Dispute over charges for gas pipelines use casts doubt on €600m project

A DISPUTE over charges for the use of the Republic’s natural gas pipelines has left a question mark over the future of a €600 million project.

Shannon LNG, which has plans to build a liquid natural gas facility in Kerry at a cost of €600 million, has warned proposals to charge all operators in the Irish market for access to gas pipelines connecting Ireland and Britain threaten its commercial viability. Over 90 per cent of the natural gas used in the Republic comes from Britain via two pipelines, known as interconnector one and two.

The Commission for Energy Regulation, which oversees the industry in the Republic, is proposing all suppliers pay for the interconnectors, irrespective of whether they use them. However, Shannon LNG opposes this. It will not require the interconnectors as the gas it supplies will arrive by ship. The commission is due to make a final decision on this at the end of the month. The matter was discussed at a meeting involving the regulator and a number of companies involved in the Irish gas market in Dublin yesterday.

Shannon LNG, which is backed by US energy giant, Hess Corporation, has said it will not make a final decision on whether to proceed with the project until the regulator clarifies the charges issue.

Bord Gáis Networks, which built the interconnectors at the Government’s request, favours charging all suppliers for pipelines, as it says they are vital to ensuring the supply of the natural gas to this country. The company says forcing it to pay for interconnectors that it will not be using will add to the cost of the fuel and effectively put it in a position where it will be subsidising its competitors.

Bord Gáis also argues that, as British prices ultimately set the cost of gas here, companies such as Shannon LNG will charge that in any case and could make super-normal profits at the expense of businesses and consumers. Shannon LNG denies this is the case, and points out if it were to start selling gas in the Irish market, to attract customers it would have to offer discounts to established players .

Bord Gáis Networks built the interconnectors and operates and maintains them.