Enterprise Oil will proceed with full-scale commercial development of the Corrib gas field following a £100 million (€127 million) deal reached with Bord Gais, The Irish Times has learned.
This means natural gas from the Corrib field will be available to domestic and industrial users in the west from the first indigenous supply of energy since the opening of the Kinsale field. The Corrib field, which is three-quarters the size of Kinsale, will supply energy for 15 years. It will significantly improve the prospects of major gas-using companies basing operations in the region.
Enterprise Oil has yet to announce its decision but it is understood the company agreed with Bord Gais this week to co-fund the construction of a pipeline from Broadhaven, Co Mayo, to Galway.
This will link Corrib with a loop between Dublin, Galway, Limerick and Cork which the State-owned company plans to construct. According to some reports, the Government has already sanctioned this development, which will cost some £200 million. Once confirmed, this decision will pave the way for Enterprise Oil to secure final project sanction.
The link between Broadhaven and Galway will be co-owned by Enterprise Oil, its joint venture partners Marathon Petroleum and Statoil, and Bord Gais, which will construct the pipe.
This is the first major deal on the public-private partnership model concluded in the State.
While Bord Gais will own the pipeline itself, the private consortium will own the gas running through it. Because Enterprise and its partners are financing more than half the pipeline, they will pay no transmission charge to Bord Gais to put their gas through the link.
The consortium will sell wholesale gas to Bord Gais and it will also sell directly to the industrial market. It is thought, however, that it has yet to secure individual supply contracts because it previously had no means of connecting the Corrib field with the Bord Gais network.
While recent tests showed the Corrib field had the potential to produce commercial supplies of gas, the uncertain element of the consortium's plans centred on bringing the energy ashore. With this resolved, final project sanction is "almost certain", said one person familiar with the situation.
The deal means Bord Gais is unlikely to proceed with the construction of a new interconnector between Dublin and Moffat in Scotland. The company has argued that such a link is needed to compensate for the loss of gas from Kinsale, which is depleting rapidly. But the latest development means the Minister of State for Public Enterprise, Mr Joe Jacob, will be unlikely to sanction the second interconnector.
