Shell E&P Ireland Ltd Corrib gas project sees costs spiral
The Corrib Gas partners are now counting the cost of a contentious An Bord Pleanálaruling as the bill for the project is set to hit almost €3.4 billion before the end of next year.
The company driving the project, Shell E&P Ireland Ltd (SEPIL) confirmed yesterday that the Corrib Gas Partners last year spent a further €250 million on the project.
The 2012 outlay brought the total spend on the project to €2.68 billion at the end of December last.
Work continues on the 5km tunnel to bring the gas ashore and a Shell spokesman confirmed yesterday that a further €380 million will be spent on the project this year with a projected €300 million to be spent on the scheme next year.
The firm expects the tunnel to be complete by the middle of next year with the first gas to flow by 2015.
The spiralling costs associated with the €3.36 billion project make it the largest commercial investment by private investors in one single project in the history of the State.
Gas was originally expected to flow from the field in 2003 resulting in the project likely to be 12 years behind the original schedule and the outlay will be more than four times the initial estimate of €800 million.
The Corrib gas partners had hoped gas would be brought ashore in 2011 – but this was before An Bord Pleanála ruled that half of a proposed overground pipeline would be unsafe, necessitating the construction of the tunnel. The project is now counting the cost of that decision with the projected spend on the entire scheme in 2013 and 2014 totalling €680 million that coincides with the construction phase of the tunnel.
SEPIL are not in a position to provide the cost of the tunnel, however, a spokesman said that “a sizeable proportion” of the spend in 2013/14 is on the tunnel. Accounts recently filed with the Companies Office by SEPIL show the firm recorded a pretax loss of €23.7 million last year.
A tax credit of €6.4 million helped reduce the loss to €17.2 million and last year’s tax credit brings to €114.4 million the amount SEPIL has received in tax credits since the project’s inception.
Remuneration for the firm’s three directors last year topped €1.4 million with staff costs dipping from €18.89 million to €18.3 million.
SEPIL’s shareholder funds last year topped €1.25 billion after the firm received a further cash injection of €175 million during the year.
Shell has a 45 per cent share in the field with its two partners, Statoil having a 36.5 per cent share and Canadian-owned Vermilion owning the remaining 18.5 per cent share.
A SEPIL spokesman said yesterday that 2012 “was a busy and productive year. The Corrib gas project moved into its final phase with construction work continuing at the Bellanaboy bridge gas terminal.”