ExxonMobil sues Dutch government over gas field closure

ExxonMobil has sued the Dutch government for its 2018 decision to ramp down gas production in Groningen after years of extraction-linked earthquakes. 

The petroleum giant’s claim, which could potentially run to billions of euros, appears to be prompted by the recent change of government, as Mark Rutte, who served as liberal prime minister for 14 years, was ousted after a swing to the right in 2023 elections. 

“It is our view that the previous government had no intention of reaching an amicable settlement,” ExxonMobil said in a social media post on Monday evening. 

The energy multinational said the Rutte government had taken “unilateral measures that arbitrarily disadvantaged ExxonMobil as an investor” and that had “damaged its confidence in the Dutch investment climate”. 

ExxonMobil’s move, made under the controversial Energy Charter Treaty (ECT), has drawn sharp condemnation from green groups. 

The firm’s decision to file an arbitration request with the Washington-based International Centre for Settlement of Investment Disputes comes just months after the EU decided to withdraw from the treaty, as a majority of member states saw it as incompatible with the bloc’s climate policy goals. 

In February, the company, alongside joint venture partner Shell, requested arbitration at an independent Dutch tribunal, complaining the Dutch government had shut down production earlier than originally agreed. 

The decision to invoke the ECT – which is set to remain in force in the EU throughout a 20-year sunset period – increases pressure on the new government, with technocrat premier Dick Schoof heading a coalition dominated by Gert Wilders’ far-right Freedom Party. 

“We ask the new government to enter into dialogue in order to find a solution that is acceptable to both parties,” ExxonMobil said, adding that an “amicable settlement” would be “good for the Netherlands and … the people of Groningen”. 

Contacted by Euronews, ExxonMobil refused to specify the level of compensation it was seeking, and said it does “not provide further comments on ongoing arbitration cases”. 

The decision to ramp down production at the Groningen field, despite an estimated 450 billion cubic metres of gas remaining in the ground, followed major earthquakes in 2012 and 2018 linked to extraction, with tremors having been recorded since at least the early 1990s. 

As ECT investor-state disputes typically involve compensation for lost profits, the claim could potentially run to billions of euros. 

The Dutch state already faces a huge bill for compensating homeowners in the affected region, with Rutte last year having pledged €22 billion to repair thousands of damaged homes and revitalise the region. 

The US firm’s move drew sharp condemnation from Paul de Clerck, an economic justice specialist with Friends of the Earth Europe, who said its claim for “massive compensation … shows how ruthless the company is”. 

“It also illustrates clearly again that the Energy Charter Treaty is being used by fossil fuel companies to undermine the energy transition and phase out of fossil fuels,” de Clerck told Euronews. 

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He also suggested the move by the US multinational should be seen as a warning by EU member states like Belgium, Finland, Hungary and Sweden who are considering remaining individual parties to the agreement. 

“This case is the best proof that the ECT is not compatible with the fight against climate change and that all countries should leave,” de Clerck said. 

The legal charity ClientEarth echoed these sentiments. “National governments that remain in the treaty must leave as soon as possible, while the EU needs to work with other countries to neutralise the dangerous 20-year sunset clause – something all too clearly illustrated by this latest case, lawyer Quentin Mautray told Euronews.

“It is critical to minimise the risk of more costly damages claims being brought over the next two decades,” Mautray said.

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The Dutch government did not respond to a request for comment in time for publication.