Shell pulls out of Cambo oil field development

Royal Dutch Shell, which has a 30 per cent stake in the project, said that it has concluded the economic case for investment is “not strong enough” to go ahead.

“Before taking investment decisions on any project, we conduct detailed assessments to ensure the best returns for the business and our shareholders,” said Shell in a statement. “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.”

The proposal has been highly controversial, particularly in the context of the critical UN COP26 climate conference in Glasgow in November, raising questions about whether the host country had the credibility to call for the phase-out of fossil-fuel developments with the Cambo development in the pipeline.

Licensing for oil and gas exploration at Cambo was initially approved in 2001. If the project receives the full go-ahead from the Oil and Gas Authority and Offshore Petroleum Regulator for Environment and Decommissioning, a further 150 to 170 million barrels of oil may be extracted from the soil: the equivalent of running a coal-fired power station for over 16 years. The site is expected to operate from 2022 to 2050.

More than 80,000 people have signed a petition delivered to Prime Minister Boris Johnson, calling on him to intervene; Greenpeace has threatened the government with legal action; an open letter signed by 77 organisations has separately been sent to Downing Street calling on a halt to the project; and First Minister of Scotland Nicola Sturgeon voiced caution over plans to exploit the site. Sturgeon told the Prime Minister in a letter that he should “reassess” the licence for the proposed development. She later voiced stronger opposition, saying at the conclusion of COP26: “I don’t think that Cambo should get the green light.”

Shell’s decision to pull out of the oil field, which it owns with Siccar Point Energy, was welcomed by environmental groups. Philip Evans, oil campaigner at Greenpeace UK, commented: “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.”

Ed Miliband, shadow secretary of state for climate change and net-zero, said: “[Cambo] makes no environmental sense and now Shell are accepting it doesn’t make economic sense. Ploughing on with business as usual on fossil fuels will kill off our chances of keeping 1.5°C alive, and carries huge risks for investors as it is simply an unsustainable choice. Shell have woken up to the fact that Cambo is the wrong choice. It’s long past time for the government to do so.

“The right choice for the UK’s future energy security is to rapidly accelerate renewable alternatives and ensure we protect the interests of oil and gas workers with a just transition. Britain could lead the world in the global race for green energy and a Labour government will make the necessary investment in the transition, ensuring we protect workers and communities.”

Siccar Point Energy, which holds the majority stake in the Cambo oil field, expressed disappointment at Shell’s withdrawal. Siccar Point Energy CEO Jonathan Roger said: “Cambo remains critical to the UK’s energy security and economy […] we will continue to engage with the UK government and wider stakeholders on the future development of Cambo.”

The Scottish Greens welcomed Shell’s decision, while the Scottish Conservatives expressed support for the oil and gas industry. Liam Kerr, Scottish 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 of Cambo but it is a business decision for them to make.”