The Dutch-Qatari energy relation : the role of the Dutch gas hub in securing gas supply in the EU

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The Dutch-Qatari Energy Relation: The Role of

the Dutch Gas Hub in Securing Gas Supply in the

EU

MSc Political Science (International Relations) Thesis Research Project: The Political Economy of Energy University of Amsterdam, Graduate School of Social Sciences

21st June 2019

Author: Supervisor:

Régine Portocarero Dr. M. P. (Mehdi) Amineh 60970762 Second reader:

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Acknowledgements

This dissertation is not only the end product of my student career as a whole, but also of six months of intensive research, disappointment, sleep deprivation, and at last gratification and fulfilment. As such, I would like to express my sincerest gratitude to Dr. Mehdi Amineh, who is the most dedicated mentor and professor I have ever encountered in my student career. Due to his profound knowledge of geopolitical economy and constructive feedback, I have learned to not only utilise but also to appreciate my skills and knowledge to the fullest, even though my own confidence was sometimes lacking. Likewise, without his indispensable ability to apply concepts and theories, this dissertation would not have been possible. I would also like to thank my second reader, Dr. Henk Houweling for commenting and taking interest in my work.

Furthermore, I would like to thank all my interviewees, whom have taken the time to meet with me and offered me knowledge and insights on the LNG market, which even further spurred my interest to study energy and geopolitical economy. Moreover, I would like to thank my fellow students in the thesis project for our critical and often challenging debates. Last, but not least, I would like to thank my parents for allowing me to fully focus on my thesis during these last six months. My mother has shared her profound knowledge on the Middle East and her continuous support and love. This has been one of the main pillars of my motivation, not only during this six-month journey, but also during my student career as a whole.

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Abstract

This thesis analyses the evolution of the energy relation and challenges between the Netherlands and Qatar, specifically the role of the Dutch gas hub in securing foreign gas supply and facilitating gas trade between the EU and Qatar from 2006 till 2018. The EU faces an increase in domestic gas consumption amidst decreasing domestic production. In 2018, the Netherlands for the first time since the beginning of its domestic natural gas production, became a net importer of gas and aims to terminate domestic production by 2030. This is significant at EU-level as the Netherlands supplied large volumes of gas to the rest of the EU, thereby increasing the importance of additional gas supply and gas security. In this context, the Netherlands introduced the Dutch gas hub policy to transform to a gas hub in Northwestern Europe, along with initiating the ‘Gas Access to Europe’ (Gate) LNG terminal. The Gate terminal in the Netherlands connects the Dutch and EU gas network to the global supply of LNG, in which Qatar is the largest LNG exporter. The global LNG market has become increasingly flexible, liberalised and competitive due to the rise of portfolio players, increasing number of buyers and sellers, hub-based pricing and spot availability. In this flexible LNG trading market, the Dutch gas hub ensures additional and diversified LNG supply by responding to fluctuating gas demand and supply, thereby contributing to the security of energy supply in the EU.

Keywords: Energy supply security, the Netherlands, Qatar, the EU, LNG contracts, the Dutch

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Maps

Political map of Qatar

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Political map of the Middle East

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Political map of Europe

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List of Tables and Figures

Tables

Table 2.1 Total energy production, consumption, and net imports, EU, 2000-2016 26

Table 2.2 Gas reserves in the Netherlands, 2000-2017 32

Table 2.3 Total energy production, consumption, and net imports, NL, 2000-2016 34

Table 3.1 Top five countries by natural gas: reserves & production, 2017 55

Table 3.2 Shareholders, capacity and main markets of Qatargas I-IV 58

Table 4.1 Largest LNG demand and supply markets, total imports in MT, 68

followed by market share %, 2018 Table 4.2 Volumes received from Qatar by the Asian and EU market, 2018 77

Table 4.3 Infrastructural investments in the Dutch gas hub, 2006-2018 80

Figures Figure 1.1 Capital industrial development and its outcomes 15

Figure 1.2 Key actors in this thesis and how they are related to each other 18

Figure 2.1 Final gas consumption by sector, EU, 2016 27

Figure 2.2 Net electricity and derived heat generation by input, EU, 2016 27

Figure 2.3 Trends in GDP and final energy consumption, EU, 2000-2016 30

Figure 2.4 Trends in GDP and final energy consumption, NL, 2000-2016 31

Figure 2.5 Final gas consumption by sector, NL, 2016 35

Figure 2.6 Net electricity and derived heat generation by input, NL, 2016 35

Figure 2.7 Total natural gas revenues for the Dutch state and its share 37

in the total government revenues and total GDP per year, 2006-2018 Figure 2.8 Gas extraction from the Groningen field in future weather scenarios 42

and the natural depletion of the small fields in the Netherlands, 2018-2031 Figure 2.9 Involvement of state and private actors in gas 45 production, transport and trade in in the Netherlands

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List of Abbreviations

AIIB Asian Infrastructure Investment Bank BBL Balgzand Bacton Line

BP British Petroleum BRI Belt & Road Initiative

CBS Centraal Bureau voor de Statistiek DES Delivered Ex Ship

EBN Energie Bedrijf Nederland ECB European Central Bank EED Energy Efficiency Directive

EIA Energy Information Administration EIT European Integration Theories EIU Economic Intelligence Unit ESS Energy Security Strategy EU European Union

EZK Ministry of Economic Affairs and Climate FOB Free On Board

Gate Gas Access To Europe GCC Gulf Cooperation Council GDP Gross Domestic Product GHG Greenhouse Gas

GIIGNL International Group of Liquefied Natural Gas Importers GPE Geopolitical Economy

GTL Gas-To-Liquid

GTS Gas Transport Services IEA International Energy Agency IED Industrial Energy Directive IGU International Gas Union IMF International Monetary Fund IOC International Oil Company IPE International Political Economy ISIS Islamic State of Iraq and Syria

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JCC Japanese Customs-cleared Crude JFTC Japanese Fair Trade Commission JKM Japanese Korean Marker

LNG Liquefied Natural Gas

MDPS Ministry of Development Planning and Statistics MENA Middle East and North Africa

MESA Middle East Strategic Alliance MoC Memorandum of Cooperation

MOF Ministry of Foreign Affairs (the Netherlands) MOFA Ministry of Foreign Affairs (Qatar)

MoU Memorandum of Understanding NAM Nationale Aardolie Maatschappij NBP National Balancing Point

NCG Net Connect Germany

NDS-1 National Development Strategy 2011-2016 NDS-2 National Development Strategy 2018-2022 NEL Nordeuropäische Erdgas Leitung

