Safety Before LNG
Exposing the truth about the Hess 'Shannon LNG' project
Negative Effects on the Shannon Estuary
Nevada LNG Explosion

Press Releases

Press Release December 6th 2011: Major criticism by Irish Minister for Energy of "windfall gain" to US Multinational 'HESS' a dramatic game-changer that could spell end of proposed Shannon LNG project.

Energy Minister agrees that less customers to pay for the €50 million fixed annual cost  of the  gas interconnector to the UK means that if the Shannon LNG project goes ahead "the prices for the consumer would go up and there would be a windfall gain for the multinationals" adding "that this is not the outcome we seek".

The Energy Minister statement will be viewed by industry analysts as a dramatic game-changer that  shows  the Irish government's intent not to allow the country become a  hostage to a Shannon LNG monopoly price-fixing business model.

The first major criticism by any Irish Minister for Energy in the Dáil (Parliament) on Tuesday November 29th 2011 of the "windfall gain" that will accrue to US Multinational giant HESS, could signal a dramatic game-changing end to the proposed Shannon LNG project  [c.f. note 1].

Minister Pat Rabbittte has cast serious doubts on the acceptability to the Irish Government of the Shannon LNG business model which is based on the benchmark price paid by Ireland for gas imported via the interconnector from the UK. The minister agreed with the logic put forward by the LNG project opponents that less customers to pay for the €50 million annual cost of the gas interconnector to the UK means that if the Shannon LNG project goes ahead then 

"the prices for the consumer would go up and there would be a windfall gain for the multinationals"


"that this is not the outcome we seek".

The Minister was responding against pro-LNG lobbyists who are attempting to stop the independent Irish Commission for Energy Regulation (CER) from setting a tariff on all gas shippers based on their market share to pay for the fixed costs of the interconnector in order to prevent gas prices from increasing by up to 15% for consumers [c.f. note 3 and note 4 page 11]. Major wholesale gas purchasers in Ireland (the ESB, Bord Gáis and Endesa) have supported the CER position with the ESB even going as far as to accuse Shannon LNG of "free-riding" on the services that the gas interconnector provides  [c.f. note 2]. Shannon LNG would earn a yearly windfall gain of €22.5 million euros on top of its normal profits if it decides to take a 50% market share and has threatened to pull out of the project if it is forced to pay the tariff along with all the other market participants.

Minister Rabbitte stated in the Dáil:

"This regulatory issue is complex. Under the current regulatory regime the coming on stream of this liquefied natural gas, LNG, project will have implications for gas network tariffs set by the regulator. The same applies to the Corrib field. This, in turn, will have implications for general wholesale gas prices bearing in mind that the model is based on Irish prices following United Kingdom prices plus an additional amount for the price of transport through the interconnectors. In an environment in which gas from the Corrib field and LNG meet some or all of Irish demand, the interconnectors built and owned by Bord Gáis Éireann would become under utilised and their proper remuneration by the reduced number of gas customers becomes an issue. In such circumstances, the prices for the consumer would go up and there would be a windfall gain for the multinationals. Deputy Ferris is likely to be minded to agree with me that this is not the outcome we seek. We have no wish for prices to be pushed up as a result of a stranded asset, that is, the interconnector, and a windfall profit to the multinationals, much as we welcome them here, whether they are associated with Corrib or LNG."

'Safety Before LNG' is of the view that the CER has now been given a green light by the Energy  Minister to make a decision on the tariff to be charged to Shannon LNG with the knowledge that the government has a clear understanding of the issues at stake.

Complaint by Shannon LNG to the EU Commission:

In signs of a further deterioration in relations between Shannon LNG and the Goverment, the Minister  for Energy went on to criticise the move by Shannon LNG to complain Ireland to the EU Commission before the CER even rules on the tariff to be charged to market participants for the gas interconnector.The Minister stated:

"I did say that I expected a decision at the end of October or early November, as I was so advised. I believe that is what would have happened were it not for the rather unusual step by the company to lodge a formal complaint with the European Commission against the process underway by the regulator. One can understand the lodging of a complaint against a decision of the regulator but it is unusual to see an action taken against an anticipated decision by the regulator."

