London, UK | – Royal Dutch Shell is to sell its 45 percent stake in the Corrib gas venture to a subsidiary of Canada Pension Plan Investment Board for up to $1.23 billion, marking the oil company’s exit from the upstream business in Ireland.
The deal includes an initial consideration of $947 million and additional payments of up to $285 million between 2018-2025, subject to gas price and production, Shell said in a statement on Wednesday.
The transaction will result in an impairment charge of around $350m, which will be taken in Q2, 2017, Shell said.
CPPIB, Canada’s biggest public pension fund, and Canada’s Vermilion Energy Inc will become the new operator of the Corrib Gas Venture situated off then north-west coast of Ireland.
The development of the Corrib field, discovered in 1996, has faced protests, including by residents opposed to a pipeline to bring the gas onshore.
In late 2015, gas began to flow from the field, which Shell has estimated could meet up to 60 percent of Ireland’s gas needs.
Statoil, which owns a 36.5 per cent stake in the Corrib gas field, was not immediately available to comment.
The total sale price of $1.23 billion also includes a payment of up to $171.83 million contingent on annual average (NBP) prices being above 2.03 euro cents/kWh between 2018 to 2022, Shell said.
The transaction, which is subject to partner and regulatory approval, is expected to complete in the second quarter of 2018, the company said.
Shares in Shell were up 1.7 percent at 2079 pence at 1031 GMT.