NOC National Oil Company

OMV Österreichische Mineralölverwaltung

OPEC Organisation of Petroleum Exporting Countries PCI Per Capita Income

POR Port Of Rotterdam

PPP Public Private Partnership QDB Qatar Development Bank QFC Qatar Financial Centre QIA Qatar Investment Authority QIB Qatar Investment Bank QNV Qatar National Vision QP Qatar Petroleum

RL Ras Laffan Liquefied Natural Gas Company Limited RVO Rijksdienst voor Ondernemend Nederland

SCO Shanghai Cooperation Organisation SME Small Medium Enterprise

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TFEU Treaty on the Functioning of the European Union TPA Third Party Access

TTF Title Transfer Facility UAE United Arab Emirates UK United Kingdom UN United Nations US United States

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Chapter I

Research Design

1.1 Introduction

Since the start of the Industrial Revolution in 1750, fossil fuels have played and continue to play a dominant role in the global energy system. The fossil fuel dependence of wealth and power structures led to devastating effects on the environment. Ultimately, the long-term goal of states is to achieve a carbon-free economy, as fossil fuels are scarce and not economic and environmentally sustainable. The 2016 Paris Agreement was a milestone in international effort to tackle climate change by reducing greenhouse gas (GHG) emissions, which are mostly caused due to the combustion of fossil fuels. Even though renewables (e.g. wind, solar, hydro or bio energy) are the fastest growing forms of energy, fossil fuels will continue to dominate the world’s energy demand in the nearby future (EIA, 2017). This thesis concerns an intermediate goal: gas supply security. Supply security of gas refers to the availability of gas in sufficient quantities at reasonable and affordable prices at all times, without causing unacceptable or detrimental impacts on the environment (Amineh & Guang, 2018: 14). The reason for this intermediate goal is twofold. Firstly, even though renewables are the fastest growing forms of energy, the energy transition requires more than appropriate technologies, as it also needs a certain congruence of social and economic reforms, focusing on the radical transformation of the patterns of production, consumption and organisation of human life (Altvater, 2007:55). Secondly, natural gas is the cleanest of fossil fuels and generates significantly lower GHG emissions. However, natural gas is increasingly concentrated in regions sensitive to geopolitical conflict. Russia, Iran and Qatar together hold half of the world’s proven gas reserves (BP, 2018a: 26). Hence, the combination of concentrated gas reserves, resource scarcity and environmental concerns have created a setting for the importance of gas supply security.

The aim of this thesis is to analyse the evolution of the energy relation and challenges between the Netherlands and Qatar, specifically the role of the Dutch gas hub in securing foreign gas supply and facilitating gas trade between the European Union (EU) and Qatar. The EU faces an increase in domestic gas consumption amidst decreasing domestic production. In 2018, the Netherlands, for the first time, since the beginning of its domestic natural gas

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production, became a net importer of gas, due to the Phasing out Policy, aiming to terminate production from the Groningen field by 2030 (EZK, 2018a). This is significant at the EU-level, as the Netherlands supplied large volumes of gas to the rest of the EU. For this reason, additional supply and gas security have become crucial for both the EU and the Netherlands (Commission, 2019a: 10). In 2006, the Netherlands introduced a set of policy measures to transform to a gas hub in Northwestern Europe, including investments in pipeline infrastructure and storage, the development of the Title Transfer Facility (TTF) and the initiation of the Liquefied Natural Gas (LNG)1_{‘Gas Access to Europe’ (Gate) terminal (EZK, 2011a: 9-14;} EZK, 2011b: 53). The Gate terminal connects the Dutch gas network to the global supply of LNG, in which Qatar is currently the largest supplier. In 2017, Qatari LNG accounted for 41 percent of total LNG imports in the EU (Commission, 2018d). By functioning as a gas hub instead of gas producer, the Netherlands ensures both domestic as EU gas supply security. The global LNG market has become increasingly flexible, liberalised and competitive, due to the rise of portfolio players, increasing number of buyers and sellers, hub-based pricing and spot availability (BP, 2018b). For emerging buyers such as the EU, this changing environment raises additional concerns in terms of supply security, in the context of more interdependent markets, fluctuating demand volatility and price sensitivity.

The societal relevance stems from the fact that an uninterrupted supply of hydrocarbon reserves is the requirement for a stable and prosperous economy as food production and transport fully rely on fossil fuels (Amineh & Guang, 2018: 14). Furthermore, the study of energy security is crucial for the EU and the Netherlands, as the residential, industrial and power generation sector almost entirely run on the consumption of natural gas. The lack -and decline of domestic production forces the Netherlands to access natural resources beyond borders by developing tools and policies to sustain their fossil fuel based wealth and power structures. In addition, this thesis adds academic relevance explaining the role of the Netherlands for the EU’s energy supply security. For this, the timeframe is from 2006 until 2018. The reason thereof is twofold. In 2006, the Dutch gas hub policy developed and the EU increased its efforts to diversify its gas supply routes through LNG imports. Geopolitical events will be closely followed up until June 2019, data on the LNG market runs until 2018, whereas data on the energy situation in the EU and the Netherlands follows the most recent published data from Eurostat, which is 2016. Moreover, for examining economic relations between Qatar

1 LNG forms natural gas when cooled to -162ºC. This cooling process shrinks the volume of the gas by 600 times, making it easier to store and transport by ship (Shell, 2019d).

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and the Netherlands, long-term development data is used, dating back to Shell’s involvement in Qatar in 1984. The geographical focus is the EU as a whole, focusing on the European Commission (Commission), Qatar, the Netherlands, the Gulf region, regional players, and major powers including China, Russia and the United States (US) to examine the geopolitical aspect.

Objectives

The central aim of this research is to analyse the evolution and challenges of the energy relation between the Netherlands and Qatar and the role of the Dutch gas hub in securing foreign gas supply and facilitating gas trade between the EU and Qatar. Thereby, this research examines whether the Dutch gas hub contributes to an increased EU energy security. The Netherlands and Qatar appreciate strong bilateral economic and diplomatic relations which have unfolded between different actors over the years. Hence, if the EU continues to depend on LNG imports in a flexible trading market, the Dutch gas hub could contribute to enhance an effective market activity and security of energy supply.

In order to do this, the first objective is to analyse the energy situation in the EU and in the Netherlands and with this the process of energy policy formulation, followed by the relevant actors in the Dutch gas and LNG industry. This sheds light on the reason why the Netherlands introduced the gas hub policy and engages with Qatar. The second objective delves into the state and energy sector in Qatar. The third objective examines the tools (diplomatic and economic) used by the Netherlands to strengthen the energy relationship. The fourth objective analyses the challenges and possibilities of attracting Qatari LNG supply to the EU and to the Netherlands and thus delves into the development of the Dutch gas hub and trends in the global LNG market. The fifth objective focuses on the domestic and geopolitical challenges in Qatar and the Middle East and North Africa (MENA) and Persian Gulf region that might threaten the EU’s energy security and pose barriers for energy trade and investments in the region.

