which it uses to take the necessary action to ensure that all staff fully comply with the competition regulations, such as the ban on cartel formation and the ban on the abuse of a dominant position, and that they comply with other regulations that apply to GasTerra. 

17. Sustainable purchasing/internal footprint

When assessing requests for quotations, GasTerra not only takes price and quality into account but also the potential supplier's CSR score. Depending on the request for a quotation, specific questions will be asked about the company's CSR policy. GasTerra seeks to keep the burden on the environment caused by its business activities as low as possible by, for instance, reducing consumption of electricity, gas, water and paper as much as possible.

18. Future of GasTerra

GasTerra is going through a reorganisation process in which restructuring and cost-cutting are important issues. In addition, less Groningen gas is now available for sale than in the past and small-field production is in decline, which makes the role of GasTerra in the future unclear.

19. Personnel and Organisation

GasTerra considers it important that its employees are satisfied with their work and the opportunities afforded to them. This is why we conduct regular staff satisfaction surveys. GasTerra seeks to have a balanced workforce and to treat all employees the same. GasTerra invests in career development.

These material issues are then worked out in detail in objectives in the Business Plan and can be found in the strategy table below.

Material issue Aim for 2017
Position of gas GasTerra will carry out the “Gas by Design” proposal of the gas sector.

GasTerra will contribute to the rational transition towards a climate-neutral energy supply:
a) In 2017 hybrid heat pumps will be installed in more than 100 homes on Ameland, and initial experience with the social, economic and technical aspects of this heating technology will be reported.

b) In 2017 preparations will be made for installing a fermenter in the Ameland sewage plant.

Sustainable or more sustainable products GasTerra will produce a plan of action to describe how green gas production can be further encouraged, and will together with Gasunie head up a green gas project in the context of ‘Gas as part of long-term sustainable energy management’ (GILDE).

GasTerra expects to by 70 million cubic metres of green gas for 2017.
Short-term security of supply GasTerra will comply fully with its contractual obligations and will apply a failure standard of one hour’s failure in 20 years for the security of supply of its portfolio.
Transparency GasTerra will aim to achieve a score of between 150 and 170 points on the transparency benchmark when drawing up its annual report.
Future of GasTerra In GasTerra 2018, GasTerra committed to cutting its running costs and FTE headcount. Running costs will remain within (the lower) budget

GasTerra will meet its financial targets.

In addition to the stakeholder dialogue, GasTerra takes part in various (non-profit) partnerships with a view to promoting gas as part of a sustainable energy supply and monitoring and furthering harmonised market processes.

Dialogue with stakeholders

Dialogue with stakeholders
Level Nature of dialogue Content and effect of dialogue
International Gas Union, non-profit organisation whose mission is to promote gas as part of an international sustainable energy supply Knowledge exchange, gas advocacy Exchange of knowledge about the international gas value chain through meetings, joint participation in working groups and giving presentations
Project Delta Group, public-private partnership Monitoring, knowledge-transfer Reduction of our clients' footprint and acquisition of knowledge about best practices
Eurogas, partnership that stands up for the interests of the European gas sector Research, opinion-forming, monitoring, gas advocacy Participation in meetings and working groups, presentations and influencing regulations
European Federation of Energy Traders (EFET) Opinion-forming, monitoring, promotion of harmonised market processes and influencing regulations Opinion-forming through meetings, joint participation in working groups, research and giving presentations
EASEE GAS Promotion of harmonised market and communication processes and influencing regulations Joint participation in working groups, research, designing processes and giving presentations
Clingendael International Energy Program (CIEP) Research and knowledge-transfer Knowledge exchange, influence, opinion-forming,
EnTranCe Research and knowledge-transfer Knowledge exchange, promotion of the benefits of gas in the transition to a sustainable energy supply, also by developing and testing sustainable gas applications
Energy Academy Europe and EDI Knowledge-transfer Giving presentations, sharing knowledge and research
Dutch Energy Association (Vereniging Energie-Nederland) Intensive involvement, monitoring Knowledge exchange, promotion of the benefits of gas in the energy transition, monitoring and influencing regulations
Energy podium dinners and annual debate Exchanging views and information with stakeholders within and outside the gas sector in an informal setting Cultivating understanding of each other's positions, broadening and deepening of knowledge, search for common interests and positions
Energy podium website Platform for stakeholders to exchange views and arguments Learning about each other's positions and arguments, broadening and deepening of knowledge among interested audiences
GILDE Exchange of views and information with NGOs Development of a common discourse by the gas sector and NGOs in order to make a real and credible contribution to the debate on the energy and climate debate and to policy formation
Royal Dutch Gas Association (KVGN) Defending the interests of the Dutch gas sector Knowledge exchange. Expressing common standpoints, contributing to the development of energy and climate policy. External communication activities

