Work on the new pipeline will begin in mid 2015 and continue into 2017, with the first connections expected in 2016.
The announcement was made this morning at the launch of the Gas to the West project in Enniskillen.
Speaking at the launch, Enterprise trade and investment minister Arlene Foster said the scheme will bring “greater energy choice for consumers” and “increase the potential for businesses and the public sector to use a cleaner more efficient fuel”.
The Utility Regulator welcomed the announcement. Chief executive Jenny Pyper said: “Natural gas provides an affordable, cleaner and convenient form of energy and this is a further vote of confidence in the natural gas industry.
“It is also a welcome new investment in our energy infrastructure. We look forward to work commencing as soon as possible so that natural gas can start flowing to customers.”
The extension of the network was first announced in early 2013 and was expected to cost £200 million, connecting domestic and business customers in the west of Northern Ireland to the gas network.