Shell abandons plan to develop Cambo oil field in North Sea, citing economy, not climate

Shell and Siccar Point, backed by Blackstone, were awaiting permission from the British government to begin development of the Cambo oil field. The company, which would produce 164 million barrels of crude during the first phase of development, had become a hotspot in debates over energy transition and the future of fossil fuel exploration in the North Sea. North rich in oil and gas.

The UK government, which hosted the recent COP26 talks in Scotland and touted itself as a global climate leader, has come under enormous pressure to reject the massive project. Opponents of Cambo argue that an expansion in oil production undermines the country’s goal of becoming carbon neutral by mid-century.

“After a thorough review of Cambo’s development project, we concluded that the economic case for investing in this project was not strong enough at this time, and that there was a potential for delays,” a Shell spokesperson said in a statement to CNN Business. Friday.

But the company has made it clear that it plans to continue investing in oil and gas in the UK, saying this is “critical to the country’s energy security.”

“We believe that the North Sea – and Shell within it – have a critical role to play in the UK’s energy mix, supporting jobs and skills to enable a smooth transition to the low-carbon future of Great Britain.”

The International Energy Agency said in a recent report that investment in new fossil fuel infrastructure should stop immediately if the world is to have a good chance of achieving net zero emissions by 2050. Net zero is a state where the world emits so little greenhouse gases. as possible, and removes or compensates for anything that it cannot prevent from entering the atmosphere.

Scientists say the world must reach net zero by mid-century to contain global warming to critical 1.5 degrees Celsius above pre-industrial levels.

Prior to Thursday, Shell had expressed frustration at the lack of clarity in the UK government’s policy direction. In October, a British regulator blocked Shell’s plans to develop the Jackdaw gas field in the North Sea on environmental grounds.

“Shell’s admission that Cambo’s economy is ‘not strong enough’ is the latest evidence that new fossil fuel projects are getting harder as the world tackles the root causes of change climate, “said Simon Cran-McGreehin, head of analysis at Shell’s Energy and Climate Intelligence Unit, told CNN Business.

He added that when Shell announced its withdrawal from the Cambo project on Thursday evening, Britain’s offshore wind industry announced two new turbine factories, which would provide jobs and regenerate Scottish ports abandoned by the fossil fuel industry.

“Together, they highlight the challenge for policymakers to develop new forms of clean energy while ensuring a just transition from fossil fuels for people who work in these sectors. “

Cambo operator will try to move forward

Like many fossil fuel producers, Shell is driven by campaigning, political pressure and litigation to rapidly decarbonize its business and make a faster transition to renewable energy sources.

Jonathan Roger, CEO of Siccar Point Energy, said his company was “disappointed with Shell’s change of stance” but remained confident in the merits of the Cambo project, highlighting its potential to directly create more than 1,000 jobs , and thousands more indirectly.

He said oil production at Cambo would help the UK source oil more responsibly than becoming more dependent on higher carbon imports.

“We will continue to engage with the UK government and stakeholders at large on the future development of Cambo,” he said.