Bord Gais plans to spend up to £50 million (€63 million) increasing the capacity of its interconnector (pipeline) between the Republic and Scotland by 70 per cent.

The investment will enable all domestic gas demands to be met for the next four to five years, although the company still needs a new supply after that.

The company is currently deciding between two options for this later supply dilemma. One is to take gas from Enterprise Oil's Corrib field off the coast of Achill, Co Mayo and the other is to build a new interconnector between Ireland and Scotland at an expected cost of £300 million. Yesterday's announcement lessened the urgency for a decision, although Bord Gais chairman Dr Michael Conlon said the company would make a choice before the end of the year.

He said Bord Gais had a preference for "indigenous gas" which would make the Enterprise Oil option the more likely. However, he stated that until Enterprise Oil completed its final appraisal testing this summer, the size of the gas deposit there was uncertain.

To increase the capacity of the existing interconnector, two new compression stations will be built at Moffat and Brighouse Bay in Scotland.

There will be a £45 million (€57 million) investment at Moffat in conjunction with Premier Transco, the company which owns and operates the interconnector to Northern Ireland. This interconnector is also connected to the Moffat station and Premier Transco is contributing £20 million (€25 million).

The rest of the money will be spent at Brighouse Bay and Bord Gais will fund this entirely on its own. The work at Moffat will begin a year ahead of the work at Brighouse Bay.

One of the reasons why demand for gas is expected to grow so dramatically in the State is that several gas-fired generating stations are planned.