Anglo-US gas consortium makes pipeline proposal

British Gas (BG) and KeySpan, a New York-based utility, have proposed a radical plan which would see most of the Bord Gais pipeline infrastructure transferred to a separate company.

BG and KeySpan UK Ltd have offered to build a gas pipeline between Northern Ireland and the Republic at a total cost of £510 million (€647.57 million) - and at no cost to Bord Gais. Instead, the State company would contribute to the development ais could fund the pipeline by placing its assets in a joint venture with BG and KeySpan.

This company would then control most of the gas infrastructure in Ireland and Bord Gais would no longer have sole ownership of its assets, which are worth several hundred million pounds.

The main asset of Bord Gais is its existing pipeline between Scotland and the Republic which comes ashore at Loughshinny, in north Co Dublin.

Mr Martin Plackett, Ireland business manager for BG, said the idea was among several submitted to Bord Gais during recent talks. He said BG and KeySpan wanted to be "flexible" when looking at ways to finance the pipeline.

Bord Gais is currently examining two options for its future gas supply. One is to accept BG and KeySpan's proposal and the second is to build a new inter-connector between the Republic and Scotland at an estimated cost of £320 million.

The Minister for Public Enterprise, Ms O'Rourke, will have to approve any expenditure by the company. While a spokesman for Bord Gais declined to comment, other sources last night suggested the Scotland-Dublin pipeline is currently the most likely option to be chosen.

However, the cross-Border dimension of the Belfast-Dublin option may become important. The Northern Ireland Office is understood to be in favour of it and the Northern Secretary, Dr Mowlam, is due to hold a meeting with Ms O'Rourke about the issue shortly.

Mr Jim Rooney, a director of KeySpan, said one of the important elements of the Belfast-Dublin option was that it could be eligible for an EU grant. He said BG and KeySpan had held meetings in Brussels and "received a positive response".

However, it is understood that Bord Gais believes it may be possible to secure an EU grant for a Scotland-Dublin pipeline.