13 July 2017
Reporter: Theo Andrew

CPPIB pumps $830 million on Irish natural gas field

The Canada Pension Plan Investment Board (CPPIB) and Vermilion Energy have entered into a joint venture to acquire the majority of Corrib Natural Gas Field in Ireland for €830 million.

Vermilion, which already owns a 18.5 percent stake in Corrib, will be responsible for the operation of the gas field, while CPPIB will take over the Shell Exploration Company’s 45 percent stake in the project.

CPPIB will acquire 100 percent of Shell E&P Ireland (SEPIL), which holds Shell’s 45 percent interest in Corrib.

On closing, CPPIB will hand over SEPIL, plus a 1.5 percent stake in Corrib, to Vermilion for €19.4 million, taking Vermilion’s stake in Corrib to 20 percent. Statoil ASA will continue hold 36.5 percent of non-operated interest.

Closing is expected in the first half of 2018, subject to customary conditions and government’s consent.

In addition, two contingency payments, a €150 million payment linked to prices and €100 million payment linked to production levels, have been put in place.

Located 83 kilometres off the north coast of Ireland, the gas field has a capacity of approximately 350 million cubic feet of natural gas per day, providing 60 percent of Ireland’s gas consumption.

Avik Dey, head of natural resources at CPPIB, said: “Vermilion has a strong operational track record in both onshore and offshore projects and we look forward to working with them and are confident that this investment will benefit the CPP Fund by delivering strong risk-adjusted returns over the long-term horizon of the fund.”

Anthony Marino, president and CEO of Vermilion, said: “We welcome CPPIB as a strategic partner in this world-class gas field, and we look forward to a productive long-term relationship.”

He added: “Our extensive experience in Europe, North America and Australia over our 23-year history will serve us well in Corrib. We look forward to working with SEPIL employees and Corrib stakeholders to implement our best-in-class approach to safety, environmental protection and strategic community investment.”

Vermilion, an international energy producer, first invested in the Corrib gas field in 2009.

As of 31 March 2017, CPPIB’s natural resource portfolio consisted of nine direct investments valued at $4.3 billion. In October 2015, the pension fund purchased Denver Julesberg Basin in Colorado for $900 million.

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