ALMOST a decade after the American-based Hess corporation took the first steps to develop a liquid natural gas plant on a land-bank between Tarbert and Ballylongford, the corporation is now looking to sell off Shannon LNG.
The decision to sell was taken some time ago, according to Fine Gael MEP. But he believes the project has now become a much more attractive prospect because it has been classified as a key part of the EU’s energy strategy.
“I know they are speaking to a number of potential buyers,” he told the Limerick Leader.
The proposed terminal and gas pipeline to Foynes is now listed as a key European Project of Common Interest, to integrate Europe’s energy markets and diversify sources, Mr Kelly explained.
“We must not underestimate the importance of this announcement,” he added. “This is a huge step towards putting in place a project that is badly needed for Ireland, for Kerry, and for Europe.”
One benefit of the inclusion in the EU list, Mr Kelly explained, could be increased funding opportunities under the Connecting Europe facility. The possibilty of assistance under the European Fund for Strategic Investments should help the project attract the required private investment, he said.
However, it was reported last week that Hess Corporation is looking to pull out of the project, stating that it is in talks with the management of Shannon LNG “with the object of facilitating a sale of the company.”
“There is nothing new in that. Hess, the owners, want to sell,” Mr Kelly said. But, he added: “Up until now, it was seen as a private project which would not be seen as very marketable.”
But its new status as a European Project of Common Interest gives it added importance, he argued, and would make it easier for another company to invest. “In terms of its marketability and do-ability, this is huge.”
Hess took its first steps towards developing the plant on the publicly owned landbank in Ballylongford back in 2006 and secured planning permission in 2008 for a terminal to convert liquid gas and feed it into the national gas grid near Foynes. The company also planned a combined heat and power plant at Ballylongford. The entire project was estimated to cost up to €1b, and create hundreds of local jobs during the construction phase.
The aim was to be in production by 2013. But a row over tariff payments towards a gas interconnector with Britain stalled progress and Shannon LNG failed in its court challenge to the tariff scheme imposed.
Mr Kelly acknowledged that the project had proved very frustrating for Hess. “They felt some of the decision-making wasn’t very welcoming from their point of view,” he said. “It is a bad reflection of the lack of support it got at Irish level.”
So far, about €63m has been spent in developing the project. In a note filed with company accounts, Shannon LNG said that the company had acquired and developed valuable assets comprising permissions, rights, licences, leases and other entitlesments which have positioned it for the next phase of development which would be the construction of the terminal, pipeline and related infrastructure.”
However, it adds: “A decision to proceed with construction would require some additional studies and work and the capital costs invlved would be of a scale as to require the involvement of a suitable industry investor.”