US oil giant Hess sells troubled Irish gas terminal Shannon LNG
The New York company recently reported its first annual loss since 2002
Published 07/02/2016 | 02:30
Hess Corporation, which has its headquarters in New York, has sold Shannon LNG, the Sunday Independent has learned. Hess confirmed that it has exited the business.
The identity of the owner of the proposed liquefied natural gas terminal on the Shannon Estuary in Co Kerry, and their plans for the long-delayed development, are not yet clear.
Shannon LNG's assets include options to develop land owned by the Shannon Group (formerly Shannon Development) and planning permission for the terminal.
Hess indicated that it was seeking to sell it late last year.
The company has spent more than €67m trying to progress the project but never made it to the point of construction. Completing it was expected to cost about €600m.
If built, the terminal could accept shipments of liquefied natural gas from around the world, which could be used by Ireland or sold to other countries.
Liquefied natural gas is formed when natural gas is cooled to minus 162C, which shrinks the volume of the gas 600 times, making it easier to store and ship.
The planned Kerry gas terminal was included on the European Commission's Projects of Common Interest (PCI) list late last year, following lobbying by Shannon LNG.
PCIs are eligible for EU funds totalling €5.35bn and accelerated planning and permit granting.
Hess was first granted planning permission for the terminal in 2006. The oil company said it would create around 650 jobs in construction and about 100 full-time positions when operational.
But progress stalled when the energy regulator ruled that Shannon LNG would have to contribute to the costs of two interconnecting pipes which transport gas between Ireland and the UK.
A series of legal wrangles ensued, with Shannon LNG claiming the tariffs would cost them tens of millions and subsidise their competition in the UK.
Some critics of the energy regulator's stance said the approach threatened the development of a secure supply of natural gas to Ireland.
Hess has sold Shannon LNG at a time when it is experiencing sharp declines in revenue and share price.
Its stock has fallen by more than 50pc in the last 12 months
Like explorers and producers of hydrocarbons companies around the world, the company's revenues have plummeted with the falling cost of oil.
Oil prices have tumbled from more than 70pc from a June 2014 peak.
Last month, Hess reported a net loss of $1.82bn (€1.63bn) for the quarter and $3.06bn for the year, its first annual loss since 2002.
It will cut spending by two fifths this year as it pulls back in all regions and seeks further cost reductions and efficiency gains, is announced.
Sunday Indo Business