Risk section

A robust risk policy is vital to GasTerra in order to allow it to achieve its aims. Risk management at strategic, tactical and operational level is part of the Management Control System. GasTerra’s Management Control System is based on the COSO ERM framework that is used throughout the world.

The Board of Management and the management team jointly determine the strategic and tactical risks, and are responsible for their management. Reports on this issue are also submitted to the Board of Supervisory Directors and the Audit Committee. In addition, each manager is responsible for the management of operations risks within his/her department.

GasTerra considers that risk management is an important and therefore integral part of day-to-day management and business activities. All employees, irrespective of their level in the organisation, are from time to time involved in parts of the Management Control System. They are always expected to comply with the policy rules, procedures, work instructions and guidelines in force.

A risk and control register was set up in 2016, containing a central summary of all risks, management measures and the results of the management measures. New procedures have been set up which give greater insight into the effectiveness and efficiency of business processes on the basis of the risks associated with each process. This register will be completed and updated in 2017.

Risk tolerance and risk culture

Risk tolerance is the amount of risk which a company is willing to accept. There are three different forms: risk-avoiding, risk-neutral and risk-taking.

GasTerra’s risk tolerance is low, and so in most situations it has a risk-avoiding approach. Risks are mitigated by specific measures. For all risks, an assessment is carried out to determine whether the residual risk is acceptable. GasTerra’s focus will in future be on the effectiveness, but also on the efficiency of existing measures. All business processes were described afresh in 2016. The restructuring of some processes has led to more balanced measures that reflect the level of the risk.

Risk identification and risk management

GasTerra identifies the major risks and uncertainties by means of regular risk analyses. Strategic risks are determined once a year, and tactical risks twice a year. The frequency of risks at operational level is determined on the basis of the risk profile of the business process concerned. In any event, each process is subjected to a risk analysis once every three years.

The management measures that cover high risks, known as key controls, are tested periodically via self-assessments carried out by the process owner. The results are reported and the implementation of recommendations made on the basis of the results is monitored. In addition to the self-assessments, an internal auditor periodically tests the design and operation of the management measures, also on the basis of the risk profile of the business process concerned.

Finally, GasTerra has a procedure for reporting incidents in order to promote improvements and to allow people to learn from each other.

Business risks

GasTerra’s risk analysis analyses business risks that could interfere with the achievement of targets in terms of volume, price, anticipation and costs. For each risk GasTerra determines the likelihood of the risk occurring and the impact on GasTerra if it does occur. The company decides what are the most important risks on the basis of that information. The summary below shows the most important risks identified in 2016 and the measures taken:

1. Supply from the Groningen field

The volume offered by NAM from the Groningen field limits the volume to be sold by GasTerra. Restrictions imposed on NAM, in terms of production volume and measures leading to smooth production or the use of the Loppersum clusters, automatically restrict the volume available and the flexibility which GasTerra is able to sell.

Since 2014 gas production in the Groningen field has been limited by ministerial decisions related to safety in the extraction area. The first decision in 2014 limited production to 42.5 billion cubic metres, and this has been followed by lower limits and further restrictions on extraction at various production locations in the Groningen field.

For the next five years (from gas year 2016/2017), the minister has set a maximum production level of 24 billion cubic metres of natural gas a year from the Groningen field, the option of additional production of up to 6 billion cubic metres a year in years that are colder than average. A calibration point will take place once a year, at which time the minister will decide whether new knowledge or facts mean that the permit decision needs to be adjusted.

In past years GasTerra has been able to cope with changes, for example by buying gas on the exchanges for the short term.

