By Laura Hurst on 12/2/2021
LONDON (Bloomberg) –Royal Dutch Shell Plc pulled out of a controversial UK oil project, a win for environmentalists as the development of a new North Sea field was left hanging in the balance.
“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 Thursday in a statement.
Environmental groups have campaigned against Cambo, saying the project is at odds with the UK’s goal of reaching carbon neutrality by 2050. Despite that opposition, Shell Chief Executive Officer Ben Van Beurden publicly supported the field until recently, arguing that the investment was needed to slake ongoing British demand for oil and natural gas.
The project, operated by Siccar Point Energy Ltd. and co-owned by Shell, had to delay work earlier this year while waiting for regulatory consent following pressure from Greenpeace and other groups.
Despite being one of the UK’s biggest potential oil and gas projects, the Cambo field is a relative minnow globally, with the first phase of development targeting the equivalent of 170 million barrels of crude. Still, the field became a flash point between activists, project partners and the U.K and Scottish governments.
“Let me be very clear, as long as the UK still needs oil and gas in its consumption for its society, it’s better to produce it in its own backyard,” the Shell chief said earlier this year.
Siccar said in a separate statement that it would continue to engage with the UK government and stakeholders on future development of the field.
“Cambo remains critical to the U.K’s energy security and economy,” Siccar CEO Jonathan Roger said in the statement. “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.”
Even before Shell’s decision, the future of the development was unclear because UK regulators had yet to grant consent. Another Shell-operated project — Jackdaw — failed to get approval earlier this year.
“This really should be the deathblow for Cambo,” Greenpeace campaigner Philip Evans said in a statement. “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. The truth is rejecting the permit is the only practical option.”
Shell said it will continue to work with its joint venture partner and will review the development in the future.
“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.”
This article was originally posted at www.worldoil.com