Shell said it has agreed to sell its interest in Ireland’s Corrib gas field for up to US$1.23 billion (€1.08 billion) to a unit of Canada Pension Plan Investment Board as part of its $30 billion divestment programme.
Corrib joint-venture partner Vermilion Energy will now take over from Shell as operator of the producing field off west Ireland, with CPP Investment Board Europe - a wholly-owned subsidiary of CPPIB - coming onboard as partner with Shell’s 45 per cent interest.
“This transaction is part of our strategy to reshape Shell and to deliver a world class investment case,” said Shell’s upstream director, Andy Brown. “It demonstrates the strong momentum behind our three-year $30 billion divestment programme. At the half-way point, we have now announced deals valued at more than $20 billion.”
The transaction includes an initial consideration of $947m (€830m) and additional payments of up to $285m (€250m) between 2018-2025, subject to gas price and production, Shell said in a statement.
The transaction’s effective date is January 1, 2017, but expected to be completed in the second half of next year subject to partner and regulatory consents.
The Shell share of the Corrib gas venture’s production represented approximately 27,000 barrels of oil equivalent per day in 2016. Located 83 kilometres off Ireland’s northwest coast in water depths of almost 350 metres, the Corrib gas field lies approximately 3,000 metres below the seabed.
“This transaction is consistent with Shell’s strategy to concentrate our upstream footprint where we can add most value. I’m confident that Corrib will continue to deliver energy successfully to the people and businesses of Ireland,” Brown said.
Ronan Deasy, Shell’s country chair in Ireland, said, “Shell is very proud to have led the development of the Corrib gas field. Since coming on-stream, the field and facilities have delivered exceptional performance. I would like to pay tribute to all those who have contributed to the development of this important energy project. In particular, I wish to acknowledge our staff, stakeholders and the local community who have worked closely with us over the years.
“With our existing staff remaining with the asset - CPPIB as a partner; and Vermilion, as the operator, will be well placed to successfully own and manage Corrib.”
The transaction will result in an impairment charge of around $350m, which will be taken in second quarter, 2017. At completion, a negative non-cash Cumulative Currency Translation Difference of around $400m will be released, the statement said.
Shell will retain a presence in Ireland through its aviation joint venture, Shell and Topaz Aviation Ireland Limited based near Dublin airport.