Research question

These objectives result in the following research question:

How has the energy relation between the Netherlands and Qatar evolved and what is the role of the Dutch gas hub in securing foreign gas supply and facilitating gas trade between the EU and Qatar, thereby enhancing the EU’s energy security?

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In order to answer the main question, this research is divided into six chapters, each with a corresponding sub-question, where chapter 6 presents the conclusion. For a complete overview of the structure of the thesis see section 1.6.

Chapter 2: Sub-question 2: What is the energy situation in the Netherlands and in the EU? Do the energy policies of the Netherlands fit within the EU framework and who are the relevant actors in the Dutch gas and LNG industry?

Chapter 3: Sub-question 3: How is power structured in the Qatari energy sector and what is its political economy of energy policy? How has the energy relation between Qatar and the Netherlands evolved, supported by their diplomatic and economic relations?

Chapter 4: Sub-question 4: How does the Dutch gas hub secure foreign gas supply and facilitates gas trade between the EU and Qatar and what are the possibilities and challenges for the EU and the Netherlands in securing Qatari LNG supply?

Chapter 5: Sub-question 5: What are the domestic and geopolitical challenges in Qatar that challenge the EU’s energy security?

1.2 Literature review

This part provides an overview of previous studies related to the objectives of this thesis. The topics are: the Dutch gas sector and gas policy, the role of LNG for the EU, developments in the global LNG market (trends and actors), and the energy sector and foreign policy in Qatar.

The Netherlands: gas sector and gas policy

The Netherlands has been the biggest natural gas producer and exporter- in and to the EU, ever since the discovery of the Groningen field in 1959 (Commission, 2017a). According to Mulder & Zwart (2006: 20-23), the Dutch government is involved in all upstream, midstream and downstream activities of the Dutch gas industry through the following measures: ownership, regulation and financial instruments. Regarding ownership, the Dutch government participates in all exploration and development activities in the Netherlands, as well as in trade and transport activities. Concerning regulation, the state is responsible for approving all licenses for gas

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fields. With financial instruments, the Dutch government takes measures consisting of direct tax and other financial measures. The direct tax is the corporation tax, i.e. the profit-related tax, applicable to all corporations, active in the mining industry. Other financial measures consist of royalties and the petroleum tax. Schipperus & Mulder (2015: 118-119) show that the Dutch gas sector faces declining indigenous production. The reason for that is the depletion of the Groningen field reserves, together with the increasing occurrence of earthquakes, which triggered social pressure to reduce gas production. The Groningen field acted as a balance-field: due to its high flexibility it was able to generate significant profits by selling gas in long markets, increasing the annual revenues of the Dutch government. Moreover, gas remains at the centre of the Dutch energy mix, as the Dutch residential and industrial sector highly depend on the consumption of gas and will remain to do so.

Consequently, the increasing domestic energy demand and decreasing domestic production raise questions of energy security. The Dutch gas policy seeks to transform the Dutch energy market from a domestic-production to a transit-driven market by developing a Dutch gas hub for Northwestern Europe. Hence, securing an additional source of income for the Dutch government. Schipperus & Mulder (2015: 125) base their analysis on only a part of that policy, namely, on the institutional reforms to enhance the liquidity of the gas market. The scholars observe that the TTF has grown into a highly liquid trading platform, both in terms of market share, trade volume, number of active traders and churn-rate, increasing the security of gas supply for the Netherlands and the EU. Honore (2017: 37-43) analyses the impact of the Groningen production cap on EU importers and finds that alternatives to Dutch gas are limited to renewable energies, the exploitation of smaller gas fields in the Netherlands, green gas production, gas storage investments, and an increase of pipeline imports from Norway and Russia. Lastly, Honore only briefly touches upon the possibility of an increase of imports from a wide range of LNG suppliers.

The role of LNG for the European Union’s energy security

In order to examine the role of the Dutch gas hub for the EU’s energy security, it is important to review the importance of LNG for the EU (Wood, 2016, Leal-Arcas, Rios & Grasso, 2015, Rodriguez, Zaccarelli & Bolado, 2016). Wood (2016) and Leal-Arcas, Rios & Grasso (2015) agree that LNG imports strengthen energy supply security: LNG is less geographically confined and allows the EU to engage with strategically more reliable markets, such as Qatar, the US and Australia. Rodriguez et. al. (2016:474) add that the Commission is strongly

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committed to increasing LNG trade. Between 2009 and 2014, there was an increase/improvement of: LNG receiving terminals, LNG floating storage, regasification units and underground storage facilities, interconnecting and reverse-flow networks, and the development of gas hubs in France and the Netherlands, providing flexibility to support shortage of supply in terms of crisis. Scholars also briefly touch upon the importance of EU gas hubs for the EU’s energy security (Correlje, 2016, Heather, 2012, Pollo & Miriello, 2015, Petrovich, 2013). Correlje (2016:34) argues that gas hubs improve the number of entrance points in the EU gas market, increasing interconnectivity and flexibility of supply. Heather (2012:10) distinguishes trading hubs (the Dutch TTF and the British National Balancing Point (NBP)), transit hubs (Zeebrugge in Belgium and Baumgarten in Austria) and transition hubs (for example, Net Connect Germany (NCG) in Germany). The NBP is the most developed hub, whereas the TTF is growing, because of the strong push of the Dutch government. Pollo & Miriello (2015) and Petrovich (2013) elaborate that the attractiveness of the Dutch hub has increased, due to its geographical location, market regulations, increased interconnections with neighbouring countries, investments in LNG terminals and gas storage facilities.

Developments in the global LNG market

Trends in the global LNG market

Wood (2012), Mu & Ye (2018), Carriere (2018), and Trimble (2018) wrote extensively on the evolvement of the global LNG market. Wood (2012:27) presents that global LNG trade has grown rapidly, fuelled by increased globalisation, technology improvements, demand growth, and environmental concerns. Asia continues to dominate LNG trade, but the EU’s market conditions allow the EU to emerge as a significant LNG importer as well.

