Royal Dutch Shell has signed an agreement via its affiliate Shell Overseas Holdings Limited with Canada Pension Plan Investment Board (CPPIB) subsidiary CPP Investment Board Europe SARL to sell its shares in Shell E&P Ireland Limited for a potential sum of $1.23bn (€1.08bn).
Shell E&P Ireland currently holds 45% stake in the Corrib gas venture, located off the north-west coast of Ireland.
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The deal comprises an initial consideration of $947m (€830m) and additional payments of up to $285m (€250m) between 2018 and 2025, subject to gas prices and production.
The sale also subject to partner and regulatory approval and is expected to complete in second quarter of 2018. It carries an effective date of 1 January 2017.
Shell's share in the gas venture represented a production of approximately 27,000 barrels of oil equivalent a day in 2016.
Shell Energy Europe Limited (SEEL) has signed an offtake agreement for around 40% of the gas venture’s production for up to three years after completion of the deal.
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By GlobalDataCPPIB will be the new JV partner in the Corrib gas development, while Vermilion is set to become the field's new operator.
Shell upstream director Andy Brown said: “This transaction is part of our strategy to reshape Shell and to deliver a world-class investment case.
“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.”
“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.”
Shell country chair in Ireland Ronan Deasy 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, with CPPIB as a partner and Vermilion as the operator, will be well placed to successfully own and manage Corrib.”
The deal will lead to an impairment charge of around $350m, which will be taken in the second quarter of 2017.
A negative non-cash Cumulative Currency Translation Difference of around $400m will be released following the sale's completion.
Shell will continue to have presence in Ireland through its aviation JV located near Dublin airport, Shell and Topaz Aviation Ireland Limited.
