The revised licence for the operation of the Shell gas terminal at Ballinaboy, Co Mayo, has been quashed by the Commercial Court.

In a setback for the Shell Corrib gas pipeline project, the Environmental Protection Agency, which issued the licence last June, conceded in court that a Mayo man was entitled to an order quashing the licence.

This was because of defects in carrying out an Environmental Impact Assessment.

Mr Justice Peter Kelly granted the order to Martin Harrington of Doohoma, Ballina, Co Mayo, after the EPA said it was not opposing his challenge to the licence issued by the agency to Shell E&P Ireland. The EPA will also pay Mr Harrington's costs.

The licence permitted the operation of a gas refinery and combustion installations at the Ballinaboy Bridge gas terminal in Co Mayo.

Shell E&P Ireland told an earlier court hearing that this case had "significant potential commercial consequences" for the €2.7bn Corrib gas project.

In the earlier hearing Shell said the construction of the terminal had been largely completed and it was intended to begin commissioning it in April next year.

Gas was due to be brought in for the first time towards the end of next year or early 2015.

Mr Harrington had argued that in issuing the revised licence, the EPA had failed to carry out an Environmental Impact Assessment in a manner that met the requirements of various European Union Directives including the Habitats Directive.

He claimed the EPA was wrong to decide to retrospectively carry out an EIA at a meeting of the EPA Board held in June when the decision in respect of the licence had already been made.

Such an assessment must be carried out before a decision is made on a licence, he argued.