Shell backs out of plans to develop Cambo oil field in North Sea
03 December 2021
Shell announced on December 2 that it had decided to pull out of plans to develop the Cambo oil field in the North Sea. The energy giant, which had a 30% stake in the project off the west coast of the Shetland Islands, said that the economic case for the project was not strong enough. Majority owner of the project, Siccar Point, has said it would continue to engage with the UK government and other stakeholders about the project’s development.
Image: Photographic Services, Shell International Ltd
The Cambo oil field project has been a contentious issue for several years and has been a target for environmentalists who say it would hinder the UK’s efforts to become net zero by 2050. Siccar Energy owns the remaining 70% of the project, but it is unknown whether the project will go ahead without Shell’s support.
In a statement following Shell’s decision, Siccar Energy’s 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 that 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, with a relatively higher carbon intensity. We will continue to engage with the UK Government and wider stakeholders on the future development of Cambo.”
Siccar Point Energy, together with Shell have carried out many months of due diligence and assurance, stakeholder and regulatory consultation, the company said. A ‘cliff-edge’ transition, by cutting UK gas and oil production, would risk jobs and leave the country reliant on imports, often from less regulated countries – doing nothing to cut demand or emissions, Siccar added.
Jonathan Roger added: “Given Shell’s decision, we are now in discussions with our contractors, supply chain and wider stakeholders to review options for this important development.”
Siccar Energy says that the Cambo project would help to reduce the volume of imports required by delivering up to 170 million barrels of oil equivalent during its 25-year operational life. It would also provide a further 53.5 billion cubic feet of gas. The hydrocarbons Cambo would produce are suitable for a UK and European market, helping to support domestic supply during the period that renewable energy is expected to scale to levels to meet UK energy demands, the company says.