Decisions that might be taken by the minister are anticipated in the context of sale of volume and flexibility, to avoid entering into obligations that cannot be met. GasTerra does this by using its own resources or going to the gas market.

The risk has not changed since 2015, even though a multiannual decision was taken in 2016. The impact remains high, as it leads directly to a reduction in supply and so uncertainty in terms of the volume to be sold. Nevertheless, GasTerra has shown that it can respond appropriately to the decisions taken.

2. Supply from small fields

Gas extraction from small fields is also under pressure. Low gas prices, difficult permit trajectories and a decline in social and political support for natural gas are making existing gas production more difficult and stand in the way of the realisation and profitability of new projects. This might eventually mean that supply from small fields declines more rapidly than is allowed for in the current forecast.

GasTerra buys gas from small Dutch fields as well as from the Groningen field. GasTerra encourages the production of this gas by guaranteeing that small field producers are always able to sell their gas to GasTerra at normal market conditions. By doing this, GasTerra is implementing the government's small field policy.

However, the developments referred to above stand in the way of opening up new fields for production. The absence of new gas extraction does not reduce the unit costs of existing production. Very limited exploration activity means that this situation is likely to remain for a considerable time. This will lead to falling supply, which will also affect GasTerra's portfolio.

GasTerra offers small field producers normal market conditions in accordance with the Gas Act and its own company policy. GasTerra also informs parties concerned as to the expected effects of current market conditions on supply from small fields.

This risk was first identified as a significant high-impact business risk in 2016. As long as prices remain low, supply will continue to fall sharply. GasTerra expects to have sufficient resources within its portfolio and on the market to allow it to meet its obligations.

3. Image of natural gas

The position of gas in the energy mix of the future and the image of this energy source are under pressure. Society is looking for ways of achieving the ambitious targets for CO2 emissions. The position of gas in this respect has been damaged as a result of the earthquakes in Groningen, concern over dependence on Russian gas, discussions on shale gas and methane emissions. The positive aspects, such as comfort, the cleanest fossil fuel, flexibility and versatility risk being pushed to the background of these debates.

Gas has played a vital role in energy supply for decades. At a time of structural and far-reaching changes, when gas trade and gas transport were being separated from each other and the market was being opened up, gas continued to play a major role. But this is no longer automatically the case. Society wants to reduce the volumes of greenhouse gas emissions in order to help limit the extent of climate change. Governments have formulated ambitious targets for this, and plans have been or are being drawn up to achieve them. The presence of fossil fuels is often seen as a drawback in this regard, slowing down the process towards a fully sustainable energy supply. The concept of a responsible, gradual move towards sustainability, where the main focus in the transition period is on cutting emissions, risks being pushed into the background as a result of this attitude.

The earthquakes in Groningen have also made many people feel more strongly that gas is at best a necessary evil, and tensions between Russia and the Ukraine have heightened the existing doubts over security of supply of gas in Europe. The debates on shale gas and methane emissions caused by fossil fuels have also brought the image of gas under increasing pressure.

This development undermines the position of natural gas and is therefore a major concern for the gas sector.

GasTerra has set itself the task of increasing understanding of the energy issue and the importance of gas. Under the umbrella of the Dutch gas association KVGN, GasTerra works with other companies that are active in the gas sector in order to produce a new, clear, positive vision of the function of gas in the energy transition. Gas can certainly continue to play an essential albeit changed role, acting more often in smart cooperation with other forms of energy. In other words: the use of gas will increasingly be customised (‘Gas to Order’). In this context the gas sector is supporting the government in its efforts to focus primarily on reducing CO2 emissions in the transition towards a climate-neutral energy supply. This is because greenhouse gas emissions contribute to climate change, and it is therefore essential for society to concentrate primarily on emission reduction. The best way of achieving this is to set priorities for the use of energy sources and energy carriers. Energy saving is the top priority here. The second priority is that, where possible and rational, renewable energy, including renewable (green) gas should be used. Next come the fossil fuels, with natural gas as the first choice because it produces fewer CO2 emissions than the other fossil fuels (oil and coal).

