Corrib field shareholder Nephin Energy earned a €14.1 million profit from natural gas sales last year, but low prices and other costs left the overall group with a €59 million loss, the latest figures show.
Nephin Energy Holdings Ltd holds 43.5 per cent of the Corrib field, Ireland’s sole producing natural gas reservoir, and owns a trading arm, Nephin Energy Ltd (NEL), which sells the fuel on the Irish market.
Accounts show NEL earned a €14.1 million profit last year from selling gas. Turnover at the holding company fell 35 per cent to €116.5 million in 2020 from €178.75 million in 2019, as gas prices fell amid a slump in demand during the worst of the Covid-19 pandemic.
Nephin Energy Holdings earned profit before tax last year of €11.6 million, 85 per cent less than the €69.6 million profit it generated in 2019.
However, a €27.7 million tax bill and a €44 million non-cash charge related to its hedging activities meant the business recorded a €59.3 million loss for 2020, against a €77.36 million surplus the previous year.
The group paid a €56.5 million dividend to its shareholder, the Canada Pension Plan Investment Board.
Nephin managing director Tom O’Brien said the figures reflected a strong performance in a period when gas prices fell to a 10-year low amid a slump in demand during the Covid-19 pandemic.
“Nephin’s business remained resilient due to the prudent and proactive approach we took to hedging and the hard work of our team and joint venture partners,” he said.
The company supplied up to 40 per cent of Ireland’s natural gas needs last year, something which current fears of a global shortage of the fuel should “bring into sharp focus”, Mr O’Brien pointed out.
Rising demand
Rising demand as countries emerged from the pandemic, combined with Russian monopoly Gazprom's squeeze on supplies to Europe, have sent gas prices surging. Fears of a shortage are growing, particularly as demand for gas increases sharply in wintertime.
Mr O’Brien argued that with the right Government support, Corrib could continue to contribute significantly to Irish energy security for many years to come.
“Corrib’s existing infrastructure could be used to provide the country with a reliable, lower carbon-intensive supply of natural gas compared to foreign imports and in the process reduce Ireland’s dependency on what are increasingly challenging international energy markets,” he said.
The Corrib field’s reserves will fall as it continues to supply gas, but several companies hold exploration licences over nearby areas that could potentially hold further quantities of the fuel.
If that were the case, these reserves could be connected to the infrastructure now used to draw gas from Corrib, cutting the cost of exploiting those fields.
A ban on future fossil fuel exploration in the Climate Bill does not apply to existing licences. However, the offshore oil and gas industry argues that both this legislation and conflicting energy policy statements have left companies unwilling to risk investing here.
Nephin’s figures show that the value of the Corrib gas field and its associated infrastructure fell to €482.1 million last year from €626 million in 2019.
