Shell partner writes down Corrib gas field value by €200m

ONE OF Shell’s partners in the controversial Corrib gas project, Statoil, has written down the value of the gas field by almost €200 million due to project delays and changes in market conditions.

The Norwegian energy giant owns 36.5 per cent of the gas field off the Co Mayo coast. Confirmation of the write-down is contained in Statoil’s results for the third quarter of 2010, which have just been published.

In the financial statement, Statoil states that the impairment of €196 million in the Corrib development asset “is triggered by changes in market conditions and project delays”.

A spokesman for Statoil said yesterday: “It is well known that there have been delays in the project, and we have now stated that we do not expect first gas until the timeframe 2012-2013”.

He added: “Our perception is that this [the impairment] has not been unexpected by the market. As a partner we are fully committed to the Corrib gas field project”.

It is anticipated that €2 billion will have been spent on developing the field before gas is produced – the field has one trillion cubic feet of gas and is expected to meet 75 per cent of Ireland’s peak winter gas needs for up to a decade.

The Irish-based Shell subsidiary driving the project, Shell EP Ireland Ltd, had anticipated gas would be produced by the project by the end of this year or early 2011. However, this was before An Bord Pleanála last year ruled that up to half of Shell’s proposed onshore pipeline was unacceptable on safety grounds, resulting in Shell EP lodging plans for an underground tunnel to bring the gas ashore.

The company told the recent An Bord Pleanála oral hearing into the plan that the proposed 4.9km subsea tunnel for the Sruwaddacon estuary would be the longest of its kind in western Europe.

Shell has a 45 per cent share in the project with Canadian-owned, Vermilion having the remaining 18.5 per cent share.

If Statoil’s impairment was applied on a pro-rata basis by its partners, the total impairment in the gas field would run to more than €530 million.

When asked if Shell has put in place a pro-rata impairment, a spokesman said the company’s accounts for 2009 have been filed with the Companies Registration Office (CRO), and it will be a position to answer queries on them when they are published.

An Bord Pleanála confirmed yesterday that it hopes to make a decision on the proposed tunnel before the end of the year.

A Shell EP spokesman said it was hoped construction would begin in 2011, depending on all the necessary permits and consents being in place.

“It is expected that it will take approximately two years to complete,” he said.

It is now eight years since the Corrib gas project plan was approved by Government.