Oil controversy

Wood says Cambo ‘must go ahead’ as Shell pulls out

Stop Cambo

Campaigners hailed the decision (pic: Stop Cambo)

UPDATE 3 Dec: Oil veteran Sir Ian Wood says the Cambo oil field “must go ahead” and urged politicians to “reflect carefully” on Shell’s decision to withdraw.

The company was partnering the private equity-backed explorer Siccar Point to  develop the Cambo oilfield.

But it said in a statement that it has “concluded the economic case for investment in this project is not strong enough at this time, as well as having the potential for delays.”

Siccar Point said separately: “Shell has taken the decision to not progress its investment at this stage,” while its chief executive Jonathan Roger said: “Cambo remains critical to the UK’s energy security and economy”, suggesting it might seek a new partner.

Mr Roger added: “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.”

Sir Ian Wood on Question Time

Sir Ian Wood: Shell decision ‘disappointing’

Sir Ian, chairman of the energy transition group ETZ, today said:  ”Shell’s decision is disappointing. However, we welcome Siccar Point’s continued commitment to the development and the very good reasons they have given as to why it must go ahead.

“We  fervently hope that it does as it will create thousands of jobs across the North East of Scotland both directly and across our supply chain and make a significant contribution to meeting our energy requirements.  

“It has been made patently clear for some time we cannot put ourselves in the position of reducing domestic production only to increase carbon heavy imports from overseas.

“This would be entirely counter productive, both environmentally and economically.  

“The skills, experience and infrastructure of a world class oil and gas industry will play a crucial role in accelerating energy transition and meeting net zero.

“We must support the industry in meeting this ambition and it is essential the Scottish and UK Governments do too.

“I urge politicians to reflect carefully on their public statements on oil and gas and the impact they have on investment in the industry. We must not create an adverse investment environment at this crucial moment in our energy transition journey. The future prosperity of our region and the country’s ability to meet net zero, depends on it.”

Britain’s oil and gas industry was facing added uncertainty after Shell’s decision on Thursday night to pull out of developing the oilfield off the Shetland Islands.

Siccar Point, which owns 70% of the Cambo field, says it could produce up to 170 million barrels of oil equivalent and 53.5 billion cubic feet of gas over 25 years.

The decision has dismayed the oil and gas and those, including politicians, who have supported moves to continue drilling for oil in order to provide revenue to invest in green energy and to avoid the UK becoming reliant on imported supplies of oil.

As recently as October Shell boss Ben van Beurden defended plans for the Cambo oil field as he declared the UK North Sea a global leader in terms of the energy transition.

After the company’s third quarter results he told reporters: “If the Government of the UK wants to supply at least part of its energy needs with domestic resources then it should develop projects like Cambo.”

He added: “If you say we’re not going to develop our national resource in a basin that actually has one of the most progressive regulations when it comes to the energy transition, done by a company that is going to use some of that cash flow to actually drive the energy transition in other parts of the energy system, we don’t want any part of that let us just import it from elsewhere, how does that make sense?”

Climate campaigners insisted Shell’s decision was a “deathblow” for the controversial project which has become a target for those demanding the UK government stops granting licences.

After the Cop26 UN climate summit in Glasgow last month, Scotland’s First Minister Nicola Sturgeon said she did not believe the project should go ahead.

The International Energy Agency, the energy watchdog, said in May that no new oil and gas exploration and development should be conducted after this year, in order to help meet global warming targets.

The UK government had faced threats of legal action over the Cambo project, which may also have played a part in Shell’s decision.

Ed Miliband, Labour’s climate and net zero secretary, 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.”

Shell said in its statement that “continued investment in oil and gas in the UK remains critical to the country’s energy security. As Shell works to help accelerate the transition to low-carbon energy, we remain committed to supplying UK customers with the fuels they still rely on, including oil and gas.

“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.”

Jenny Stanning, external relations director for industry body OGUK, said: “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, 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.”

Comment: Cambo Shell shock

Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.