Shell pulls out of controversial Cambo project in Scotland

LONDON (AP) — Royal Dutch Shell has pulled out of a controversial plan to develop a new oil field near Scotland’s Shetland Islands, buoying environmentalists’ hopes that the project may be shelved altogether as Britain seeks to combat global warming.

Shell, which had a 30% stake in the Cambo project, said Friday that the decision was based on an assessment of what was best for the company and its shareholders.

The project has faced stiff opposition from groups such as Greenpeace, which argue Britain must stop developing new oil and gas fields if it is serious about reducing carbon emissions. U.K. authorities granted an exploration license for the project in 2001 and the government is now considering whether to authorize commercial operations.

“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 the potential for having delays,” Shell said in a statement. “However, continued investment in oil and gas in the U.K. remains critical to the country’s energy security.”

Siccar Point Energy, Cambo’s controlling partner, said it still planned to move ahead with the project. Developing the field 125 kilometers (78 miles) west of the Shetland Islands will create 1,000 jobs and help ease the U.K.’s transition to a low-carbon economy, Chief Executive Jonathan Roger said in a statement.

“We will continue to engage with the U.K. government and wider stakeholders on the future development of Cambo,” he said.

The Cambo field will produce up to 170 million barrels of oil and 53.5 billion cubic feet of natural gas over 25 years, according to Siccar Point.

Philip Evans, a campaigner at Greenpeace UK, said Shell’s departure from the project should prompt the government to think again.

“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,” he said.

Prime Minister Boris Johnson came under pressure to block the Cambo project as he sought to lead the global fight against global warming as host of last month’s UN Climate Conference in Glasgow, Scotland, known as COP26.

The International Energy Agency has said policy makers shouldn’t approve the development of any new oil or natural gas fields if they hope to achieve the UN goal of limiting global temperature increases to 1.5 degrees Celsius over pre-industrial levels. The IEA, whose members include the U.S., U.K. and Japan, advises countries around the world on energy issues.

Shell’s decision on Cambo comes as major economies accelerate the shift toward renewable energy and oil companies plan for the day when demand for fossil fuels fades. CEO Ben van Beurden has made it clear that he intends Shell to remain competitive in this new energy landscape.

Nicola Sturgeon, leader of Scotland’s devolved government, said last month that she doesn’t believe Cambo could pass any rigorous assessment of its climate impacts and that the project shouldn’t be allowed to move forward. But approval of the project rests with the central government in London, which has so far refused to block Cambo.

Johnson’s government has said no new oil and gas production licenses will be granted unless they are aligned with Britain’s climate change objectives. The government is designing a formal “climate change checkpoint,” which it says will be announced by the end of this year.

Liam Kerr, a member of the Scottish Parliament from Johnson’s Conservative Party, continued to back Cambo on Friday.

“Cambo will be massively beneficial to our economy, securing our domestic supply of oil and gas while demand is still high,” he said. “The (oil and gas) industry supports 100,000 Scottish jobs and is crucial to the energy transition.”

But Sophie Marjanac of ClientEarth, which seeks to protect the environment through legal action, said the U.K. government’s refusal to rule out new fossil fuel projects is “wholly inconsistent” with its pledges on climate change.

“New oil and gas projects are reckless for the climate and the economy,” Marjanac said. “If the government doesn’t start phasing out U.K. oil and gas and focus on a just transition for workers – like other major economies promised to do at COP26 – it’s only setting up the industry for chaotic collapse.”

Copyright © 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, written or redistributed.

Federal News Network Logo

More from WTOP

Log in to your WTOP account for notifications and alerts customized for you.

Sign up