The Government has granted a lease to develop a gas field off the Cork coast to a Scottish company.
Ramco Energy, an Aberdeen-based company, will drill for gas from the Seven Heads Gas field in the Celtic Sea by the end of 2003.
Mr Steve Remp, Ramco's executive chairman, said Ireland is very dependent on British gas supplies and, with Britain forecast to be gas deficient in a few years, the State needs new sources of home-produced gas.
Mr Remp said the project has the potential to supply over 10 per cent of Ireland's current gas demand.
Ramco and its partners, Island Petroleum Developments and Sunningdale Oils, will submit a plan for the gas field to the Minister.
Ramco will sell gas to British energy company Innogy. The agreement with Innogy is for an initial period of seven years and may be extended to "life of field" at the option of Innogy. The deal covers all Ramco's 86.5 per cent share of the production from Seven Heads.