Royal Dutch Shell, through its affiliate Shell Overseas Holdings, has reached an agreement with CPP Investment Board Europe S.A.R.L., a wholly owned subsidiary of Canada Pension Plan Investment Board (CPPIB), to sell its shares in Shell E&P Ireland, that holds 45% interest in the Corrib gas venture for up to $1.23 billion (€1.08 billion).
The transaction includes an initial consideration of $947 million (€830 million) and additional payments of up to $285 million (€250 million) between 2018-2025, subject to gas price and production.
The transaction, which represents Shell’s exit from the upstream business in Ireland, is subject to partner and regulatory consents and is expected to complete in Q2 2018. The transaction’s effective date is 1 January 2017.
The Shell share of the Corrib gas venture’s production represented approximately 27,000 bbl of oil equivalent per day in 2016.
Shell Energy Europe has signed an offtake agreement for some 40% of the Corrib gas venture’s production for up to three years following completion.
CPPIB will be the new Corrib Gas JV partner, and Vermilion will become the new operator of the Corrib gas venture.
“This transaction is part of our strategy to reshape Shell and to deliver a world-class investment case,” Andy Brown, Shell’s Upstream Director, said “It demonstrates the strong momentum behind our three-year $30-billion divestment program. At the halfway point, we have now announced deals valued at more than $20 billion. 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.”
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 $350 million, which will be taken in Q2 2017. At completion, a negative non-cash cumulative currency translation difference of around $400 million will be released.
Shell will retain a presence in Ireland through its aviation joint venture, Shell and Topaz Aviation Ireland, based near Dublin airport.