ESB International's proposals to develop a new combined cycle gas turbine power station in Coolkeeragh on the outskirts of Derry may be revised unless it can secure a prompt decision on the issue from the North's industry regulator, industry sources have warned.

Mr Douglas McIldoon, the electricity and gas regulator for Northern Ireland, is examining the proposals by the ESB to construct a replacement power station in Coolkeeragh to provide energy to the north-west. Industry sources fear time may be running out for the ESB to proceed with its plans to have the power station operational by early 2004.

The future of the gas market in Northern Ireland and the Republic was one of the key issues raised at the energy conference held in Belfast yesterday. Government officials, north and south, believe an all-island gas market would bring benefits to both jurisdictions.

Mr Peter O'Neill, a principal in the Republic's Department of Public Enterprise, said an enlarged market would improve economies in gas supply. "Integration of both markets would benefit the security of supply in the Republic of Ireland." His counterpart in the Department of Enterprise, Trade and Investment in Northern Ireland, Mr Jack Beattie, said security of supply was paramount in the North. "Northern Ireland and the Republic have very different markets. There is an extensive gas network in the South whereas the market is at the embryonic stage in the North.

"There is currently only one delivery channel for natural gas in Northern Ireland and that is by pipe from Scotland. If there were any incidents, no matter how rare, this would have serious implications for supply," Mr Beattie said.

Both men said one of the major issues to be addressed in any debate on an all-island gas market was the question of price. Mr Beattie said Northern Ireland also had significant hurdles to overcome in attracting new investment in the industry.