Shell has scrapped its plans to develop the Cambo North Sea oilfield, throwing the future of the controversial project firmly opposed by climate activists into doubt.
The oil giant said it had concluded the economic case for investment in the project off the Shetland Isles is “not strong enough” and also cited the potential for delays in a surprise statement on Thursday.
Private equity-backed energy firm Siccar Point – which owns a majority stake in the field – confirmed that Shell had “taken the decision to not progress its investment at this stage”.
The Cambo project has been at the centre of political debate on whether the UK should develop new fossil fuel resources, as Boris Johnson’s government seeks to cut carbon emissions to meet net zero targets in the decades ahead.
While Shell’s move to pull out does not necessarily mean the end of oil development in the field off the coat of Shetland, Greenpeace hailed the news as a potential “deathblow” for the project.
Philip Evans, oil campaigner at the environmental campaign group, said: “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.”
Calling on the UK government to reject the drilling license, the Greenpeace campaigner added: “Anything else would be a disaster for our climate and would leave the UK consumer vulnerable to volatile fossil fuel markets.”
Shell has owned 30 per cent in the Cambo project, while Siccar Point, which operates it, holds the remaining 70 per cent. “Cambo remains critical to the UK’s energy security and economy,” Siccar Point’s chief executive Jonathan Roger said in a statement.
“Whilst we are disappointed at Shell’s change of position ... we will continue to engage with the UK government and wider stakeholders on the future development of Cambo,” he added.
Despite Siccar Point’s insistence that the project could still go ahead, Labour said it was a “significant moment in the fight against the Cambo oil field”.
Ed Miliband, shadow secretary of Climate Change, said: “It makes no environmental sense and now Shell are accepting it doesn’t make economic sense.”
Urging the government to reject drilling license, the Labour frontbencher said: “Shell have woken up to the fact that Cambo is the wrong choice. It’s long past time for the government to do so.”
Mr Miliband added: “Ploughing on with business as usual on fossil fuels will kill off our chances of keeping 1.5 degrees alive and carries huge risks for investors as it is simply an unsustainable choice.”
Mr Johnson and his ministers have faced intense pressure to rule out support for the planned Cambo development. If approved, the project would produce up to 170 million barrels of oil between 2025 and 2050.