The Competition Authority of Ireland, the state body responsible for enforcing Irish and European competition law in Ireland has not even been consulted on the matter as it already informed 'Safety Before LNG' that it could not assess the matter until a decision was first made by the Regulator.

'Safety Before LNG' has consistently stated that Shannon LNG should be considered as a competitor in Ireland, not of Bord Gáis, but of the suppliers to the Milford Haven and other LNG terminals in Great Britain and therefore of other exporters into Ireland. Shannon LNG itself admitted in its submission to the CER on this issue that:

“If Shannon LNG charges the same price as UK imports of gas to Ireland, then Shannon LNG cannot gain market share” [c.f. note 4 page 3].

Disagreement  within the  coalition:

The Ministers comments may also put strain in the relationship between the coalition partners. Fellow cabinet minsiter, Jimmy Deenihan, Minister for Arts, Heritage and the Gaeltacht, has already stated publicly to the "Limerick Leader" newspaper that Hess LNG should not have to pay any money to the CER for the interconnectors and Minister Deenihan went on in the same interview to state:

“if we lose this project, there will be a major issue over the role of the regulator and how it was established” [c.f. note 4 page 4 and ' Limerick Leader' - May 21st 2011.]

Minister Rabitte, as Minister responsible for the Energy portfolio, however categorically contradicted Minister Deenihan's position when he stated:

"The regulator is set up by statute of this House and is independent and has a job to do in the interests of consumer protection, competition and so on. I cannot interfere with that but I will be helpful in any way I can. I have signalled only recently following a request from my colleague, the Minister, Deputy Deenihan, my willingness to meet the county manager and I am pleased to do so."

'Safety Before LNG' is of the view that there is now an obligation on Minister Jimmy Deenihan to  publicly clarify his position towards political interference  with  the Energy Regulator's office in the light of Minister Pat Rabbitte's comments in the Dáil on the matter. 

'Safety Before LNG' understands that any direction from the Governnment to the CER contradicting current government policy is possible but would first require extensive public consultation in order to develop a new Irish Energy Policy - a process that could take months, if not years to complete.

Unbalanced Reporting in Local Media

In an implicit acknowledgement that the issues at stake in the LNG plan are not being fairly reported in some pro-LNG local media outlets Deputy Martin Ferris T.D. stated in the Dáil on the same day:

"The truth about what is holding this up should be spelt out for the people of the area. People are not aware of what is going on."

After Minister Rabbitte had explained how Hess would get a windfall at the country's  expense, Deputy Ferris noted:

"As the Minister is aware, I have no love for multinationals and I am keen to ensure value for money for the taxpayers of the country - I subscribe fully to this principle as I have done consistently all my life."

'Safety Before LNG' states that Shannon LNG's attempt to create a monoply for itself in Ireland at the consumer's expense at a time of increasing fuel poverty has now been exposed.

The genie is out of the bottle as the proposed Hess LNG project has now been exposed as a slick attempt to create a price monopoly in Ireland at a time of increasing fuel poverty.

The €22.5 million annual windfall to Hess from Ireland amounts to a support of €450,000 per year for each of the only 50 long-term jobs that the Shannon LNG plant would hope to create.

The people are not mushrooms to be kept in the dark and there is now a duty on all media to explain all the issues at stake in the proposed LNG project.

Someone in government is finally listening to the argument that the Shannon LNG project is only an attempt at price fixing at a time of increasing fuel poverty and is not in the national interest.

Shannon LNG is hoping to make millions of euros profits every year with state support at the consumer's expense at time of increasing fuel poverty.

From every angle looked at, be it environmental, safety, strategic planning or economic, the Shannon LNG project defies logic and is the wrong project in the wrong place and is against the strategic national interest.

This dramatic statement by the Minister is a game-changer against attempts to allow the country become a hostage to Shannon LNG monopoly price fixing.

After four years of campaigning this has now become a truly national debate about value for money for the Irish taxpayer and consumer.


Notes to the Editor:

Note 1.

The full comments of Minister Pat Rabbitte in the Dáil on Tuesday 29th November 2011 regarding the Shannon LNG project may be viewed on

Note 2.