Mu & Ye (2018: 215) divide the global LNG market into importers: the Pacific Basin (Japan, Korea, Taiwan, China and India) and the Atlantic Basin (Spain, Italy, France, the United Kingdom (UK), the Netherlands, and Belgium), and exporters: Qatar, the US, Australia, Nigeria, and Algeria. Additionally, five regional spot LNG markets are identified: East Asia, Spain & Portugal, Northwestern Europe, South America, and North America. Due to the increased LNG business, LNG flows between the Pacific and the Atlantic Basin increased, Qatar became the largest LNG exporter, domestic production in the US manifested itself after the shale gas revolution, competition grew in Europe and in Asia, LNG contracts evolved, and increased trade in spot, short and medium-term markets materialised. The findings show clear evidence of a price convergence between the spot LNG prices and between spot LNG and NBP

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prices, in particular from 2016 onwards. Moreover, European prices are forecasted to partially match Asian prices for the period of 2020-2035, implicating that a global gas market might occur if the volume of spot and short-term markets further increases (Trimble, 2018: 439; Mu & Ye, 2018: 231). Important to note is that North America is not a material importer of LNG, its prices will influence the LNG market, but prices remain outside the convergence (Trimble, 2018: 438). In contrast to Mu & Ye (2018) and Trimble (2018) who argue for the strong emergence of a more liquid and diversified global LNG market, Carriere (2018: 136) states that fixed long-term contracts continue to dominate LNG trade. However, the specific provisions of long-term contracts are changing. Japan has pushed for greater LNG market flexibility on LNG pricing, destination restrictions, thereby seeking a more diversified contract portfolio. These trends have an impact the global LNG market, as Japan is the largest LNG importer on the globe and engages with international partners to establish a liquid global LNG market.

Actors in the LNG market

Scholars highlight the dominant roles of the Commission, National Oil Companies (NOCs), International Oil Companies (IOCs), national energy corporations, and governments in the various phases of the EU LNG chain (Fernandez & Palazuelos, 2014; Godzimirski & Nowak, 2018; Hartley, 2015; Ledesma, 2009). Fernandez & Palazuelos (2014: 496-507) rely on an International Political Economy (IPE) approach to explain the organisation of power relations within the gas market. IPE emphases the deep interconnection between national and international actors, political intervention in the market structures and the interaction between states and transnational corporations. The scholars present that due to the Commission’s liberalisation policies (e.g. the unbundling of vertically integrated companies), the creation of hubs, the promotion of spot and short-term contracts, gas-to-gas pricing, and increased investments in the LNG structure, the gas industry evolved into a more integrated gas market, where gas is traded in a liquid and competitive manner. However, whereas the Commission exerts great power in the internal market through its competition policy, it cannot alter the relational power between exporting NOCs, IOCs and national energy corporations, nor can it alter the national alliance between NOCs and their respective government. Qatargas, Statoil, Sonatrach, and Gazprom remain the main exporters of gas. Moreover, the power of national importing and distribution corporations has not been weakened by the Commission. In the Netherlands, Gasunie has been forced to unbundle, becoming transport (Gasunie) and

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distribution (GasTerra), but Gasunie remains 100 percent state-owned with a monopoly on gas transport in the Netherlands, demonstrating the regulatory power of the Dutch state. Furthermore, E.ON, RWE Supply & Trading, Gaz de France, Gas Natural Fenosa, and Ente Nazionale Idrocarburi are the dominant importers of gas to the EU.

Hartley (2015: 232) adds that national energy corporations negotiate LNG supply contracts with exporting NOCs. In addition, large exporting and importing incumbents have taken advantage of hubs: Qatargas, Sonatrach, GasTerra, RWE Supply & Trading, and E.ON have acted as traders and spot suppliers whilst playing with daily fluctuations in gas prices between gas hubs. Lastly, Ledesma (2009: 14) argues that the IOCs ExxonMobil and Shell are crucial in the extractive phases of the Qatari LNG sector: they bring the Qatari NOCs access to risk capital, technical expertise, advanced technology, project development experience and financial aid.

Qatar: energy sector and foreign policy

In resource- rich countries such as the Persian Gulf, rents are generated through revenues from oil and natural gas exports. Consequently, the state becomes autonomous from civil society and provides public services without having to levy taxes on its citizens (Gray, 2011: 6). Khatib (2013: 420) adds that Qatar holds the world’s third largest gas reserves, and has emerged as the largest exporter of gas, implicating that Qatar’s foreign policy heavily revolves around the need to guarantee gas exports. However, Qatar cannot be conceptualised as a rentier-state, because it re-invests these in other economic sectors in order to achieve long-term economy viability. In addition, Kamrava (2009) and Haselip, Al-Shafai & Morse (2010) explain that the Qatari are stable and reliable trading partners, as generally Qatar pursues an open-door policy towards various clashing political actors in the region by acting as a neutral mediator.

DSouza (2017) adds that Qatar is governed by the Al Thani ruling elite, who streamline policy-making and economic activity in Qatar. They have strict control over the energy sector and own the major oil company, QP, who has the majority share in Qatargas, the company controlling Qatar’s natural gas sector. In addition, Qatar performs poorly on political rights and civil liberties: it does not have an independent legislature, political parties or civil society organisations. Further, Doukas et al. (2013) and Houshisadat (2015) present that the Al Thani’s heavily invest in the Qatari LNG sector, but also seek to attract foreign investors to gain the necessary technical experience. Hence, ExxonMobil, Mitsui, Marbueni, ConocoPhillips, Shell, and Total are all crucial NOCs and IOCs in the Qatari LNG sector (Doukas et al., 2013: 203).

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Lastly, Krane & Wright (2014: 20) present that Qatar’s foreign energy policy shifted its focus to supplying big economies in Europe and Asia, instead of engaging in regional gas trade with the gas-short Gulf countries.

Gap in the literature

The literature provides insights on the changing global LNG market: LNG markets have become more integrated, liberalised and competitive. Prices have converged, and specific contract provisions have evolved and became more flexible, allowing the EU to become a significant LNG importer. In addition, studies show that the Commission, QP, Qatargas, Shell, ExxonMobil, the Dutch state and national energy corporations steer the development of the EU’s LNG value chain in securing Qatari LNG.

