Shell Sells Out of Corrib
Wednesday 12 July 2017
Shell has struck a $1.23 billion deal to sell its upstream interests in Ireland to a unit of Canada Pension Plan Investment Board (CPPIB) that will mark the Anglo-Dutch supermajor’s exit from the controversial Corrib gas field.
Corrib co-venturer 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 through its acquisition of Shell’s 45% interest in the project and other assets.
CPPIB will pay an initial consideration of $947 million and additional payments of up to $285 million between 2018 and 2025, subject to the gas price and production from Corrib, according to a Shell statement.
However, Shell is set to record a $350 million impairment loss on the sale of its Irish assets in the second quarter of this year, while also suffering a non-cash foreign exchange charge of $400 million.
The transaction is due for completion in the second quarter of next year, subject to regulatory and partner approvals.
It is the latest in a raft of asset sales by the supermajor as part of a three-year $30 billion divestment effort by 2018, with disposals worth a total of $20 billion notched up to date.
Shell’s upstream director Andy Brown said the latest deal “is part of our strategy to reshape Shell and to deliver a world-class investment case” by concentrating its “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,” he added.
The gas field project has though historically been a thorn in the side of the departing operator, having triggered local protests over safety and environmental concerns that delayed start-up by about a decade to the end of 2015.
Aside from Vermilion, with an 18.5% stake in Corrib, the remaining partner is Statoil on 36.5%.
The acquisition marks a debut upstream investment off Ireland for Toronto-based CPPIB, which manages a fund totalling $316.7 billion.