Gas producer Nederlandse Aardolie Maatschappij (NAM), a joint venture between Royal Dutch Shell and Exxon Mobil has been ordered by court to compensate homeowners for the decreasing property values caused by earthquakes linked to production at Groningen gas field in northern Netherlands.
The joint venture entity may have to pay billions of dollars in compensation following the order by the Dutch court in Assen, report Reuters.
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The court held NAM responsible for the earthquakes in the northern province of Groningen, which have affected the house values in the region and resulted in decline of ‘several percent’.
Judge Ger Vermeulen was quoted by the news agency as saying: "NAM is responsible for declines in the value of real estate that lies in the area where earthquakes are caused by gas production, and that damage is eligible for compensation."
The lawsuit against NAM was filed in the Dutch court by a group representing 900 homeowners and 12 housing associations.
According to Vermeulen, the homeowners should claim for the depreciation value on a case-by-case basis, even if they are not eager to sell off their property at present.
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By GlobalDataGovernment in Netherlands have already reduced production limits at the gas field, which is the largest in Europe. The limitations were imposed following the Dutch Safety Board’s conclusion that energy producers and regulators have been neglecting the threats posed by the gas production-linked earthquakes.
The area has been suffering from frequent earthquakes which started from 1991. In 2013 alone, it had been affected by a total of 119 quakes.
NAM has acknowledged its responsibility for the increasing frequency of earthquakes in the region. It, however, has said that it is willing to pay for the losses after the homeowners sell their property.
NAM spokesperson Martijn Verwoerd was quoted by Reuters as saying: "We are going to study the considerations carefully and consider potential further steps."
The firm has set aside €1.2bn for the losses. The compensation costs for lost value and strengthening of the buildings in the affected are expected to be a lot more.
Image: Map of Natural Gas concessions of the NAM in the Netherlands. Photo: courtesy of MJSmit /Wikipedia.
