LONDON, Oct 22 (Reuters) - Infrastrata expects to make a final investment decision (FID) on its natural gas storage project in Northern Ireland by the end of the year to enable construction to start in the first quarter, a senior executive at the company said on Tuesday.
The company's subsidiary, Islandmagee Energy Limited, plans an underground natural gas storage facility at Islandmagee, a peninsula on the east coast of County Antrim, Northern Ireland.
Once built, it will be able to store up to 500 million cubic metres of gas, equivalent to a quarter of Britain's total gas storage capacity.
"We hope to do an FID by the end of the year and hope to start construction in the first quarter," Arun Raman, chief financial officer of InstraStrata told a Bloomberg New Energy Finance conference in London.
Infrastrata has agreed with energy trader Vitol to offtake gas from the facility in a 12-year contract, Raman added.
Britain, as well as its European neighbours, relies on gas reserves to manage winter demand. Typically, storage is refilled in summer when gas prices are cheaper and demand is lower in preparation for higher demand and prices in winter.
Britain's largest natural gas storage site, Rough, has closed, removing an extra cushion to meet winter demand that once had capacity to inject gas into the national network for 90 consecutive days if needed.
This year, European gas storage sites have been very full due to over-supply of gas and liquefied natural gas imports.
However, this was likely a short-term phenomenon, Raman said.
"It is our belief that the (gas) markets are going to tighten in the future and so what we have seen this year has been an exceptional situation," he added. (Reporting by Nina Chestney; Editing by Mark Potter)