Please see our previous press release of 10th August 2011 for more details:

10th August 2011: ESB accuses Shannon LNG of "free-riding" on the services that the gas interconnector provides.

Note 3.

Public consultation documents on the Regulatory Treatment of the BGE Gas Interconnectors can be found on the CER website at:

Note 4.

Click here for full Safety Before LNG submission to the Commission for Energy Regulation

Note 5.

Media Interest in this Issue.

Europe & Russia LNG / LPG News

Shannon LNG Asks Commission to Settle Pipeline Tariff Dispute

by James Enright   European Spot Gas Markets

December 06, 2011

Shannon LNG, the operator of Ireland's regasification plant project, has referred a dispute with the country's regulator about a proposed interconnector tariff to the European Commission, claiming a tariff for operating and maintaining the UK-Ireland natural gas interconnectors would amount to unlawful state aid.

Shannon LNG is awaiting a decision by the watchdog Commission for Energy Regulation (CER) on the proposed E10m annual tariff towards the operation and maintenance of gas interconnectors with Britain.

The company, a subsidiary of Hess LNG, has refused to pay the charge, saying it will not use the interconnectors.

"The tariff not only contravenes EU law but represents a massive policy shift from the previous government's stance on interconnector policy," Gordon Shearer, CEO of Hess LNG, told ICIS Heren on Thursday. "This switch in methodology is totally unreasonable and quite controversial."

Sherarer insisted that a tariff breaches EU Regulation 715/2009, which forbids cross-subsidies between network users.

The CER expects to reach a decision on the regulatory treatment of the gas interconnectors by the end of January.

A CER spokesman said: "We seek to balance the interests of gas customers with keeping Ireland as an attractive location for gas producers. The CER will also endeavour to comply with relevant European legislation and regulatory best practice."

Hess LNG has said it is committed to constructing the west-coast regasification terminal despite the possibility of a tariff, which would threaten to undermine the project's viability ( see ESGM 22 August 2011 ).

"We will still pursue it but the tariff seriously compromises the project," Shearer said. "Over a 20-year period, the tariff will cost E200m. Our current budget runs to E500m, so that's a 40% hit."

Hess LNG has been granted 100% of the capacity at the proposed terminal for a 20-year period. Shearer said the terminal had not attracted third-party interest from European utilities because of a perceived lack of liquidity in the Irish market. JE

Copyright 2011 Heren Energy Ltd. All Rights Reserved.

(Originally published December 2, 2011, in European Spot Gas Markets.)

Clare Champion Tuesday, December 6, 2011

Shannon natural gas project under threat


Written by Dan Danaher   

PLANS to construct a €500 million liquefied natural gas (LNG) regasification terminal on a 104 hectare site on the Shannon Estuary are under threat over the proposed introduction of annual costs of €21m for the use of interconnectors.
The developers of Shannon LNG have threatened to pull the plug on the project if the Irish Commission for Energy Regulation (CER) proceeds to levy gas suppliers with costs of €21m by transferring this tariff for the use of interconnectors to competing Irish suppliers, who don’t use interconnectors.
According to a consultation paper published last January by the CER, the rationale for this cross-subsidisation is to pay for the “security of supply” benefit of the second interconnector.
Another consultation paper was published by the CER in July, which LNG claims presented a completely new set of issues and proposals, which are not described adequately or clearly, including investor incentives, “diversity premium”, tariff volatility, tariff capping and the role of the Common Arrangement for gas in Ireland.
An economic assessment provided by DKN Economic Advisors estimated the value of the LNG project at over €206m annually for the Irish economy.
Shannon LNG will employ 500 people during the three-year construction programme and 100 full-time jobs afterwards.
Shannon LNG has made a formal complaint to the EU Commission that the CER proposals are anti-competitive, discriminatory, create barriers to entry, provide cross-subsidies, lack transparency and fair procedures and provide illegal State aid.
The promoters have advised they believe the consultation and options it contains are legally defective under Irish and European regulations and laws.
According to an assessment provided by the company, these proposals introduce a degree of instability to the regulatory regime in Ireland, which will have a chilling effect on any future investment and perhaps worst of all, they fail to address the primary issue identified by the CER with the interconnectors, namely the future stability of the associated tariff.