However, the first gap is that scholars (Correlje, 2016, Heather, 2012, Pollo & Miriello, 2015, Petrovich, 2013) tap into is the development of EU gas hubs in the EU. With this, they fail to delineate the role of EU gas hubs and how these increase the EU’s energy security. In particular, the importance of the Dutch gas hub is neglected, which has become crucial, especially given the development of the gas hub policy to transform the market from a domestic-driven to a transit-driven market. The second gap is that studies (Schipperus & Mulder, 2015; Honore, 2017) that did touch upon the Dutch gas hub policy, were not concerned with the possibility of an increase of imports through the Gate terminal nor where scholars concerned to delineate this importance in securing the EU’s supply of gas. In this context, the development of EU gas hubs are crucial, as they present a central point for gas trade to be imported and re-exported regionally and internationally, fostering flexibility and competitiveness. Hence, the Dutch gas hub has received an increasing amount of attention: it allows for the virtual trading of gas through the TTF, invests in domestic and international gas infrastructure, laying the groundwork that more gas will be offered through the Dutch gas transmission network over the coming years, and provides access of LNG into the EU through the Gate terminal. Qatar, being the world’s largest LNG exporter captured a market share of 41 percent of total LNG imports in the EU in 2017 (Commission, 2018d). Hence, the third gap in the literature is that studies neglected the economic and diplomatic relation between Qatar and the Netherlands. The Netherlands and Qatar have a strong economic and diplomatic relationship, laying the basis of a global strategic partnership. Consequently, this research seeks to academically and scientifically contribute with an analysis on the role of the Dutch gas hub

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in securing foreign gas supply and facilitating gas trade between Qatar and the EU, thereby enhancing the EU’s energy security.

1.3 Theoretical framework and concepts

This thesis relies on a combination of concepts from geopolitical economy (GPE) and European Integration Theories (EIT). However, neither of these theories are fully applicable to the analysis on the role of the Dutch gas hub for the EU’s energy security, which is why concepts of both theories are used and combined to form a complete and relevant theoretical framework. The first part discusses the conceptual framework of GPE, whereas the second delves into the EIT.

Geopolitical economy

The theoretical framework of GPE intersects with key assumptions of IPE and critical geopolitics (Amineh & Guang, 2018: 24). The grand theories of IPE are economic nationalism, economic liberalism and critical theory. Economic nationalism focuses on the role of the state as the sole actor in the pursuit of power in the inter-state anarchic world. The anarchic system is one of zero-sum and self-help. Market actors do exist, but are subordinate to the state and have limited power. The negligence of market actors led to the emergence of economic liberalism, where markets and institutions are the main actors. The world system is one of interdependence rather than anarchy, where the ultimate goal is free trade (O’Brien & Williams, 2016: 10). Critical thought in IPE emerged as a reaction to liberal thought. The three most common variants of critical theories are Marxist, feminist and environmentalist theories. These theories question prevailing social structures and arrangements. Marxist IPE focuses on the working class as the main actor, derived out of the assumption that economic relations are inherently exploitative due to the tendency for profit, leading to an unfair remuneration for the working class. Moreover, capitalism leads to uneven global development and social instability due to overproduction or overconsumption (O’Brien & Williams, 2016: 18).

Whereas the grand theories of IPE are crucial to grasp the relationship between economics and politics in the global political economy, their unitary unit of analysis makes them inapplicable for this research. Moreover, the geographical aspect in IPE is lacking, which is crucial as fossil fuels are geographically concentrated. The three main variants of geopolitics seek to fill this gap. The first is classical geopolitics, closely related to the stream of economic

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nationalism and refers to the rivalry between major states to gain access to resources in resource-rich regions. The second is critical geopolitics, which emerged at the end of the Cold War, in the context of the internationalisation of trade, production and finance. Scholars rejected the focus of state in classical geopolitics and started to emphasise cultural factors or discourse (Mercille, 2008: 572). The third stream in critical geopolitics, also incorporates the geo-economic dimension of global political economy, apart from the geographical and/or territorial status, thereby also incorporating the role of market as a separate actor in critical geopolitics (among them Harvey (1985); Agnew and Corbridge (1995)). “Critical geopolitics not only deals with the material spatial practices through which the international political economy is constituted, but also handles the way in which it is represented and contested” (Amineh, 2003: 21). GPE builds upon the third stream, thereby intersecting the spatiality of critical geopolitics and the study of IPE to grasp the systematic change at the global level (Amineh & Guang, 2017: 29).

The study of GPE builds upon the two logics of power introduced by Harvey (1982; 2003; 2006), namely, the ‘territorial logic of power’ and ‘capitalist logic of power’. The former refers to the power projection of politicians and the need to maintain credibility both domestically and internationally, whereas the latter refers to tendency of capitalism to expand geographically. The key attribution of Harvey are the provided insights into the dynamics of capital. By connecting geography with economic growth, capitalist activities follow a spatial as opposed to fixed expansion (Mercille, 2008: 575). This spatial expansion is grounded in the reasoning of reversibility and circularity. This implies that capitalism generates surpluses which have to be invested again domestically or abroad, to secure the appropriation of a growing surplus. This surplus must be produced, since the production process has been financed with credits and debt must be serviced (Altvater, 2007: 45; Mann, 2013: 943). Amineh & Guang (2017: 27) build on Harvey’s two logics and conceptualised the territorial (geo-political) and the capitalist (geo-economic) logic of power. The former refers to the power projection of major states, constrained by their ability to control capital flows. The latter refers to the cross-border flows of trade, investment and finance, taking into consideration the political ideology behind such movements. GPE is used in this study as it interacts these two logics, thereby reflecting the interconnectedness of the state and market in a geographical setting that sets the configuration of the global capitalist system.

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In GPE, state-market complexes are the unit of analysis. The complex delves into the relation between power and market and refers to the structure and network of relations between different social groups (e.g. civil society or the business elite) and the state (Amineh & Guang, 2018: 13). There are two ideal types: the centralised and the liberal state-market complex. In the former, civil society (the social and capitalist class) is non-existent or too weak to act independently from the state. Furthermore, political leaders have greater authority over the executive, legislative and judicial branches of government (Amineh & Guang, 2017: 14). This implies that the business class is part of state-power, steering the strategic orientation of a country. Key-economic sectors, including energy, are nationalised, limiting the formation of an independent business class (Amineh & Guang, 2018: 12). In the latter, an industrialised and bourgeois revolution occurred, resulting into a strong capitalist middle class. The market is able to operate relatively independent from the state and can influence the international system economically as well as politically (Amineh & Guang, 2018: 12). The underlying forces of capitalism (the geo-economic constituents) are somewhat able to shape the politics that determine the form of overseas investments. However, the relation between the economic and political forces may clash, because the state needs economic actors to support economic growth for the government and taxations depend on the level of economic activity. Simultaneously, the market needs the state for economic regulations, both domestically and internationally (Mercille, 2008: 577; Amineh & Guang, 2018: 26). Thus, states and business project power overseas to access resources to sustain the domestic wealth-power structure.

