Cambo oil field: Shell pulls out as future of offshore development uncertain

The future of the controversial Cambo oil field is in doubt after fuel giant Shell pulled out of the development.

Shell currently has a 30 per cent stake in the proposed oil field, which would be located near Shetland.

The development has so far been a political hot potato, with Nicola Sturgeon recently saying that it should not go ahead, however the UK Government has criticised her stance, saying it could put jobs at risk.

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The controversial oilfield off the west coast of Shetland is being led by Siccar Point Energy.

The move could see the development fall through.The move could see the development fall through.
The move could see the development fall through.

Climate campaigners have welcomed Shell’s decision, saying the plan has been “so toxic that even oil giant Shell doesn’t want to be associated with it any more”.

The oil field has been awaiting approval from the Oil and Gas Authority (OGA), which would then be followed up by the operating partners making a final decision on investment.

This evening Shell confirmed that it would pull out, saying that the economic case was not strong enough.

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.

Climate campaigners have welcomed the news.Climate campaigners have welcomed the news.
Climate campaigners have welcomed the news.

“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.”

Ms Sturgeon recently said of the proposed oil field: “I don’t think we can continue to give the go-ahead to new oil fields, so I don’t think that Cambo should get the green light.”

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A Scottish Government spokesperson said: “We have said previously that unlimited extraction of fossil fuels is not consistent with our climate obligations and we continue to call on the UK Government, who have the power to act in this instance, to urgently reassess all approved oil licenses where drilling has not yet commenced against our climate commitments.

“A just transition must be delivered across all of our communities, including those that have a dependency on oil and gas.

"That is why we are undertaking a programme of work and analysis to better understand Scotland’s energy requirements as we transition to net zero, ensuring an approach that supports and protects our energy security and our highly skilled workforce whilst meeting our climate obligations.

“We are already investing in the sector’s net zero transformation. Our £500 million Just Transition Fund – which we have called on the UK Government multiple times to match - will support the north east and Moray as one of Scotland’s centres of excellence for the transition to a net zero economy, with our investment supporting transformation across the region.”

A UK Government spokesperson said: “This is a commercial decision that has been taken independently by Shell.”

Climate campaigners said it marks “the beginning of the end” for new oil and gas projects.Friends of the Earth Scotland’s Climate and Energy Campaigner Caroline Rance said: “People power has made the climate-wrecking Cambo development so toxic that even oil giant Shell doesn’t want to be associated with it any more.“Shell could see what way the wind was blowing with the project facing fierce opposition, and costly delays, from the public, climate groups and politicians.“This marks the beginning of the end for all new oil and gas projects.“Climate science is clear that there can be no new fossil fuels , and now Shell has admitted there’s no economic case in new oil and gas either.“Both the UK and Scottish Governments must now officially reject Cambo, say no to any future oil and gas developments in UK waters and get on with planning a fair and fast transition for people working in this industry.”

Head of Oxfam Scotland Jamie Livingstone also welcomed the move, saying: z“Shell has finally realised the economic case for drilling new oil at Cambo when the world is already burning simply does not stack up.

“This is a positive step but not the end of the road and it is now incumbent on the Oil & Gas Authority and the UK Government to do the right thing and veto production at Cambo and other oilfields in the UK. The COP26 summit saw some welcome signals that the world must phase out oil and gas production, but giving Cambo the green light would send entirely the opposite message.

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“The last thing the world needs in a climate crisis is drilling for more oil. This must be a step towards the end of this and every other new oilfield."

Industry body Oil and Gas UK (OGUK) said that the UK will still need new fossil fuel developments.

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

“However, we know that to deliver the transition to a lower carbon future, investor confidence remains essential. Gas and oil has a critical role to play in the nation’s future energy supply and we will continue to work with governments, industry and politicians of all parties to make this case.”

Liam Kerr, Scottish Conservative shadow cabinet secretary for net zero, energy and transport, said: "Cambo will be massively beneficial to our economy, securing our domestic supply of oil and gas while demand is still high.

"The industry supports 100,000 Scottish jobs and is crucial to the energy transition.

"It's obviously disappointing Shell have pulled out from Cambo but it is a business decision for them to make.

"Recently, Nicola Sturgeon's language about oil and gas has been more harmful than helpful.

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"This will no doubt make it harder for energy companies to invest in oil and gas, and the skills and technology needed to reach carbon net zero."

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