Canada Pension Plan Investment Board (CPPIB) is buying a 45% stake in Ireland’s Corrib Natural Gas Field, which produces nearly all of the country’s natural gas output.

The CAD317bn (€214bn) pension fund is investing in the offshore project through a new partnership with Vermillion Energy.

CPPIB is buying the stake from Shell for €830m, and Vermillion will operate the asset.

Avik Dey, managing director and head of natural resources at CPPIB, said: “Ireland is an attractive destination for a long-term investor like CPPIB, and through this investment in the Corrib gas field we are able to further our strategy of investing in high-quality natural resources assets alongside highly regarded and experienced operating partners such as Vermilion.”

Vermilion has a strong operational track record in onshore and offshore projects, he said.

“We look forward to working with them and are confident that this investment will benefit the CPP fund by delivering strong risk-adjusted returns over the long-term horizon of the fund.”

CPPIB has agreed through its subsidiary CPP Investment Board Europe to buy 100% of Shell E&P Ireland Limited (SEPIL) — which holds Shell’s 45% interest in Corrib — for €830m plus future contingent value payments.

The deal is subject to the usual conditions including government consents, and has an effective date of 1 January 2017, with closing expected in the first half of next year.

When the deal closes, Vermilion will become the operator of the project and CPPIB plans to transfer SEPIL along with a 1.5% working interest to Vermilion for €19.4m.

Vermilion already holds an 18.5% working interest in Corrib.

After the transfer to Vermilion, CPPIB will have a 43.5% non-operated interest in Corrib; Statoil will continue to have a 36.5% non-operated interest and Vermillion will hold a 20% operated interest.

The two contingent payments involved in the deal include one of up to €150m linked to price and a second of up to €100m linked to produced volumes.

Corrib is located 83km off the northwest coast of Ireland, and has a gross plant capacity of about 350m cubic feet of natural gas a day.

It provides around 60% of Ireland’s natural gas consumption and constitutes about 95% of the country’s gas production.

CPPIB’s natural resources portfolio consist of nine direct investments, which were valued at CAD4.3bn at the end of March.

The pension fund says its natural resources team concentrates of direct private investments in the oil and gas, energy midstream, power and renewables, and metals and mining industries, investing around CAD500m or more in each deal.

In October 2015, the pension fund bought US oil and gas asset Denver Julesberg Basin in Colorado via a joint venture with the Broe Group.