Corrib gas field cost rises to €2.5 billion

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

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

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

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

Figures show that the total tax credits received by SEPIL to date amount to €87 million.

Partners in the project – Shell, Statoil and Canadian-owned Vermillion – spent an additional €424 million on the project last year and it is understood the spend on the project in 2010 will be around €300 million SEPIL had anticipated that gas would be produced from the field at the end of this year or early 2011.

However, gas may not flow for another three years due to An Bord Pleanala last year ruling that up to half of a proposed pipeline to bring the gas ashore was unacceptable on safety grounds, resulting in SEPIL seeking planning permission for a 4.9km tunnel to bring the gas up the Sruwaddacon estuary.

An Bord Pleanala 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 €120 million will begin next year and take two years to construct.

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

SEPIL, which has a 45 per cent share in the gas field, has spent a total of €707 million since the project began to the end of December last, made up of €548 million in capital costs and €159 million in operating costs.