The State has received permission from the United Nations Commission on the Limits of the Continental Shelf to increase its continental shelf territory by 39,000sq km, opening up a huge area of seabed to hydrocarbon and mineral exploration.

Providence exploration manager John O'Sullivan says the company views the development as "very positive" because the licensing of exploration blocks in deep water is likely to provide access to crystallised methane hydrates, a rich source of natural gas.

"The view in the industry is that there's quite a bit of it out there, " he said.

"Any increase in Ireland's territorial claim will allow exploitation in the future."

The AIM-listed company has not done any in-depth analysis of the new territory, but it has carried out a methane hydrate study covering the Rockall Trough and the Porcupine Basin - deep sea areas off the west and south west coasts respectively. This study was made available to the Government through the petroleum affairs division of the Department of Communications, Marine and Natural Resources "and may well have formed part of the thinking" behind the Government's application to the UN, according to O'Sullivan.

The Government hailed the UN decision as "a major boost for the nation's future mineral exploration prospects".

Deep sea methane hydrate extraction is becoming more mainstream as resources companies seek new sources of hydrocarbon fuels. Uncertainty of supply from Russia, a major supplier of natural gas to western Europe, has also increased pressure to find new gas fields.

But hostile conditions in the North Atlantic make supporting such ventures costly and unpredictable. A joint venture by Exxon Mobil, Chevron and Shell in 2000m of water off the coast of Newfoundland has suffered from delays and cost overruns.

Providence said on Wednesday that it would raise Euro25.8m in a share placing to fund development of offshore projects.