Final bill for Corrib gas field expected to reach €2.5bn

THE final cost in developing the controversial Corrib gas field is now expected to near €2.5 billion.

The revised cost estimate emerged yesterday as new documents just filed with the Companies Office by Shell Irish subsidiary, Shell E&P Ireland show that the capital outlay on the project to the end of December reached €1.918bn.

Partners in the project, Shell, Statoil and Canadian-owned Vermillion, spent an additional €424 million on the project last year to bring their outlay to €1.9bn, and it is understood the spend on the project in 2010 will be around €300m.

SEPIL had anticipated that gas would be produced from the field at the end of this year or early 2011.

The field has one trillion cubic feet of gas and is expected to meet 75% of Ireland’s peak winter gas needs for up to a decade.

However, gas may not flow for another three years due to An Bord Pleanála last year ruling that up to half of a proposed pipeline to bring the gas ashore was unacceptable on safety grounds.

This resulted in SEPIL seeking planning permission for a 4.9km tunnel to bring the gas up the Sruwaddacon estuary.

An Bord Pleanála is expected to rule on the application before the end of the year and if planning is granted, work on the tunnel — which is expected to cost around €120m — will commence next year and take two years to construct.

Earlier this week, Statoil wrote down the value of the Corrib Gas field by €200m due to project delays and changes in market conditions.

The accounts just filed by SEPIL show that SEPIL last year recorded a €20.4m pre-tax loss on the scheme.

However, the company’s after-tax loss was reduced to €1.9m after availing of a tax credit of €18.5m from the Irish exchequer.

The figures show the total tax credits received by SEPIL to date amount to €87m.

Last year, the 83km offshore pipeline out to the Corrib field was laid — work had to be suspended on the laying of the pipeline after the damage to the Solitaire ship in 2008 and this cost the partners in the project €104m.

The figures show that SEPIL, which has a 45% share in the gas field, has spent a total of €707m since the project commenced to the end of December last made up of €548m in capital costs and €159m in operating costs.

Statoil has a 36.5% share of the field and Vermillion has an 18.5% share.

The SEPIL accounts show that the company had accumulated losses of €122.6m, but shareholders funds stood at €916.9m through called-up share capital of €424.4m and a capital contribution of €416m.

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