Conceptualisation of resource scarcity

The theory of GPE with the subsequent unit of analysis capture the relation between state and market in the global capitalist system. However, the study of energy requires an additional set of concepts. Figure 1.1 provides an overview of the relation between concepts in the contextual framework of the capitalist world-economy. Industrial capitalism refers to our current system that fosters the endless accumulation of capital, regardless of how this accumulation may be achieved, grounded in the reasoning of circularity, reversibility, economic rationality and profit-maximisation. “Capital outlays returns and the returns must be greater than the investment” (Altvater, 2007: 44). The Industrial Revolution in the second half of the eighteenth century and the first of the nineteenth, led to the predominant usage of fossil energies. The combination of capitalism and fossil fuels fits perfectly. That is because fossil energy can be

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used with constant intensity, allowing the organisation of the production process independently of social schedules or natural rhythms (Altvater, 2007: 45). Consequently, this leads to both

wealth-power structures (GDP growth and Per Capita Income (PCI)), which refers to the

relation between wealth and power accumulation in the capitalist system. Moreover, it also leads to population growth with a consequent increase in fossil fuel consumption (Altvater, 2007: 41; Huber, 2008: 113; Mann, 2013: 944). This gradual process of industrialisation is known as sequential industrialisation, which refers to the sequence in which states succeed in their transition towards an industry based economy (Amineh & Guang, 2018: 13).

Consequently, the mutual interaction of wealth-power structures and subsequent fossil fuel consumption, building on natural resources and sophisticated technology, led to two mutually reinforcing mechanisms: environmental concerns and resource scarcity. Environmental concerns refer to the fact that the combustion of fossil fuels has significant health and environmental impacts, including air and water pollution, environmental degradation and global warming. Global transport is responsible for a large increase in CO2 emissions, whereas labour-intensive production processes are environmentally harmful and located where environmental laws and regulations are scant, such as in the late-industrialised countries (Altvater, 2007: 37: West & Brockington, 2012:1). Simultaneously, resource scarcity refers to the lack of sufficient resources within the legal borders of a nation as these are limited and cannot be duplicated (Altvater, 2007: 38). Amineh & Houweling (2007: 374-376) distinguish three types of scarcity: demand, supply and structurally-induced scarcity. Demand-induced scarcity refers to the increase in global consumption amidst a fixed stock of oil and gas that will at some point begin to decrease, which is caused by three factors: (i) population growth, (ii) rising GDP and PCI in advanced and in late industrialising economies, and (iii) technological change. Demand-induced scarcity will enter the industrial countries lastly, as these transitioned when energy was relatively cheap. Therefore, demand scarcity is caused by the rising demand in fossil fuels and growth of population of late industrialised countries such as China and India (Amineh & Guang, 2018: 15). Supply-induced scarcity is caused by the dwindling of fossil fuels, the increased concentration of fossil fuels in unstable areas, and to the small possibilities of new fossil fuel discoveries. The anticipation of supply-induced scarcity results in a process of competitive power projection by import-dependent regions to gain control over territory where stock is located. Structurally-induced scarcity explains that the deliberate action of a major power or non-state actor, such as oil companies producing cartels, can bring about scarcity.

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to import dependency (i.e. the difference between domestic production and domestic consumption) for countries that have low domestic resources, but a high requirement thereof, such as the EU (Amineh & Crijns-Graus, 2017: 364). Every state, constrained by the logics of industrial and post-industrial capitalism, requires access to fossil fuel reserves. States developed appreciated policies to increase their energy supply security or to transit to a system of renewables. In the long run, environmental concerns make the transition inevitable due to the lack of economic and environmental sustainability, as the transition from coal to oil to gas is not sustainable to mitigate GHG emissions and are scarce, rendering the current system of capitalism an obstacle for further development. The energy transition, defined as the transition from fossil fuels to renewable energy requires more than appropriate technologies. It also needs a certain congruence of social and economic reforms focusing on the radical transformation of the patterns of production, consumption and organisation of human life, which led to new social forms such as a ‘solidarity economy’ or ‘moral economy’ (Altvater, 2007:55). This discrepancy resulted in a divergence of interests between multiple actors, including businesses or citizen groups. These actors constitute lateral pressure, which refers to societal demands that pressure the decision-making from above.

This research focuses on the short and medium-term solution by increasing energy supply security. Energy supply security is defined as the “availability of energy in various forms, in sufficient quantities and at reasonable/affordable prices at all times, without unacceptable or irreversible impact on the environment” (Amineh & Guang, 2018: 14). Energy (security) is a prerequisite for the functioning of the economy, and thus the scarcity thereof is given special attention by both energy corporations and domestic consumers, who converge their demands on political leaders to project state-power abroad as societal demands cannot be met by domestic resources (Amineh & Guang, 2018: 22). There are two options to increase energy security. The first option is to reduce dependency by increasing domestic energy production or increase energy intensity. The first, is beyond the scope of this research, the second option to increase supply security (for example through diversification of suppliers and supply routes), is the main focus of this research (Amineh & Guang, 2017: 18).

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Figure 1.1 Capitalist industrial development and its outcomes.

Source: Compiled by author. The concepts of the resource scarcity model are derived from Amineh & Houweling (2007: 374-377).

European integration theories

The conceptual framework of GPE explains the need to develop strategies to improve the security of imported resources. However, the Netherlands is an EU MS, implicating that the Dutch energy strategies to improve security of supply operate within a broader EU framework,

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as energy falls under a shared competence according to Article 4 of the Treaty of the Functioning of the European Union (TFEU). Therefore, EIT are crucial as they capture the complexity between individual MS and EU institutions in the process of policy and market creation. EIT revolve around a theoretical debate between neofunctionalists such as Haas (1958) and intergovernmentalists such as Moravscik (1993), with the central question being whether the creation of institutions or the surrender of member states’ sovereignty through interstate bargaining led to deeper integration (Rosamond, 2000: 100-112).

Neo-functionalism, explained by Niemann and Schmitter (2009: 45-46), focuses on the power of institutions and interdependence. Hence, supranational institutions have an autonomous identity and an important role to fulfil as states decide to delegate political activities towards new centres of decision-making power, a process known as integration. This process of EU integration happens through spillovers, which are distinguished into three different categories: functional, technical, and political. The key assumption is that spillovers are logical, rational, and continuous – that is when sovereignty over a policy area is transformed to EU level, it would automatically demand that other areas are also transferred to EU level. In contrast, intergovernmentalists believe that member states consciously decide to delegate parts of their competences at EU-level. Thus, EU integration is not the result of automatic spillover of competences, but a result of national and sovereign choices. These choices stem from a series of constraints and opportunities resulting from the economic, political and institutional interests of states. Hence, states are still dominant actors in the process of EU integration (Moravcsik & Schimmelfenning, 2009: 67).

