The decision by Shell to sell its stake in the Corrib gas field for €1bn was not unexpected, as the oil giant continues to pull back from smaller projects globally, but it will have learned from its chequered management of the project, a leading Irish oil expert has said.
Shell said it agreed to sell for just over €1bn its 45% stake in the gas project, a move ending its exploration and production here, to the Canada Pension Plan Investment Board. The deal will see Shell exit its so-called upstream operations in Ireland, with its Shell Aviation joint venture based at Dublin airport set to be its sole remaining operation. It comes as part of Shell’s efforts to offload assets following its takeover of smaller rival BG Group last year. Shell has sold off more than £16bn of assets since the BG takeover.
David Horgan, who heads Petrel Resources, one of the energy and mining firms in John Teeling’s portfolio, said the oil major was focusing on other developing huge gas prospects and Corrib, though accounting for over half of Ireland’s gas needs, was no longer a core asset amid the slump in the global price of crude oil since 2014.
Mr Horgan said that Shell made “a catalogue of errors” in developing the Corrib field in North Mayo, but that “in fairness”, it had done nothing technically wrong in seeking to develop a high-pressure pipeline to bring the gas onshore.
Around 100 staff employed by Shell will move over to the new owners of Corrib, with Canadian-based Vermilion Energy — which already owns 18.5% of the gas field — becoming the operating company. It is thought there are no plans for job losses among affected staff and the offices in Co Mayo and Dublin are expected to be retained after the deal, which is set to complete in the second quarter of 2018.
Shell said it will take a £272m impairment charge on the deal. Shell’s share of Corrib Gas output amounts to the equivalent of around 27,000 barrels of oil a day.
The Corrib gas field was first discovered in 1996, but it was mired in controversy and the first gas was only processed in late 2015, some 19 years later.
During development, millions were spent policing protests, facilitating workers and securing sites around north Mayo in the face of deep opposition locally and from environmentalists.
Five local men, who opposed a pipeline to an onshore refinery, were jailed for 94 days in 2005 for defying a court order. Part of the wider objections included Ireland’s once-generous tax regime for oil and gas exploration. At peak production, Corrib has the potential to meet up to 60% of gas needs.
Additional reporting PA
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