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Canadian Pension Plan Sinks $1.4 Billion in Controversial Offshore Gas Field

The Canadian Pension Plan Investment Board (CPPIB) is sinking C$1.4 billion of members’ retirement savings into a 45% stake in an offshore natural gas development in Ireland that local residents have been trying to stop for more than a decade.

Reuters places the initial value of the purchase from Royal Dutch Shell at US$947 million, with the Board on the hook for “additional payments of up to $285 million between 2018-2025, subject to gas prices and production.”

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Once the initial deal closes, the CPPIB plans to sell a 1.5% interest in the project to Vermillion Energy Inc. of Calgary at a price of C$32.2 million, Canadian Press reports. That arrangement will give Vermillion, the gas field’s operator, a 20% stake in the project. Norway’s Statoil will hold the remaining 36.5%.

“The development of the Corrib gas field, discovered in 1996, has faced protests since 2005 by residents concerned that the laying of a high-pressure pipeline to bring gas onshore could pollute their water supply,” Reuters notes. For the CPPIB, “the deal is another step in its pursuit to diversify beyond domestic markets.”

Shell “is on track to sell assets of about $30 billion by 2018 to cut debt following its $54 billion acquisition of BG Group,” the news agency states. “Shell has also been working to mitigate climate change risks that have upset some investors.”