This debate modified as studies in the 1990s focused on defining the EU as a sui generis political system in the global world order. These studies introduced the concept of multi-level

governance which combines both neo-functionalist and intergovernmentalists perspectives

(Hooghe & Marks, 2001: 4). The concept of multi-level governance hinges around a number of assumptions: First, national governments have lost some of their control to supranational institutions, as these have the authority to implement binding legislation upon MS. Second, the levels of government are interconnected: subnational actors (e.g. energy corporations) operate in both national and supranational arenas, creating transnational associations in the process. These subnational actors in turn influence EU policy making. Third, the degree to which these subnational actors influence policy-making depends on the domestic constitutional structure of that MS, as these actors are constrained by their national governments (Piattoni, 2009: 166).

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1.4 Brief argumentation and hypothesis

The theoretical framework of GPE relies on insights from IPE and critical geopolitics. The practical use of this theory is that it introduces a set of concepts: (1) state-market complex, (2)

resource scarcity, (3) energy supply security and (4) the geo-economic and geo-political logic.

Further, EIT introduce the concept of multi-level governance. These concepts have to be moulded into measurable variables.

First, state-market complex is operationalised by distinguishing state and market forces both in the Netherlands and in Qatar. The concept helps this research to understand the energy relation between the Netherlands and Qatar and taps into how certain energy policies might be influenced by lateral pressure in the Netherlands (Chapter 2). Figure 1.2 provides an overview of the key actors in this research and how they are related to each other. The relation between these actors is extensively analysed in chapter two, three and four. This research focuses on six crucial actors. The first actor is the national government of the Netherlands, who, through the affiliated official institution: the Ministry of Economic Affairs and Climate (EZK) and the state-owned enterprise N.V. Nederlandse Gasunie (Gasunie), heavily regulates the energy sector and energy policy in the Netherlands. Whereas the Ministry of Foreign Affairs (MOF) guides diplomatic relations. Gasunie is responsible for investments in gas storage facilities, transmission networks and owns the liquid trading platform in the Netherlands (the TTF) and has a 50 percent ownership of the Gate terminal (IEA, 2014: 141).

The second actor is the Qatari political elite, which is the Al Thani royal family, who represent the state in Qatar. Further, trust-worthy family members work in the specialised institutions of the Ministry of Development Planning and Statistics (MDPS) and the Ministry of Foreign Affairs (MOFA) (DSouza, 2017). The MDPS sets up the Qatari energy policy, whereas the MOFA guides diplomatic relations. The state-owned Qatar Petroleum (QP) is responsible for the all the phases in the oil and gas industry in Qatar. QP has a majority share in Qatargas, the company responsible for the Qatari gas and LNG industry. The third and fourth actors are market forces, consisting of the IOCs Shell and ExxonMobil, which are both heavily involved in the Dutch and Qatari energy sector. These strong capitalist forces determine the form of overseas territorial activities in Qatar. Shell, ExxonMobil and some Japanese energy companies also have shareholding capacity in Qatargas. Moreover, Shell has reserved a certain capacity to store and trade LNG at the Gate terminal and has close ties with the Dutch government. The fifth market actor is Vopak, world’s leading independent tank operator, who

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together with Gasunie owns the Gate terminal. The sixth and final set of market actors are the five European energy companies: Shell, Uniper, OMV, Ørsted, and Eneco. These energy corporations have long-term contracts for the rent of the capacity of the Gate terminal, and are the main actors that negotiate LNG contracts with QP.

Figure 1.2 Key actors in this thesis and how they are related to each other.

Source: Compiled by author.

The second and third concepts are resource scarcity and energy supply security. The concept of resource scarcity explains that countries, such as the EU MS, have low domestic reserves but a high requirement thereof, leading to import dependency (Chapter 2). Hence, the focus is placed on demand and supply-induced scarcity. In order to operationalise demand-induced scarcity the following indicators are used: (1) population growth in the EU and in the Netherlands, (2) GDP growth in the EU and in the Netherlands, and (3) global population growth and economic development. The energy situation in the EU and in the Netherlands use the following indicators: (1) total energy production, consumption and net import by source, (2) final gas consumption by sector, and (3) net electricity and derived heat generation by sector. Supply-induced scarcity is operationalised through: (1) historical and forecasted gas production in the Netherlands, (2) remaining gas reserves in the Netherlands and the EU, and (3) the global concentration of reserves. Lastly, domestic and geopolitical risks are operationalised through the following indicators. The first are domestic risks in Qatar as the supplier country: (1) political, (2) economic, and (3) politicised Islam. The second are geopolitical risks, which also incorporates the possibility of structurally-induced scarcity. These risks are operationalised by actor: (1) relations between Qatar and the Gulf Council Cooperation (GCC), and (2) US hegemony and contender states (Chapter 5).

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Netherlands increases both domestic and EU supply security with its gas hub policy (Chapter 2 and 4). The fourth concept relates to the two logics of geo-politics and geo-economics that operate within a geographical setting of both space and time. In order to secure energy imports, states seek to constantly improve supply security from resource-rich regions by introducing tools to access resources overseas to mitigate the challenges of environmental concerns and resource scarcity (Chapter 3). Consequently, the two logics are operationalised by examining what set of tools (economic and diplomatic) the Netherlands has developed to engage in its energy relation with Qatar. Economic tools are operationalised by examining trade and investment between the Netherlands and Qatar, and the business relations between Qatargas and Shell through investment and technology-sharing. Diplomatic tools are operationalised by examining the official state relations, such as ministerial meetings, or projects that the Ministries of Foreign Affairs in the Netherlands and Qatar engage in.

Lastly, the fifth concept of multi-level governance explains the process of energy policy formulation in the EU and in the Netherlands (Chapter 2). The Dutch gas policies are outlined in the context of the EU to examine the degree of overlap or diffusion. These concepts provide coherent insights and assumptions regarding the topic of this research. Hence, the following set of hypotheses are formulated:

HO: The Dutch have strategically invested and enhanced diplomatic activities with Qatar, and

invested in the development of the Dutch gas hub. Herewith, the Netherlands does not contribute to their importance in securing foreign gas supply and facilitating gas trade between Qatar and the EU.

H1: The Dutch have strategically invested and enhanced diplomatic activities with Qatar, and

invested in the development of the Dutch gas hub. Herewith, the Netherlands significantly contributes to their importance in securing foreign gas supply and facilitating gas trade between Qatar and the EU.

