Shell pulls out of Cambo oil plan; Siccar holds talks

Royal Dutch Shell said on Thursday it has scrapped its current involvement in plans to develop the controversial Cambo oilfield west of Shetland in a dramatic move that was welcomed by environmentalists.

Shell said it concluded the economic case for investment in Cambo “is not strong enough at this time.”

Shell owns 30% of the project, while operator Siccar Point holds 70%.

It is not yet clear whether the Cambo field can be developed without Shell’s support. The UK regulator has yet to grant consent for the project.

If approved by the UK’s Oil and Gas Authority, drilling for Cambo could start in 2022 and last for 25 years.

The field could produce up to 170 million barrels of oil equivalent and 53.5 billion cubic feet of gas over 25 years, according to Siccar Point.

The Cambo project has been at the centre of a heated debate on whether the UK should develop new fossil fuel resources as it seeks to become a net zero carbon economy by 2050.

A Shell spokesperson said: “Before taking investment decisions on any project we conduct detailed assessments to ensure the best returns for the business and our shareholders.

“After comprehensive screening of the proposed Cambo development, we have concluded the economic case for investment in this project is not strong enough at this time, as well as having the potential for delays.

“However, continued investment in oil and gas in the UK remains critical to the country’s energy security.

“As Shell works to help accelerate the transition to low-carbon energy, we remain committed to supplying UK customers with the fuels they still rely on, including oil and gas.

“We believe the North Sea – and Shell in it – have a critical role to play in the UK’s energy mix, supporting the jobs and skills to enable a smooth transition to Britain’s low-carbon future.”

Private equity-backed Siccar Point said in a separate statement that Shell “has taken the decision to not progress its investment at this stage.”

Shell said it will review the development in the future.

Siccar Point CEO Jonathan Roger said: “Cambo remains critical to the UK’s energy security and economy …

“Whilst we are disappointed at Shell’s change of position, we remain confident about the qualities of a project.

“It will not only create over 1,000 direct jobs as well as thousands more in the supply chain, but also help ease the UK’s transition to a low carbon future through responsibly produced domestic oil instead of becoming even more dependent on imports.

“Given Shell’s decision, we are now in discussions with our contractors, supply chain and wider stakeholders to review options for this important development.”

Jenny Stanning, external relations director with Trade body OGUK, said: “This is a commercial decision between partners, but doesn’t change the facts that the UK will need new oil and gas projects if we are to avoid increasing reliance on imports and support jobs.”

Greenpeace campaigner Philip Evans said in a statement: “This really should be the deathblow for Cambo …

“With yet another key player turning its back on the scheme, the government is cutting an increasingly lonely figure with their continued support for the oil field.

“The truth is rejecting the permit is the only practical option.”