Bord Gais has accepted that the Government is likely to defer sanctioning the construction of a second gas interconnector linking Dublin and Scotland if the consortium exploring the Corrib field off Co Mayo declares that it can bring commercial gas ashore in time to meet a growing shortage of energy.

The State-owned company, which has yet to appoint a chief executive to succeed to Mr Philip Cronin who retires on July 14th, plans to report on its future strategic direction and ownership options to the Minister of State for Public Enterprise, Mr Joe Jacob, before the end of the year.

Proposals to float Bord Gais on the stock exchange, to sell the company or to enter a strategic alliance are under discussion, although its chairman, Dr Michael Conlon stressed that the ultimate decision would be for the Government to make.

While consultancy Arthur Andersen is advising the company on its options, its board and management had yet to reach a conclusion.

Bord Gais, which yesterday reported a £2 million (€2.54 million) rise in pre-tax profits last year to £68 million, said a new interconnector running parallel to its existing link with Scotland would be required as early as "a couple of years" after gas from the Corrib field came on stream.

Dr Conlon said it was clear that the State's future gas supply would be taken from a second interconnector, from the Corrib field and via a proposed crossBorder link between the Republic and Northern Ireland.

"But the question is in what sequence," he said.

When it was suggested that the Government was unlikely to sanction expenditure of £300 million to build a second interconnector if an indigenous supply was available from Corrib, Dr Conlon said: "If Corrib can show clearly that it's coming on stream in time, certainly what you say would happen."

Enterprise Oil, Statoil and Marathon Petroleum are expected to seek project sanction to exploit the Corrib field commercially late this year.

Dr Conlon said Bord Gais's obligation to ensure continuity of supply meant that the Corrib partners should indicate their plans as soon as possible.

Reflecting rising demand, which Bord Gais believes will double in the next 10 years, the company is already planing to increase capacity on the existing interconnector with Scotland by 70 per cent.

The company also wants Government approval to build a £200 million link from Dublin to Galway, onward to Limerick and then Cork.

Turnover at Bord Gais's rose to £337.17 million last year, up 8 per cent, reflecting growth in sales.

But increasing dependence on imported gas - reflecting the depletion of the Kinsale field - and a 14 per cent rise in its cost contributed to a fall in operating profit to £80.15 million from £86.8 million in 1998.

Yet the company has undertaken not to increase the price of gas to residential users before 2003.

Bord Gais paid a £22 million dividend to the Exchequer under a new arrangement agreed with the Government.

No dividend was paid in 1998.

At a briefing yesterday, the company also argued strongly that it wanted to retain its transmission and supply divisions.

When it was suggested that establishment of the ESB's transmission system operator function - controlling power supply into the electricity network - as an independent entity might set a precedent for Bord Gais, Dr Conlon said it should not, given the relatively small size of the gas company.

Plans to develop a power generation plant in joint venture with ATCO Power and Aughinish Alumina at its Co Limerick plant are at an early stage only.