Holland, a global center for energy products

Holland, a global center for energy products

The world's three major oil refinery centers are Rotterdam,
Singapore and Houston. These locations also serve as distribution
centers for their relevant regions.

For North and West Europe, Rotterdam is also the "energy"
center, where the prices are established. The geographic position
of the Netherlands and the presence here of a large seaport
caused various large oil refineries and oil storage depots to
settle in Rotterdam in the 1960s.

Thanks to an efficient systems of links between the
Netherlands and its surrounding countries, Rotterdam became the
main distribution center of crude oil and oil products in
Northwest Europe.

When a large, and various smaller deposits, of gas were also
discovered in the north of the Netherlands is the 1960s, a
pipeline network was constructed from the Netherlands for the
distribution of natural gas across vast areas of Western Europe.
By using the small, exhausted gas fields as buffers and storage
depots for imported natural gas, the Netherlands operates, as it
does for oil, as the distributor of gas for Europe through the
existing pipeline network.

Thus, the Netherlands has become a European dealer in both oil
and natural gas that stores supples and manages imports and
exports.

In 1996, the Netherlands' crude oil imports totaled NLG 16
billion (99 million tonnes). Imports from Norway, the United
Kingdom and Russia totaled 52 percent. Those from Saudi Arabia,
Kuwait and Iran stood at second place supplying 33 percent of
total imports. The third supplier was Nigeria with a share of 11
percent.

Canada and Venezuela also supplies "black gold" to the
Netherlands, though, with a 3 percent share, to a far lesser
extent than Nigeria. These oil flows to the Netherlands are
destined for the port of Rotterdam, where the refineries process
the oil into all kinds of semiderivatives and end products.

Approximately 1,200 kilometers of pipeline run underneath the
port and industrial area of Rotterdam. Crude oil pipelines
measuring more than a meter in diameter run from the sea
terminals at the Maasvlakte industrial area and Europoort.

The crude oil is brought in by tankers weighing anything up to
300,000 tonnes. As well as going to the refineries in the
Rotterdam port region, a small amount of this crude oil is sent
directly through the pipelines to Germany and Belgium. In
addition to crude oil, approximately 20 semiderivatives and end
products, including naptha, kerosene, LPG and ethylene, flow
through the pipes of the five Rotterdam refineries to customers
in the Netherlands and abroad.

Oil products

About half the total output of the refineries 40 million
tonnes of oil products is exported, primarily to the surrounding
countries. In 1996, this output was valued at NLG 18 billion. The
geographical distribution of the export of oil products shows
that 52 percent goes to the German market, 25 percent to Belgium
and 7.5 percent to the bunker trade for shipping.

Further, 5.5 percent goes to France, 3 percent to the United
Kingdom and 2 percent to Switzerland and Scandinavia. Import of
crude oil has remained relatively stable throughout the years.

Shifts occur only in regard to the regions of origin. Broadly
speaking, there is a shift from the Middle East to the North Sea
countries, specifically Norway. The import of crude oil is the
largest single flow of goods that passes through the port of
Rotterdam.

The import of oil is expected to increase until 2005, in order
to meet Europe's growing demand for energy. A shift can be
observed in the import and export of oil products such as from
heavy to light products, for example gasoline and particularly
diesel.

The worldwide stabilization of production and demand means
Rotterdam is seeing a considerable transshipment of end products.
Arrivals at the port rose by almost 50 percent. In addition to
the export of oil as an energy product, natural gas is also an
important Dutch energy product which is distributed through
pipelines across Western Europe.

In 1997, total production was approximately 94 billion cubic
meters, of which half was exported. In 1996, the export value of
natural gas, whose price is linked to that of oil, increased to
NLG 9 billion. In international terms, the Netherlands is the
world's largest exporter of natural gas after Russia and Canada.

The Dutch gas distribution company, Gasunie, which is
responsible for the trade and transportation of Dutch natural
gas, also fulfills a key role in gas supplies to Europe. As well
as purchasing natural gas in the Netherlands, the company buys
natural gas from Norway and the United Kingdom, some of which it
exports to Germany, Belgium, France, Italy and Switzerland.

For more than 30 years, billions of cubic meters of gas have
been pumped through European pipelines to customers in those
countries. Imports (currently only from Norway and the United
Kingdom) are gradually being stepped up. From 2001 on, Russian
gas will also flow to the Netherlands from the vast gas fields of
Russia.

For the time being, the agreement provides for 80 billion
cubic meters, to be delivered over 20 years. The Netherlands
connections to the natural gas highway systems of all the
surrounding countries have rendered it Europe's natural gas
intersection.

Once natural gas has been extracted from a particular field,
the empty location can sometimes serve as a storage depot for
purchased gas. In the summer, these fields store excess stocks,
and in the winter they offer a buffer supply from which Gasunie
can extract gas if required.

The growth of the oil industry and natural gas extraction was
accompanied by the Dutch subcontracting industry developing areas
of specialism in the design and production of installations for
the process industry and the distribution of energy products.

The five large refineries in the Rotterdam port area were
designed and built by members of the same industry, as were
installations for gas extraction and distribution. More than
25,000 people are currently employed by Dutch subcontracting
firms to the oil and gas industry.

In 1997, the total turnover of subcontractors to the oil and
gas industry was NLG 7 billion. About 70 percent of the annual
turnover is acquired on foreign offshore markets and from
subcontracting to the onshore industry.

There are four large steel construction companies in the
Netherlands which are capable of designing and building entire
exploration and production offshore platforms. There are also a
few dozen companies which specialize in specific equipment for
the rigging out of these platforms. the Dutch subcontracting
industry can provide 70 percent of the required installations.

Dutch companies specialize primarily in island superstructure,
automation and environmental protection systems. Areas of
specialism include the supply of helicopter decks, cranes,
winches, derricks, air-conditioning systems, power plants,
compressors, steam turbines, pumps, hydraulic installations,
accommodation units, underwater distribution stations and
electrical installations.

Ten consultancy firms work internationally on all design-
related aspects of the development of oil and gas fields, both
onshore and offshore. The also design distribution systems and
pipeline networks, perform computer simulations, soil analyses
and research into the improvement of safety and protection of the
environment.

Various research institutes have laboratory facilities which
simulate offshore conditions using scale models. Another
important part of this industry is the services sector in which
the companies deploy drilling platforms, drilling vessels and
crane vessels for installing offshore platforms.

A number of ocean-going tugs also supply and relocate drilling
platforms and oil tankers. Diving companies operate in the
various Dutch ports for such underwater activities as
inspections.