In autumn 2016 the Ministry of Economic Affairs presented an energy agenda with policy choices for the period from now until 2050. This was preceded by a national energy dialogue in which the gas sector took an active part, via a series of KVGN panel debates among other activities. The role of gas as an essential part of the trajectory towards a sustainable energy supply was also discussed with the Social and Economic Council. A section on gas was written specifically for this purpose and can be incorporated into the Energy Agreement. In this way the gas sector wishes to show society that it wants to be an active participant in making the energy supply more sustainable.

The risk of GasTerra being damaged by the decline in the image of gas has increased further since 2015, and may eventually have a significant impact.

4. Green Gas

In the years to come, green gas will be able to play an important role in making the energy supply more sustainable. In order for this to happen, the position of green gas must improve quickly and sufficient production capacity must be developed. If that is not achieved, the understanding that gas is inextricably bound up with making the energy supply more sustainable will come under further pressure.

By 2020 all European member states must generate part of their energy supply sustainably. This percentage has been set at 14% for the Netherlands. The emphasis is placed on sustainable electricity, but the sector believes that green gas also has an important part to play. GasTerra considers it important to stimulate this development and to inform policy-makers about it.

Green gas production currently stands at about 100 million cubic metres a year, and it will be possible to produce a few billion m3 a year from Dutch sources (green waste, manure etc.). This requires maximum use of biomass streams and a change in logistics. Manure and seaweed are high-potential biomass streams, while woody biomass can be used in the large-scale deployment of gasification technology.

At the moment the energy generated by the use of green gas is similar to the amount of electricity produced by solar panels. Estimates indicate that enough green gas is available to meet the heat demands of the built environment in a cost-effective and sustainable manner through the use of hybrid heat pumps. The amount of green gas currently available is not yet sufficient to completely meet the heat demands of industry on a sustainable basis, but it is possible to move in the right direction. In short, green gas is a promising part of a sustainable and affordable energy supply.

GasTerra sees green gas as a priority, and is focusing on increasing supply.

GasTerra will also assess what contribution it can make itself to green gas projects. For example, the company is now supporting a project investigating whether more green gas can be produced by fermenting sewage sludge under high pressure and adding hydrogen to it.

The lag in green gas production was first noticed as a point of interest in 2016. GasTerra will in the years to come attempt to contribute to its further development.

5. Credit-worthiness

GasTerra is exposed to a higher credit risk as a result of the worse financial position of some major clients.

The credit risk is the loss that might arise if clients default and do not meet their contractual obligations. The credit risk of a number of major clients increased this year.

GasTerra has drawn up guidelines which must be met by clients, with most of whom there is a long-standing relationship. These guidelines limit the risk associated with possible credit concentrations and market risks. The guidelines form part of GasTerra contracts. The credit-worthiness of each party is permanently monitored. If clients or counterparties fail to meet these guidelines, further securities such as bank guarantees are requested, and/or no new contracts are entered into with these parties.

The risk has not changed since 2015. Although the credit-worthiness of some major clients has declined, additional agreements have been reached with a number of clients, and in 2016 no clients were unable to meet their payment obligations as a result of their financial position. GasTerra has sufficient resources to mitigate this risk.


GasTerra attaches a great deal of importance to safeguarding the quality and integrity of the staff's actions. One of the tools that the company uses for this is a code of conduct with norms and values. New GasTerra employees formally undertake to comply with the code of conduct at the beginning of their employment. Attention is also regularly drawn to the code of conduct within the organisation, for instance via the intranet and the annual compliance programme. A Compliance Officer has been appointed who is responsible for implementing this programme. The objective of this is to make staff aware of the importance of the duty to adhere to legislative and other regulatory requirements applicable to GasTerra. This programme is obligatory for all employees. In 2016, 98% of employees followed the annual compliance programme.

An internal auditor regularly vets each department to check on whether they are complying with all procedures. The results of the audits are discussed with the Board of Management, the auditor and the Audit Committee. No employees were reported in 2016 for failure to comply with the code of conduct and supplementary procedures. GasTerra continually assesses whether the code of conduct and procedures need to be adapted or supplemented.

Information security is vitally important for the operations of a trading company such as GasTerra. Continuous attention to information security is essential because of the increasing threats and the professionalisation of cybercriminality.

The quality of the processes associated with the management of information security were improved last year, taking the best practices of the ISO27001 standard as a starting point.

