The surge in gas prices has led to the owners of the Corrib gas field off the coast of Co Mayo trebling their net income from it so far this year despite a sharp fall in the volume of gas the maturing field produces.
The latest interim accounts for listed Canadian group Vermilion Energy, which owns 20 per cent of the field, show it netted C$148.5 million Canadian dollars (€112.5m) after expenses from Corrib in the first six months of the year, up from C$48 million for the same period last year.
Its total revenues from its one-fifth share of Corrib for the six months were C$157.3 million, suggesting a profit margin in the Irish operation of about 94 per cent.
Vermilion is also the operator of the field on behalf of the other shareholders, the Canadian Pension Plan Investment Board’s Nephin Energy, which owns the 43.5 per cent originally held by Shell, and Norwegian group Equinor, which is in the process of selling its 36.5 per cent to Vermilion for about C$600 million. That deal will close at the end of 2022.
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Vermilion’s accounts attribute all of its revenues in Ireland to its one-fifth of gas sales from Corrib rather than operating fees. Assuming the other shareholders make a similar profit margin to Vermilion, its numbers suggest the Corrib field threw off total profits of about €560 million in the first half of this year alone.
With wholesale gas prices having escalated dramatically since then due to Russia squeezing the market, the Corrib field could generate a huge pot of profits for the year, possibly of up to €1.5 billion.
Vermilion’s accounts also show how the surge in gas prices has cut the cash payout it must make to Equinor for its 36.5 per cent stake. Under the deal struck last year the agreed consideration was to be settled by Vermilion keeping the free cashflow from Corrib until the end of this year, when it was to pay off the balance in a final cash payment, which it expected to be C$200 million to C$300 million.
However, the accounts show that since the gas price surge has also led to a surge in cashflow from Corrib, Vermilion now expects its final cash payment at the end of the year to have halved to just C$100 million to C$150 million.
Labour Party leader Ivana Bacik this week demanded the Government nationalise Corrib to stop the private company raking in profits on the back of the energy crisis threatening householders and businesses. Taoiseach Micheál Martin refused, and said Ireland would instead follow a EU plan to slap a windfall tax on the excess profits of producers.
