Dáil Éireann Debate, Tuesday - 27 April 2010
70 Deputy Joanna Tuffy asked the Minister for Communications, Energy and Natural Resources his views on Ireland’s use of liquefied natural gas; if he will address concerns that risks associated with LNG include political instability of exporting nations, price volatility and security of transport; and if he will make a statement on the matter. [16652/10]
Amharc ar fhreagraThe International Energy Agency (IEA) World Energy Outlook 2009 notes that the unexpected boom in North American unconventional gas production, together with the current recession's depressive impact on demand, is expected to contribute to a glut of gas supply in the next few years. This new gas supply has driven down US prices and reduced LNG imports to the U.S., which in turn have become available and increased supply in other markets.
A key security of supply imperative for the EU, where over half of the gas consumed is from sources outside Europe, is to ensure diversification of supply routes and sources of gas. Liquefied Natural Gas (LNG) is increasingly a component of this strategy as Member States work to diversify supply sources and routes. To the extent that LNG is sourced from different countries to those exporting pipeline gas, it can lessen exposure to price volatility and supply disruptions. The EU is already heavily interconnected with gas supply routes to Norway, Russia, Algeria and Libya. LNG supplies to Europe are currently sourced from Norway, Algeria, Libya, Egypt, Nigeria, Equatorial Guinea, Trinidad and Tobago, Qatar, Oman and Malaysia. Most of these countries are seen as largely stable political regions.
LNG imports account for approximately 15% of the total EU gas market. LNG supplies to North West Europe have increased in line with the coming on-stream in 2009 of new LNG facilities in UK, Italy and elsewhere, the current competitive price of LNG on world markets and with increased availability of supplies. The gas market generally, and the LNG market in particular, is much less price-volatile than in 2007 or 2008. Currently, a well supplied US gas market together with declining global demand is contributing to lower spot market prices which could help break the oil price link in the longer term gas contracts.
Ireland's demand for gas is met almost entirely by imports across the gas interconnectors from the UK. Declining production and storage at Kinsale, now supplying around 4%, accounts for the remainder. Irish imports account for around 5% of the UK gas market. The majority of UK gas demand is currently being met by indigenous North Sea production and imports from Norway. Through the gas interconnectors with Great Britain, Ireland has access to diverse sources of supply, including UK indigenous production, Norwegian imports and UK LNG imports and indirectly, to physical interconnection with mainland Europe. The UK has access to worldwide LNG markets through its significant recent investment in LNG terminals and LNG now plays an increasingly important part in the UK's gas supplies.
It is prudent, in light of Ireland's dependence on gas imported from the UK, to work to reduce our reliance on this source. In addition to bringing Corrib gas production on stream, opportunities for LNG and for gas storage are being facilitated. The island of Ireland currently has no LNG import capability. However, Shannon LNG is at an advanced stage in the project to build an LNG facility on the Shannon estuary. The proposed ‘merchant' LNG terminal would provide additional security of supply here, in that it would bring diversity to Ireland's supply sources and would bring direct connectivity for the first time to the global LNG market. The prospect of such a facility is therefore a potentially positive step for the island of Ireland. Shannon LNG has been awarded planning permission for an LNG import facility and terminal under the Planning and Development (Strategic Infrastructure) Act 2006.
The safety standards applying to an LNG facility are primarily the responsibilities of the Health and Safety Authority (HSA) and the Commission for Energy Regulation both of whom have stringent regulations and standards in place under the EC Seveso Directive and other EU Regulations.