Awareness in this area is high on the agenda. Last year the company once again ran an “awareness action” for staff, including efforts to obtain information from GasTerra. The conclusion is that staff are aware of the risks and act accordingly, but that regular attention to this issue remains important.


GasTerra is faced with more and more regulation at national and European level, especially in the areas of energy and finance. We note that the rules that are relevant to GasTerra are becoming increasingly fragmented, leading to inefficiencies in the business operations.

We manage this risk in two ways:

1) By closely monitoring regulatory developments at European and national level. We try to influence these developments where possible. When new regulations come out, we make sure that we comply with these obligations in a timely manner.

2) In meetings with governments and EU leaders, the need for a clear European energy policy is emphasised in order to ensure that regulations are efficient and that there is no duplication of effort.

The European Parliament adopted the Regulation on wholesale energy market integrity and transparency (REMIT) for the energy sector in 2011. This sector-specific regulation prohibits insider trading and market manipulation. There is also a European regulation which contains the same prohibitions, but focusing mainly on financial instruments (Market Abuse Regulation/MAR), and this regulation also applies to part of GasTerra's activities. GasTerra has adopted various measures to prevent market manipulation as covered by REMIT and MAR. REMIT also requires market operators to comply with extensive reporting obligations, and GasTerra has set up the necessary procedures for this.

Another relevant piece of European legislation is the Markets in Financial Instruments Directive (MiFID). MiFID has been in existence since 2004 (MiFID I) and was revised in 2014 (MiFID II). The relevant secondary legislation was adopted at the end of 2016. The new regime will take effect on 3 January 2017. MiFID I contains a general exemption for energy companies that does not exist under MiFID II. The effect of this is that certain obligations, e.g. reporting and record-keeping obligations, will apply to energy companies that trade in financial instruments. Additional obligations, such as rules of conduct and capital requirements, will apply to energy companies that require a license under MiFID II. A compulsory MiFID II license for energy companies could adversely affect the liquidity of gas trading exchanges, which could restrict GasTerra’s opportunities to trade. GasTerra hopes to be able to use the 'ancillary activity exemption', a matter which should be clarified in the course of 2017.

Transmission regulations

With effect from 1 November 2015, the Network Code on Capacity Allocation Mechanisms (CAM) comes into force in Europe. CAM encourages the use of the Prisma Platform to offer bundled capacity at border points wherever possible. The Transition System Operators (TSOs) can only offer unbundled if there is a mismatch between the available capacity on both sides of the border. This bundling obligation makes it more difficult to purchase unbundled capacity that is needed to match our own capacity that was booked in the past. Problems arise especially when TSOs on both sides of a border point are working under different technical conditions. GasTerra brought this issue to the attention of the relevant authorities. Gasunie Transport Services B.V. (GTS) will be implementing the new code from 1 January 2018.

The network code tariffs (TAR NC) has now been completed. This code regulates how and when tariffs for gas transmission need to be set, as well as the rules for transparency and consultation with which TSOs and regulators must comply. The code will be phased in from 2017.

The Authority for Consumers and Markets (ACM) is preparing a method decision on tariffs in the GTS network for the period from 2017 to 2021. It is expected that this decision will be taken in the first half of 2017. GTS will submit a tariff proposal for 2017 to the ACM for approval on the basis of this method decision. The 2016 tariffs will remain in force until the tariff decision for 2017 has been taken.

Summary of financial results

  2016  2015 
Income and expenditure in millions of euros    
Net turnover 9,865 14,740
Gas purchases 9,263 14,119
Transmission costs 501 532
Profits in millions of euros    
Profit before tax 48 48
Net profit 36 36
Dividend 36 36
Other financial information    
Investments in millions of euros 1.2 3.2
Liquidity ratio 1.1 1.1
Balance sheet data in millions of euros    
Total assets 1,995 2,353
Shareholders' equity 216 216
Current liabilities 1,779 2,137
Volumes sold in billions m3    
Total sales 63.9 70.3
The Netherlands 23.1 27.3
Rest of Europe 40.8 43
Personnel year-end in full-time equivalents    
Company staff 158 169
Health and safety    
Sickness absence (in %) 3 2.1
Average absenteeism rate 0.89 1.1