Gas prices, not rationing, 'main risk facing Irish business'

Disruption due to any Russian shutdown of its pipeline would push prices higher for Irish consumers and businesses

While the European mainland would face disruption of gas supply if Russia cuts off its pipeling, the main effect on Ireland would be surging prices. 

Rationing of gas on the continent in the event of Russia turning off gas supplies would push Irish energy prices even higher, despite Ireland still having access to North Sea supplies, experts have said. 

Fergal O'Brien, director of policy and public affairs at business group Ibec, said that any disruption to Russian gas supplies to the continent would more likely push Irish prices higher than to curtail supply because the Irish market taps the North Sea for a large part of its gas supply, as well as form the Corrib gas field off the Mayo coast.     

The risk from an Irish economic perspective is high prices over the winter 2022 and 2023, Mr O'Brien said, with Corrib and the British gas interconnector should ensure the market here remains "well supplied". 

Mr O'Brien said Ibec is working with Government on proposals to help out businesses:

Across Europe it looks like it will be a distressed market for some time to come.

He said that European Commission guidelines to EU members involving cutting gas consumption do not automatically apply to Ireland which is part of the British-Irish gas market. 

However, Irish manufacturers who are intensive users of energy users could be hit, experts have said.  Trade expert John Whelan said the price of gas is not determined in Ireland but decided effectively in Britain, which sources North Sea suppliers.

"The UK market should not have a problem [from the North Sea]. There is no immediate short-term relief coming to gas prices or that Opec will pump more oil," Mr Whelan said. 

"There is a glimmer of hope from the US pushing for a maximum price on Russian oil which would peg it to a certain level," with work going on it the background with the Group of 20 largest industrial countries, Mr Whelan said. 

However, he said there was little prospect for energy prices to come back down any time soon.

Tony Foley, emeritus associate professor of economics at the DCU Business School, said last week that the Government will have to table all sorts of contingencies, including setting price caps on energy suppliers, to safeguard Irish energy supplies. 

The measures will be needed to ensure energy security for Ireland should Russia disrupt, or turn off altogether, its key gas supplies to Europe. 

In terms of gas security, Ireland is not directly connected to the continental European gas pipelines and gets most of its gas from the North Sea via Britain to generate electricity from power stations.

Around a quarter of the overall gas requirements is sourced from the Corrib field off the Mayo coast. 

Gas is used by all electricity generators on the island to generate power for the all-Ireland grid.      

But wholesale gas prices across the continent also affects British and Irish wholesale gas prices. Professor Foley said that the Government should weigh a range of policies, including possibly imposing price controls on the domestic gas producer,  namely the Corrib field, and on windfall taxes on importers of energy.