Bord Gais has been shortlisted to purchase a gas pipeline business in Britain owned by the French multinational Total Fina Elf.

Despite this, however, sources said figures in the State company believed it was facing stiff competition in the sale and was "not in pole position".

Managers at Elf Connect are said to be considering a buy-out and other unnamed groups are believed to be on the shortlist.

The sale of the company is nearing completion after a six month process to demerge it from the parent group, which is disposing of non-core assets.

This follows Total's purchase of the Belgian group Petrofina and of French group Elf Aquitaine in 1999 and 2000. No Total Fina Elf press spokesperson was available yesterday to comment. It was not clear how much Bord Gais would be willing to pay for Elf Connect, although sources said "millions" would be involved.

The company owns, builds and operates gas pipes. One of the largest public gas transporters in Britain, it has connections into 120,000 homes in a network throughout the country.

As an infrastructure firm, it does not sell gas to customers. Its focus is primarily on building pipes into new housing developments. Sources said its network was expanding by 30,000-40,000 homes per annum.

Bord Gais is keen to move into the British market by acquisition or investment because its Irish business will be eroded as the market deregulates.

As part of that plan, Bord Gais established a wholly owned subsidiary in Britain last year. That company, Utility Grid Installations, has been awarded a public gas transporter licence from OFGEM, the authority which regulates the gas and electricity sectors in Britain.

That development is regarded as significant by figures within Bord Gais, who also plan to develop an electricity generation business in the Republic to offset a likely decline in revenues due to deregulation.

A recent decision by the Government to sanction a £220 million (€279 million) interconnector parallel to Bord Gais's existing link between Dublin and Scotland was linked to a reduction of its reserved market.