Shell puts extra €90m into Irish subsidiary

 

OIL AND GAS multinational Shell has injected €90 million into its Irish subsidiary to deal with the spiralling costs of the Corrib gas field project.

Documents filed with the Companies’ Registration Office show that the global group has pumped the extra money into Shell Ireland.

The Irish company confirmed yesterday that the 5km onshore gas pipeline to bring gas from the offshore Corrib field to the market will not be complete until the second half of 2014.

The Corrib gas partners, Shell, Statoil and Canadian-owned Vermillion are now nine years behind the initial target to start generating revenues from the field.

The original estimate for developing the field was €800 million and the final bill for completing the project is now expected to be almost €3 billion.

The documents confirming the cash injection show that the Shell EP Ireland’s Ltd’s capital is now more than €704 million.

A spokeswoman for Shell said yesterday: “The €90 million is to support our ongoing activities on Corrib.”

The partners had hoped that gas would be brought ashore last year – however, this was before An Bord Pleanála ruled that half of the proposed overground pipeline would be unsafe.

This meant that the developers had to apply for permission to place it in a tunnel.

Shell, Statoil and Vermillion are expected to spend a further €378 million on the development this year.

They spent €250 million on the project last year. The total spend for the project at December last was an estimated €2.35 billion.

The 2012 spend estimate arises from Vermillion confirming that it is to spend €70 million on developing the field this year. It owns 18.5 per cent of the field.

Vermillion’s 2012 Capital Programme confirms this and also states that it will cost $135 million to complete the purchase of its stake from the original owner, US group, Marathon Oil.

In a written Dáil response last week on the progress of the field, Minister for Energy Pat Rabbitte, said it is estimated that construction on the onshore section of the pipeline will take in the region of three years. He said: “First gas cannot, therefore, reasonably be anticipated before 2014.”

A spokeswoman for Shell said yesterday: “Work on the onshore pipeline, the final phase of the project to be constructed, is progressing well.

“Preparatory work at the tunnelling site is still under way and tunnelling under Sruwaddacon Bay is expected to start in the second half of 2012. Completion of the tunnel and the laying of the onshore pipeline is estimated to take at least two years to complete.”

About 400 people are working on the project, 350 of whom are based in Mayo.

Shell has 45 per cent of the field and Statoil has 36.5 per cent.

The field has one trillion cubic feet of gas and is expected to meet 75 per cent of Ireland’s peak winter gas needs for up to a decade.

It is now 10 years since the Government approved the Corrib gas project plan.

However, since then, the proposal has become mired in controversy, including the jailing of the “Rossport Five” in 2005 and a number of confrontations between the Garda and protesters at the site of the Bellanaboy terminal in north Mayo.

Separate judicial review proceedings on the onshore pipeline consents were settled in the High Court last year.