British scuttle plan for Irish gas pipeline between north and south

An ambitious plan to pipe natural gas from the Irish Republic into Northern Ireland has been scrapped because the British government says it would be a losing venture.

Dublin politicians, however, accuse the British of betrayal on a deal that was agreed in principle with the Irish government, but not signed. The main results will be the loss of 1,000 jobs in Ulster, as well as a damaging blow to north-south economic cooperation.

The saga began with the quadrupling of Middle East oil prices in 1973. This resulted in large price increases to the consumers of gas manufactured in Ulster as a by-product of Middle East oil. The government decided that it would be cheaper to switch consumers to another energy supply, such as electricity, rather than to continue paying a huge subsidy to keep gas within the price range of Ulster consumers.

In a bid to save jobs, the gas employers recommended that North Sea gas should be piped to Ulster by way of Scotland. The government decided that the cost of (STR)104 million ($135 million) was prohibitive and it looked as if the Ulster gas industry was finished.

The Irish government then entered the picture. There were ample supplies of natural gas from the Celtic Sea, just off the south-coast of Ireland in County Cork. The Republic had surplus supplies. The north needed gas. Why not pipe it over the border, at the right price, and demonstrate as well that the two parts of Ireland could work amicably on economic deals? It might even show some Ulster Protestants, who staunchly back the link with Britain, that Irish Republicans could be their friends. From a northern point of view it seemed an attractive deal. Provided the price was right, it could save the 1,000 jobs in the Ulster gas industry, and provide Ulster with cheaper gas.

The link-up seemed feasible. In October 1983 a ''memo of understanding'' was agreed between the British and Irish governments, and all seemed well. However, two major difficulties later became apparent. Gas customers who already had planned to switch to electricity were not attracted by the deal, even though they were promised lower gas prices. And the government was finding it difficult to get private companies to distribute the gas throughout Ulster.

By July this year there were persistent rumors that the deal was in trouble. Because of the strong dollar, and a rise in the price of heavy fuel oil - to which the agreement was linked - the gas coming north would have cost 25 percent more than the agreed price last October. This increase, plus the steady drift of consumers to electricity, led the British to conclude that they had no option but to pull out.

Not surprisingly, the arguments about the British about-turn on the north-south deal still rage.

Dick Spring, the Republic's deputy premier and minister for energy, blames the British government. He says his government believed that agreements ''should be adhered to.''

The fact remains that a formal agreement on the gas was not signed. The Irish opposition spokesman on energy, Albert Reynolds, described the collapse as ''another clear example of the age-old practice of British governments dishonoring agreements with Ireland.''

In the north, the Rev. William Beattie, economic spokesman for the Rev. Ian Paisley's Democratic Unionists, said ''the government in its folly by pursuing a political deal with the Irish Republic, has wrecked the Northern Ireland gas industry.''

All of which demonstrates the difficulty not only of pleasing all sides in Ireland but of presenting a clear picture of deals where economics and politics are mixed up.