Natural gas revenues reduce public deficit

22/11/2012 15:00

The sale of natural gas is an important annual source of income for the Dutch government. Last year, revenues amounted to 12.4 billion euro. If natural gas revenues are not taken into account, the public deficit would have been much higher.

Dutch natural gas reserves and revenues

Dutch natural gas reserves and revenues

Natural gas revenues important source of income for Dutch government

The sale of natural gas earns the Dutch government billions of euro each year. Natural gas revenues made up 4.5 percent of total government revenues in 2011. Revenues vary widely from one year to the next since the price of natural gas can change dramatically in the course of the year. The volume of natural gas extracted annually does not play an important part in this respect. Over the period 2001–2011, government revenues from natural gas sales have averaged 3.7 percent of total government receipts. The percentage ranged from 2.6 percent in 2002 to 5.4 percent in 2008.

Effect on government balance sheet

The importance of natural gas revenues also becomes evident, if the effect on the public deficit is taken into account. Including and excluding natural gas revenues, the public deficit was respectively 4.5 and 6.5 percent of the gross domestic product (GDP) in 2011.

Price changes account for approximately 90 percent of the difference in natural gas revenues in 2011 compared to 2001. Soaring energy prices on the global market have a positive effect on government revenues generated from natural gas sales.

Government balance sheet including and excluding natural gas revenues

Government balance sheet including and excluding natural gas revenues

Depleting natural gas reserves

Estimated natural gas reserves amounted to 1,230 billion standard cubic metres (Sm³) on 1 January 2012. Reserves are reduced as natural gas extractions continue. New gas fields are rarely discovered in the Netherlands. In the long run, natural gas will cease to be an income source, if new natural gas fields are not found.

Bram Edens and Maarten van Rossum