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New Corrib operators won't pay taxes 'for foreseeable future'

Gordon Deegan - Irish Independent

The new operator of Corrib gas field has told investors that it does not expect to incur income taxes from profits on the project "for the foreseeable future".

Last month, Shell Ireland disposed of its shareholding in the project to the Canadian Pension Plan Investment Board (CPPIB) in a strategic partnership with Vermilion - a deal potentially worth as much as €1.08bn.

Vermilion already owns 18.5pc of the field and will take over as operators of the project from Shell Ireland. "As a result of our tax pools in Ireland, we do not expect to incur current income taxes in the Ireland Business Unit for the foreseeable future," stated Vermilion in an update to investors.

Shell E&P Ireland has already received €186m in tax credits from the project since its inception.

Vermilion stated that other characteristics of the Irish asset include "no royalties, low operational expenditure and minimal ongoing capital expenditure translate to high netback and significant free cash flow".

In the Shell-CPPIB deal - which is expected to close in the first half of next year - Vermilion is to increase its ownership in Corrib to 20pc for Can$28.4m.

"We view the acquisition, and assumption of operatorship of Corrib as a strategic milestone for Vermilion, and one that will add value over the long-term," stated Vermilion.

Vermilion has recorded revenues of $81.31m to date this year on the Corrib gas field.

That represents a 101pc increase on the corresponding six-month period last year, when Vermilion enjoyed revenues of $40m.

Based on its 18.5pc share, total revenues for the three partners in the project - Shell Ireland, Statoil and Vermilion - between January and June of this year are estimated to be $439.56m (€293.14m). Based on production for the first six months, revenues for the year will hit $879m (€586m).

Vermilion state that production results for the second quarter of this year continued to benefit from better-than-expected well deliverability and minimal downtime.

The Corrib Partners have invested more than €3.6bn in the project - more than four times the original estimate of €800m.

Posted Date: 
15 August 2017