Denis O'Donovan (Fianna Fail)
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I welcome the Minister, Deputy Naughten, to the House and wish him a speedy recovery from his recent incident. He went through severe trauma and I wish him the best of health.

Ned O'Sullivan (Fianna Fail)
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I, too, welcome the Minister and wish him a speedy recovery.

This is a subject on which I have spoken on many occasions in recent years. It is timely that I raise it again today. The Minister stated at the energy security conference just this week that the question of importing liquefied natural gas to the island and the role of natural gas storage would be under consideration by his Department. I warmly welcome that statement. The Minister is to be commended for organising such an important energy conference at this time, especially in light of the very real threat to our future energy security posed by Brexit. We are almost totally dependent on the United Kingdom for our gas supply. Over 90% of our supply in 2015 was from the United Kingdom. Even with Corrib gas coming on stream, it is estimated we will have a dependency rate of 85% by 2025. Bearing in mind that we have a reserve capacity of only 5%, Ireland is clearly disadvantaged. This must be very worrying, as the Minister recognised in his statement. The Oxford Institute for Energy Studies reached the same conclusion in its January report. I referred to that last Thursday, fortuitously anticipating the Minister. I drew attention to the report.

It is most fortunate, therefore, that we currently have in place the Shannon LNG project in north Kerry. This was first announced by Deputy Micheál Martin when he was Minister responsible for industry, almost ten years ago. It has advanced very significantly in the intervening years. Strategic planning approval was obtained in April 2008. Pipeline construction approval was granted in May 2009, and foreshore leases and licences were obtained in December 2010. At that stage, the project was "ready to bid", as goes the expression. I happened to be Mayor of Kerry and a director of Shannon Foynes Port Company when the project was initiated. It is quite remarkable that such a valuable project has taken so long to come to fruition.

To date, approximately €67 million has been spent on this project, including on engineering, site investigation, lease costs, pipeline rights of way and land acquisition. The project hit a wall in 2012 when the energy regulator created new tariffing arrangements that had serious implications for a commercial LNG terminal. These new arrangements would compel any new entrant to the energy market to contribute millions of euro annually to the interconnector network whether or not it required access to the interconnector. Shannon LNG most certainly does not require such access.Shannon LNG, in simple terms, is a self-standing buy and sell operation. It should never have been penalised in this way. I do not think the EU ever envisaged such penalties obtaining in this case. As the Minister knows, there is a clear and present danger posed by Brexit to our energy security. It is stated that Ireland is a special case within the EU because of our close dependence on the UK for so many aspects of our economy, not least energy. As a result of that, if the EU is serious about assisting us through Brexit, this is one litmus test of its commitment. Many aspects of the regulator's decisions must be reviewed urgently. These regulations are going to have to be reassessed.

The Government will have to be more hands-on regarding the Kerry project, taking equity in it if necessary. Shannon LNG, which has been long anticipated in an area in which is devastated by unemployment and emigration, will finally become a reality. If the Shannon LNG project did not exist, the Government would have to invent it for itself. Clearly, much of the heavy lifting has been done and the operation is by a private company with full back-up and full support from all the State agencies, the harbour, the local authority and, most importantly, the community of north Kerry, which has embraced this and has such high hopes for it. I hope the Minister will be able to give a favourable response to my presentation and move this project forward.

Denis O'Donovan (Fianna Fail)
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That was a very well researched question to the Minister. I hope that his answer will fulfil the Senator's dreams.

Denis Naughten (Roscommon-Galway, Independent)
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I thank the Cathaoirleach and Senator O'Sullivan for their good wishes.

Brexit is the most significant economic and social challenge for Ireland over the past 50 years. It will impact on our economy and society due to the close links between Ireland the United Kingdom. It has implications for everyone on this island, North and South. Many sectors of the Irish economy have high levels of trade with the UK. However, the energy sector has one of the highest levels of interdependence with the UK, and one of the key links is energy, as most of the energy we import comes via the UK. Natural gas is a significant part of our energy mix, meeting approximately one quarter of all our energy needs. We use natural gas to generate over 40% of our electricity, heat many of our homes and fuel a significant amount of our businesses and industry. In 2015, 97% of the natural gas used in Ireland was imported via the UK. We also have our own indigenous source of natural gas, the vast majority of which comes from the Corrib gas field, which started production at the end of 2015. In the short term, Corrib will supply over half of our natural gas needs. However, it is expected that these supplies will deplete over the next seven to eight years, and by 2025 Ireland will most likely again be reliant on the UK for around 85% of our natural gas needs.

The proper functioning of our economy and society is reliant on energy. As the report referred to by the Senator suggests, the issue of security of supply is extremely important, and preserving the existing structures with the United Kingdom is the best way to ensure this security. In this regard, the continued secure trade in energy between the United Kingdom and Ireland as part of the 27 member states of the European Union is a priority for me. I will work to ensure the current strong energy relationship with the United Kingdom continues but in the European context. Ireland is, and will remain, a committed member state of the European Union, and our energy future will be very much as part of the European internal energy market. I note that Ireland has an existing intergovernmental arrangement with the United Kingdom in regard to trade in natural gas across the two interconnectors connecting Ireland with Scotland. In addition to these bilateral arrangements, there are arrangements and protocols in place between the transmission system operators in Ireland and Great Britain.

