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    Shell pulls out of UK Cambo project


The oil major cited poor economics.

by: Joseph Murphy

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Shell pulls out of UK Cambo project

Shell has withdrawn from the large Cambo oilfield west of the Shetlands Islands, following a sustained campaign against the project by environmentalists.

Cambo is one of the largest fields on the UK continental shelf, with its first phase targeting 175mn barrels of recoverable oil along with 53.5bn ft3 (1.5bn m3) of gas. But Shell, which farmed into the project operated by Siccar Point Energy in 2018, said it was withdrawing because of poor economics.

"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," a Shell spokesperson said in a statement widely carried by media on December 3.

Siccar Point filed an environmental statement for Cambo in June, and is waiting for government approval. While UK prime minister Boris Johnson has expressed guarded support for the project, Scottish first minister Nicola Sturgeon has urged UK authorities not to give Cambo the greenlight.

Siccar Point confirmed Shell's decision in its own statement. The company said it had carried out months of due diligence with the major, as well as stakeholder and regulatory consultation. It is now in discussions with the government, stakeholders, contractors and the supply chain to review options for the project.

"Cambo remains critical to the UK's energy security and economy," Siccar Point CEO Jonathan Roger commented. "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."

Industry association OGUK's external relations director Jenny Stanning commented that "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," she added, "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.”