Friday 21 September 2018

Firm doesn't expect tax bill over €362m Corrib revenues

Construction phase of the project, which cost over €3.6bn
Construction phase of the project, which cost over €3.6bn

Gordon Deegan

The Corrib Gas partners have reported a 25pc jump in revenues to €362m in the first half of this year in spite of external electricity supply issues hitting production at its gas terminal in the second quarter.

That is according to new quarterly figures provided by Canadian firm Vermilion.

It said production between April and the end of June decreased 7pc quarter-over-quarter and 11pc year-over-year for the first six months.

However, sales for the first six months were up by 25pc to €362m (Can$549m) on the same period last year.

The report said the drop in production was primarily due to natural declines and some minor plant downtime due to external electricity supply issues. A spokesman for Shell Ireland said: "The Bellanaboy Bridge Gas Terminal generates most of its own electricity supply. The terminal is also connected to the National Electricity Grid for additional security of supply. There were some minor issues in quarter two which resulted in some plant downtime. These issues are now resolved."

The Corrib Gas Partners comrprise Shell, which has a 45pc share in the field; Statoil, with a 36.5pc share; with Canadian-owned Vermilion owning the remaining 18.5pc share.

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

As part of the deal, Vermilion is to increase its stake to 20pc and become the operator of the project when the deal closes.

The Vermilion quarterly report states that the acquisition has an effective date of January 1, 2017, and is anticipated to close in the second half of 2018.

The Corrib Partners enjoyed the increase in sales in the first half of this year due to the price of natural gas increasing.

The report added that given the significant level of investment in Corrib and the resulting tax pools, Vermilion does not expect to incur current income taxes from Ireland for the foreseeable future.

The estimate for production and revenues at the field is based on Vermilion's 18.5pc share of the field where it enjoys sales of (Canadian) $101.53m in the first half of this year.

At the end of December last, Vermilion had accumulated 'tax losses' of $1.3bn which can be carried forward at 100pc against taxable income.

The Corrib Partners invested more than €3.6bn in the project before gas started to flow - more than four times the original estimate of €800m.

Gas was originally expected to flow from the field in 2003 and gas finally flowed in 2015.

Irish Independent

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