Our risk profile

Our risk profile

Revenues from our core task (i.e., gas transport in our core area) are exposed to regulatory risks and, in the longer term, to the decrease in the demand for transport capacity. In carrying out our operations, we remain aware of the risks of a calamity, technical or otherwise, with catastrophic consequences. We recognise that the challenges we are facing and the chosen strategy place high demands on our organisation and our employees.

Overview of the main risks

The ‘heat map’ below shows the probability and expected impact of the main risks compared to our risk appetite. The yellow band indicates the level of our risk appetite; risks in the orange and red band exceed our risk appetite. The basic principle is that, by means of control measures, these risks should be reduced insofar as is reasonably possible. The level to which risks are reduced is partly determined by the cost efficiency of the control measures. For decisions that imply strategic risks, the risk is weighed against the expected reward.

The heat map shows the probability and impact of the main risks. It also indicates the residual risk, i.e., taking into account the control measures already taken. The time horizon is 5 to 10 years for strategic and external risks, and up to 5 years for risks of a more operational nature.

  Description of risks Control measures
Strategic / external Pillar I I:A Developments in the financial regulation in the Netherlands and Germany with potentially negative financial consequences:
- Start of new regulatory period (the Netherlands as of 2017, Germany as of 2018).
- In the longer term, the introduction of a new regulatory methodology.
We contribute constructively to the development of new regulatory frameworks and tariff structures, at both European and national level.

In doing so, Gasunie closely monitors whether the decision-making process takes place in a transparant way, and is based on the right principles.
  I:B Changing market conditions may lead to ‘stranded assets’ and (as a result of revenue regulation) non-competitive tariffs for customers due to:
- A decline in demand for transport capacity on certain routes;
- Reduced security of long-term contracts;
- Increased market uncertainty;
- Governments formulating concrete ambitions (e.g., Energy Agenda 2016) that have a negative impact on the role of natural gas in the energy supply.

Managing a product portfolio that matches developments and customer needs. We keep working on attracting transit flows by:
- Finding replacements for declining G-gas export;
- Good connection to entry points;
- Cooperation with adjacent infrastructure companies;
- A well-functioning, efficient system without physical bottlenecks;
- Attractive services and tariffs;
- Market coupling;
- A liquid trading platform; stimulating system integration in the energy value chain to optimise the role of gas and gas infrastructure in the future energy supply.
  I:C Geopolitical risks and dependency on dominant players:
- Impact on the security of supply and the role/reputation of natural gas;
- Partnerships in which we have a minority share and therefore limited influence on the decision-making process;
- Impact on our reputation.

Safeguarding the security of supply through diversity in gas flows and sources and through steady economic and political relationships.

Informing stakeholders to clarify impact and to gain support for our approach.

Actively monitoring the political and economic circumstances in order to be able to anticipate at the earliest possible stage.

Good governance in our partnerships.
  I:D A faster than expected decline in the production of the Groningen field:
- This may lead to shortages in the G-gas market and we may not have extra capacity for quality conversion available on time.
Offsetting the natural decline in the production of the Groningen field by reducing exit capacity of G-gas to other countries.

Ensuring a timely agreement with stakeholders about the availability of sufficient capacity for quality conversion from H-gas to G-gas.
Strategic / external Pillar II II:A The risk that our strategy is not evolving fast enough in a rapidly changing environment:
- Imbalance in our portfolio of products/services;
- Reduced security of long-term contracts;
- Legal restrictions with regard to the type of activities that we as TSO are allowed to develop and carry out limit the development of new products/ services.
Actively monitoring current developments and prognoses for the medium and long term, in close consultation with the stakeholders.

In 2016, the strategy was updated to include a company-wide focus on innovations
  II:B Market conditions may obstruct Gasunie’s European expansion due to:
- Rapid market integration from large EU member states;
- Formation of very large, competitive TSOs.

Being selective with regard to mergers and acquisitions and/or strategic collaboration with gas infrastructure companies.

Participating in pipelines on major European supply and transit routes to strengthen the position of our current infrastructure, and participating in projects that contribute to an improved functioning of the European internal gas market.

Exploiting commercial opportunities with regard to European entry points (e.g., LNG) and storage infrastructure.
Strategic / external Pillar III III:A The execution of our ambitions relating to the energy transition may stagnate, due to:
- Returns that are too low for solid business cases;
- The fact that our company is seen as a fossil player only;
- Legal restrictions on the type of activities that we, as TSO, are allowed to develop and carry out, which limits our growth opportunities.
Internal discussion and decision-making on the willingness to run a higher financial risk in the sustainable domain.

Participating actively and constructively in the public debate on the energy transition, sharing our knowledge, experience and vision, and taking initiatives, possibly in collaboration with others.
Organisation / Operations O:A We may not be able to meet our own preconditions for carrying out our strategy in new markets due to:
- Insufficient knowledge and experience;
- Limited options for quick changes.
Stimulating and developing innovation, entrepreneurship and the sustainable employability of our employees.

Further deepening and broadening our knowledge with regard to business development and the energy transition.

Focusing on organisational structures and processes, and changing the culture, including the management culture.
  O:B Security risks:
- Cyber security;
- Terrorism targeting vital infrastructure.

Focusing continuously on developments relating to security in society, and energy in particular.

Carrying out periodical field tests.
  O:C Risk of calamities with catastrophic impact:
- Serious HSE incident;
- Disruption of the energy supply at a national level
Continuously emphasizing (internally/externally) the importance of safety through various measures, such as work procedures, technical standards, the Safe@Gasunie programme, safety management systems and crisis management.

Exchanging knowledge and experience with the government and with other infrastructure companies (gas and electricity) regarding a safe and reliable energy supply in the Netherlands.

  O:D The risk of our company’s non-compliance with laws and regulations or internal procedures:
- Fraud/ethics;
- Changing laws and regulations;
- If we need to take an important decision with regard to security of supply (e.g., in the event of a calamity) without a legal mandate.
Carrying out and following up on audits and risk analyses.

Active stakeholder management with regard to laws and regulations (e.g., licensing processes).

Sharing knowledge by participating in normalisation committees.

Designing our organisation with a view to increasing regulatory pressure and the associated documentation.

Vigilance when carrying out new projects.