A subsidiary of the US-based oil giant, the Hess Corporation, Shannon LNG Ltd has to date spent €63m on the planned €600m liquefied gas terminal to be built at a 287-acre site at Ballylongford, Co Kerry, while a €400m combined heat and power plant was also planned in tandem with the LNG proposal.
However, the Hess Corporation said it is looking to pull out of the project, stating it is in talks with the management of its Irish subsidiary, Shannon LNG, “with the objective of facilitating a sale of the company”.
Newly filed accounts by Shannon LNG Ltd state that “this will position the company for the selection of a suitable industry replacement for Hess Corporation”.
The intention by the Hess Corporation to end its involvement in the Ballylongford plan comes after plunging global prices for LNG.
The LNG project was to be provide 650 jobs during the four-year construction phase with 50 permanent operational jobs thereafter.
Hess first purchased the land for the development in 2006 and secured planning permission in 2008 for the gas terminal.
The initial target was to have the plant opened by 2013. However, an overhaul of the tariff for gas interconnectors by the Commission for Energy Regulation (CER) placed a fresh hurdle in front of the project and Shannon LNG failed in a High Court action against the CER tariff scheme in December 2013.
The firm was contesting the CER view that all gas providers must pay for the cost of two inter-connectors, linking Britain and Ireland’s gas supplies, whether they use them or not.
The new accounts show that accumulated losses at Shannon LNG last year increased by €2.52m to €63.4m. The Hess Corporation had provided the firm with an interest-free loan of €65m to provide the funding for the project development.
A note in the accounts states that: “The company has acquired and developed valuable assets comprising permissions, rights, licences, leases and other entitlements 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 involved would be of a scale as to require the involvement of a suitable industry investor.
“The company’s cost base has been reduced during the year past year. Overheads have been reduced to the level necessary to maintain and protect the assets and to ensure continued compliance with regulatory and other obligations until a suitable industry replacement for Hess Corporation is selected.”
Shannon LNG’s directors also state they are satisfied that the company will have adequate resources to continue in operation in terms of maintaining a development stage company and protecting the existing assets for the foreseeable future.
“Management have prepared detailed projections of the annual costs involved in protecting and maintaining the assets,” they wrote.
“The cost projections do not anticipate any significant outlays as there are no plans to develop or acquire new assets until the new industry investor is on board.”