Viridian has entered the gas market in the Republic for the first time, it has emerged.

In recent weeks its supply arm, Energia, has signed up several gas customers, mainly in the industrial and business sectors. Some of them are already buying electricity from Energia, but others are new customers.

Gary Ryan, head of sales and marketing at Energia, said the company's entry into the market was in an initial phase and there were no plans to supply the domestic market at this point.

However, he said the company was hopeful it could establish a reasonable foothold in the market. The company confirmed yesterday that Energia was competing for gas contracts against Bord Gáis, independent supplier Vayu and German energy company RWE.

The State's gas market is believed to be worth up to €900 million a year. Viridian said that a proper regulatory structure was now in place for supplying gas and electricity.

Most of the gas contracts in the Republic come up for renegotiation in October and Energia is expected to make a major push for new customers at that point. It is likely to face strong resistance from the two largest incumbent players, Bord Gáis and Vayu.

At present, Viridian imports most of its gas from Britain and uses it to supply its Huntstown gas-fired power plant in north Co Dublin. It is understood that some of this supply is available to serve individual customers.

As the Irish energy market evolves, most energy companies are expected to make a dual offering to customers - offering electricity and gas. Experience in Britain suggests that a dual offering increases the chances of companies switching supplier.

The price of natural gas is rising strongly at present. One of the reasons for this is market talk that gas producers may soon form their own version of Opec (the Organisation of the Petroleum Exporting Countries).

The gas market is also becoming more short-term in nature.

Until recently, almost all exported gas was delivered by pipeline under long-term contract. But, with scientific advances, more gas is being delivered in refrigerated ships. That has led to a developing spot market, similar to that of oil.

Russia, Iran and Qatar now own some of the largest gas reserves in the world and are anxious to see prices drift upward.

Bord Gáis has a number of favourable long-term contracts in place which allow it to offer competitive prices, but many of these contracts are due to expire in the next few years.