SHANNON FOYNES Port Company has said it is “seriously concerned” about the future of the Shannon Liquefied Natural Gas project due to tariff changes proposed by the energy regulator.
The port company’s chief executive Pat Keating says he was advised that the project will “pull out of Ireland altogether”, with the loss of a €500 million investment and up to 500 construction jobs for the midwest region, if the proposals are not shelved.
The Commission for Energy Regulation says the proposals – relating to regulatory treatment of Bord Gáis Éireann interconnectors – are “still at a consultation stage”.
International energy company Hess has secured planning permission and a foreshore licence for a liquefied natural gas terminal on the Shannon estuary. The project involves shipping in gas in pressurised containers which are held in storage tanks and piped into the consumer network.
However, no construction has begun on the terminal or associated pipeline, and Mr Keating says the port company has been advised the project is “on hold” due to the regulator’s new proposals, published in July.
The proposals would result in the annual €50 million fixed running cost of the gas interconnectors from Britain being shared out among all companies involved, including newcomers to the market.
In its submission to the regulator, Hess/Shannon Liquefied Natural Gas has threatened “legal redress”, pointing out it plans to land gas directly, and not through the interconnector. However, ESB Energy International has told the regulator that, if exempted from the tariff, new entrants to the market, such as Shannon LNG, would be “free-riding on the additional security of supply and financial balancing services that the interconnector provides”.
Bord Gáis has pointed out that interconnector-supplied gas may be the cheaper option.
Mr Keating said he could not understand how gas could prove to be more costly if Shannon LNG became a new player on the market, as it would compete with the Corrib supply – thus ensuring the interconnector supply “did not dictate price”.
Mr Keating said he accepted the interconnectors guaranteed security of supply, given Ireland was importing the majority of its gas requirements.
He said any radical revision in the tariff structure by the regulator would lead Shannon LNG to withdraw from a potential €500 million investment, with some €50 million already spent.
“It is highly unlikely that Shannon LNG would wish to use interconnectors to export gas to Britain, as its project is geared to supply 40 per cent of the gas market,” he said.
“And asking Shannon LNG and Shell [as lead Corrib gas developer] to subsidise our security of supply network is a flawed argument,” he said.
At a time when “Ireland is in crisis”, the Shannon LNG project was a vital strategic project, and Ireland’s reputation would suffer if Hess pulled out, he said.
The project would employ 500 people during its three years of construction and offer 100 full-time jobs on completion, he said.
“Obviously, Shannon Foynes Port Company stands to be a beneficiary, as the gas will be shipped into the estuary,” he acknowledged.
The Commission for Energy Regulation told The Irish Timesit was still consulting on its proposals, and had held several workshops. "In making its decision in this area, the [commission] will seek to protect the interests of Irish gas customers. We will also seek to ensure that Ireland benefits from increased security of gas supply," it said.