1.5 Data and methodology

This research employs a qualitative research method whilst relying on qualitative insights, qualitative descriptive statistics (supported with tables and figures), peer-reviewed articles, think tanks, government sources (including policy reports), interviews, research institutes, and data provided by institutions. The energy situations of the EU and the Netherlands will be

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analysed by data and analyses provided by primary sources such as the Commission (2018 EU

Energy Profile Statistics), Eurostat (2016 Energy Balance Sheets), and the Centraal Bureau

voor Statistiek (CBS) (Nationale Rekeningen). In addition, the energy policy of the EU and the Netherlands will be analysed by primary sources such as the Commission (2016 Strategy for

Liquefied Natural Gas and Gas Storage) and (2014 Energy Policies of IEA Countries: the Netherlands). Further, important policy documents for the Netherlands are provided by the

EZK (2016 Energy Rapport and 2018 Phasing out Groningen Gas Policy). Lastly, key research institutes such as The Oxford Institute for Energy Studies (The Dutch gas market: trials,

tribulations and trends) are consulted.

The third chapter elaborates on the state and energy sector in Qatar, which will be analysed by primary sources such as the MDPS (National Accounts), EIA (Country Profile:

Qatar), and by the International Group of Liquefied Natural Gas Importers (GIIGNL) (2019 Annual Report LNG Industry). The Qatari political economy of energy policy is analysed by

primary data from the MDPS (Qatar National Vision 2030 and Qatar’s First and Second

National Development Strategy). Key peer-reviewed articles are consulted, such as Al-Tamini

(2015) (Qatar’s response to the global gas boom). The second part of chapter 3, focuses on the economic and diplomatic tools. The economic tools are measured by relying on key primary data from the Rijksdienst voor Ondernemend Nederland (RVO) (Handels en investeringscijfers

Qatar-Nederland). Further, Shell’s annual reports and projects are examined, provided on

Shell’s official website. Diplomatic tools are retrieved from the website of the MOF and MOFA.

The fourth chapter focuses on the development of the Dutch gas hub. Investments in gas infrastructure and storages are provided by primary data by Gasunie (2006-2018 Annual

Reports). Furthermore, the activities of the Gate terminal are found on the official website and

through news articles: LNG world news; LNG world shipping and LNG port info. Moreover, to examine the possibilities and challenges of attracting Qatari LNG, I will mostly rely on strategic insights from experts in the field through interviews: Mr. Ton Floors, Commercial Director at Vopak, a Senior Official LNG terminal NW Europe, and a Senior Official LNG Asia at Vopak. Moreover, several outlooks by four crucial organisations are used to examine trends in the global LNG market: the IEA (2017 and 2018 Global Gas Security Review), the International Gas Union (IGU) (2019 World LNG Report), and the Commission (2017 and

2018 Gas Market Reports). Lastly, the report by Rogers, Nelson & Howell (2018) provides

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energy corporations and contracts along the supply chain. The fifth chapter focuses on peer-reviewed journal articles and on news outlets such as Al-Jazeera and Gulf News.

1.6 Structure of the thesis

This research is divided into six chapters, every chapter answers one sub-question, except for the introduction and conclusion chapters. Following chapter one, the second chapter delves into the energy situation in the Netherlands. Herein, the Dutch and EU energy situation is examined, the Dutch energy policies within an EU framework and the relevant actors in the Dutch gas and LNG industry. The third chapter follows the same structure, applied to Qatar. Herein, the state and energy sector in Qatar, together with the relevant actors in the Qatari LNG sector are examined. Moreover, the chapter looks into the economic and diplomatic tools that the Netherlands has developed to foster its energy relation with Qatar.

The fourth chapter deals with the role of the Dutch gas hub in facilitating gas trade between the EU and Qatar, and the possibilities and challenges of attracting Qatari LNG for the EU and for the Netherlands. First, I will analyse demand and supply markets in the global LNG market, followed by the technical aspects: contracts and price-mechanisms. Second, I will analyse the main challenges for attracting Qatari LNG to the Netherlands through the following indicators: (1) Asian demand, and (2) competing EU regasification terminals. Third, I will look at how the Dutch transformed their energy market from a domestic-production oriented to a transit market and thus the subsequent possibilities of attracting Qatari LNG to the EU and the Netherlands. The following indicators are used: (1) attractiveness of the EU market, (2) the TTF, (3) the facilities at Gate, and (4) short-term, spot sales and netback deals. The fifth chapter looks at the domestic and geopolitical challenges in Qatar and the MENA/Persian Gulf that challenge the Dutch and EU energy supply security. This section will examine the domestic challenges in Qatar through: (1) political risk, (2) economic risk, and (3) politicised Islam. Moreover, it delves into the nature of the post-Cold War geopolitics in the MENA/Persian Gulf region through: (1) Qatar and the GCC, and (2) US hegemony and contender states. The sixth chapter will present a conclusion suggestions for further research.

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Chapter II

The Netherlands and the European Union: Energy Situation,

Policy and Actors

2.1 Introduction

The focus of this chapter is the energy situation, policy and actors in the EU and in the Netherlands. The primary objective is to establish the context and basis of this thesis. It provides data and information on the energy situation in the EU and in the Netherlands and how this evolved in the period of 2000 until 2016. Herewith, it builds up to the understanding of energy supply security in the EU and in the Netherlands, which functions as a departure to analyse the role of the Dutch gas hub for the EU’s energy security. The chapter focuses on the

demand and supply-induced scarcity concept and liberalised state-market complex concept of

GPE. Moreover, it uses the concept of multi-level governance to capture the process of policy formulation in the EU and in the Netherlands (Amineh & Crijns-Graus, 2014: 757). The following sub-question is discussed: What is the energy situation in the Netherlands and in the

EU? Do the energy policies of the Netherlands fit within the EU framework and who are the relevant actors in the Dutch gas and LNG industry? The sub-question will be answered in six

sections. In section two, the energy situation of the EU is discussed. Herein, focus is placed on natural gas, relying on the demand and supply side of the scarcity model of Amineh & Houweling (2007). In section three, the energy situation in the Netherlands is mapped. Herein, the focus is placed on the natural gas sector and to the development of gas trade within the Netherlands. Next, in section four, the EU and Dutch energy policy is analysed. Furthermore, in section five, the relation between actors in the Dutch gas and LNG industry is discussed. Finally, section six presents a conclusion.

2.2 The energy situation in the European Union

2.2.1 The European Union’s domestic production and consumption

In 2016, the EU’s production of energy came from nuclear energy (29 percent), followed by renewable energies (28 percent), solid fuels (17 percent), natural gas (14 percent) and crude oil

The Dutch-Qatari energy relation : the role of the Dutch gas hub in securing gas supply in the EU