Gas Networks Ireland is also in the process of doubling the onshore section of the gas pipeline in Scotland to further enhance the resilience of our gas supplies from the United Kingdom. The report referred to by the Senator goes on to state that in the absence of the existing structures with the UK, an LNG regasification terminal might be needed. LNG is one option that will be considered to ensure our security of supply. I agree that the potential benefits of importing LNG directly onto the island of Ireland, and also the role of natural gas storage, must be examined in the context of Brexit. Indeed, A Programme for a Partnership Government, agreed in May 2016, commits to examining if there are ways to facilitate LNG on the island of Ireland. This is in line with the Government’s energy policy paper, Ireland’s Transition to a Low Carbon Energy Future 2015-2030, which commits to conducting a thorough analysis of options for increased gas storage and LNG potential. My Department has recently commenced the process of developing a report to identify options in order to ensure Ireland’s resilience to a long-term gas and electricity disruption. Part of this report will identify potential options to improve resilience, including the potential for LNG, storage, interconnection and fuel diversification.

I share the Senator’s concerns and my Department and I are working to identify the appropriate solutions that are in the best interests of our people. We have a number of options available for LNG, both on-shore and off-shore options. We will explore all those options. I have spoken with my Latvian counterpart about the off-shore option that has been used and been hugely successful in Latvia in driving down the cost of energy. All these options are on the table. I know there is an issue at the moment with the development of the site in Foynes and the port company is dealing with that. Once those issues are resolved, we are quite willing to engage with the successful bidders to see how we can explore the progression of this project.

Ned O'Sullivan (Fianna Fail)
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I thank the Minister for his reply, which I find encouraging. In fact, I am very pleased with it. The Minister has been engaging since he was appointed Minister, and met with all the players some time ago in a delegation headed up by the mayor of Kerry. There are no politics at play in this. All my Oireachtas colleagues from Kerry, both in the Dáil and Seanad, are at one on this issue. It just happens that on this occasion, we have tried to spearhead the initiative through the Seanad. It might just be the right thing to do. We all know that Britain is going to play Brexit in a way that will get the best deal for the UK. The UK is the priority. We in Ireland are committed to Europe, as the Minister stated. It is important that this project gets over the line. It will be good for Ireland and our security needs and for my area and for jobs. It will also be good for the whole European project to show that we can work out the best possible scenarios after Brexit.

Denis Naughten (Roscommon-Galway, Independent)
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I thank Senator O'Sullivan. He is correct that the UK is going to look at this issue from its own perspective. We cannot blame it for that. We would do the same thing. However, the United Kingdom is the United Kingdom of Great Britain and Northern Ireland. We have a single electricity market on the island of Ireland, North and South. Some 40% of all power generated on that grid comes from gas. That interconnection is vitally important for Northern Ireland as well. We have always had a strong relationship with Whitehall in the energy area because of that interconnectivity.

Every European country must have 90 days oil storage within its own jurisdiction or within another member state of the European Union. Some 90% of our 90-day oil storage is on the island of Ireland and we are the only sovereign holder of oil storage on this island. There is a huge interdependence there and from a strategic point of view, what happens in the Republic of Ireland is as important from an energy perspective to the British Government as it is to the Irish Government because of the interconnected relationship with Northern Ireland.

I agree with the Senator that our natural gas supply is critical for energy security. While overall policy is a low carbon energy future, natural gas is a key part of the transition and potentially an important part of the low carbon economy.In this regard, all options, including LNG, would be given full consideration to ensure the best options at least cost for the consumer are identified. In regard to the proposed LNG terminal at Ballylongford in north Kerry, the Programme for a Partnership Government expressed support for the proposal to construct an LNG terminal as it would bring connectivity for the first time to the global LNG market. It is also important to point out from discussions with my European colleagues that we are looking at trying to connect up LNG facilities right across Europe. Many of my colleagues in Europe, particularly in central Europe, are quite critical of the lack of connectivity between LNG terminals on the coast of Europe connecting with the main grid networks throughout Europe. We need to be conscious of that as well.

My Department has supported this project in becoming an EU project of common interest and, although not successful, it also supported the application for funding from the Connecting Europe Facility for the gas pipeline from the proposed terminal into the gas network itself. In terms of engaging with the promoters of the Ballylongford project, as the Senator is aware, I met the principal parties and my parliamentary colleagues to discuss the project. Officials in my Department have also engaged with the relevant parties to assist, as appropriate. However, while I will provide any support I can in regard to assistance sought from the EU, this is a commercial project and, therefore, the question of Exchequer or other public funding for this project does not arise.

I acknowledge that the development of an LNG terminal is one possible option to secure our natural gas supply in the context of Brexit. However, the continued trade in energy between the UK and EU member states is a priority. As I pointed out at the civic dialogue on Brexit, which I hosted in Boyne in County Roscommon earlier this week, we must be careful not to over-commit on particular technologies. I will consider the outcome of the study by my Department on the resilience of the long-term gas or electricity disruption and the recommendation it presents before making any decision on our long-term energy security.

As someone who in a previous life was a spokesperson on transport, shadowing the late Seamus Brennan, I took a huge interest in Foynes Port and the huge potential of the Shannon estuary. I have spoken to the outgoing US ambassador to see if we could get pre-clearance for goods and have a facility developed in Foynes that would allow direct access into the United States. It is something that I intend to explore again with the new ambassador. What the levels of trade will be in the future I do not know, and I will leave that to Senator Lawless to decipher-----

Ned O'Sullivan (Fianna Fail)
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I wish the Minister well.

Denis Naughten (Roscommon-Galway, Independent)
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-----but I am very positively disposed to seeing development taking place on both the northern and southern sides of the Shannon estuary.

Denis O'Donovan (Fianna Fail)
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Thank you, Minister. I always realised Roscommon bowed to pressure from the kingdom county.