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FEATURE: New Irish government policy pledges deal significant blow to gas

Highlights

Governing coalition vows to end new gas exploration licenses

Will not support LNG terminals importing 'fracked' gas

Industry body slams gas bans, points to import dependence

London — Ireland's new coalition government -- formed on June 27 between the country's two main political parties Fine Gael and Fianna Fail together with the Green Party -- is bad news for the gas industry, with plans to ban new gas exploration licenses and a pledge not to support LNG terminals importing "fracked" US gas.

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The pledges in the coalition's "Programme for Government" have been welcomed by environmentalist groups, but slammed by industry which believes the policies will not reduce Ireland's carbon emissions and will make the country more dependent on imports of gas from the UK.

The new government was formed following months of negotiations after a general election in February resulted in a hung parliament.

On energy, the new three-party government has pledged to "harness the natural resources to meet our needs in this country, without compromising the ability of future generations to meet theirs."

It said it would end the issuing of new licenses for exploration and extraction of gas, on the same basis as the decision last year in relation to oil exploration and production.

Ireland said in September that exploration for oil would end as it was "incompatible" with a low carbon future, but said it recognized the contribution gas could make in tandem with renewables.

But now, the government has backtracked, saying it would extend the ban to gas.

LNG targeted

LNG is also targeted despite there being three potential Irish LNG import projects on the drawing board.

The main reason, it seems, for the policy shift is that two of them have links to the US shale gas industry and the new government said it was strongly opposed to the import of "fracked" shale gas.

"We do not support the importation of fracked gas and shall develop a policy statement to establish that approach," it said.

"As Ireland moves towards carbon neutrality, we do not believe that it makes sense to develop LNG gas import terminals importing fracked gas, [and] accordingly we shall withdraw the Shannon LNG terminal from the EU Projects of Common Interest (PCI) list in 2021," the Programme for Government stated.

The long-delayed 5 Bcm/year Shannon LNG terminal in western Ireland is under development by US-based private equity firm New Fortress Energy.

It is currently listed as a PCI, which allows the project developer to apply for funding from the Connecting Europe Facility, which runs until the end of 2020.

Also under development is the 4 Bcm/year Inisfree floating LNG import facility in the south of the country, proposed by US LNG company NextDecade, which would bring LNG from the company's Rio Grande LNG export facility in the US.

Neither New Fortress nor NextDecade responded to requests for comment on the new Irish government stance.

A third Irish LNG import terminal has also been proposed by UK-listed Predator Oil & Gas.

Predator has said its planned FSRU in southern Ireland would specifically target LNG imports using gas feedstock from a "transparent origin that is not dependent on fracking operations related to shale gas exploitation."

Industry opposition

The Irish Offshore Operators' Association (IOOA), meanwhile, has slammed the government policy proposals.

It said the published Programme for Government failed to recognize the "urgent need" to repeat the success of the Kinsale Head and Corrib gas discoveries, which have given Ireland much-needed gas supply security.

It said Ireland would become far more dependent on gas imports from the UK, which itself is a gas importer.

"Such imports will make it far more difficult for Ireland to meet its international commitments on carbon emissions, as such imports from a country which is itself a gas importer generate up to 30% more carbon emissions," it said.

IOOA CEO Mandy Johnston said that measures such as banning gas exploration licenses were "virtue signalling gestures" that would appeal to the Green voter, but would "ironically increase our emissions."

"We are the only country in the world as reliant on energy imports to introduce a ban like this," she said.

In his first speech as leader, Ireland's new Taoiseach (prime minister) Micheal Martin said June 27 that Ireland must play its part in tackling the "existential crisis of climate change."

"The program we have agreed puts action on climate change into the work of every part of government. We must not just overcome this challenge but we must turn it into a new opportunity," Martin said.

Environmentalist group Food & Water Action Europe welcomed the government's stance on gas.

"With an import ban of climate hostile and environmentally destructive fracked gas, the Irish government shows true global climate leadership by creating a decisive legal precedent that could truly shake up markets and pave the way for the much needed clean energy transition," Andy Gheorghiu, anti-fracking policy advisor at Food & Water Action Europe, said.