North Sea rethink
Shell takes fresh look at Cambo oil and gas field
Energy giant Shell may reverse its decision not to invest in the Cambo oil and gas field in the North Sea.
Rising oil prices and a new focus on domestic supplies of energy has encouraged the company to take a fresh look at opportunities in the region.
It decided not to proceed with the Cambo field west of Shetland in December when it said there was no economic case, though environmental campaigners were also said to have played a part in its decision just weeks after the COP26 summit.
Since then the price of crude oil has shot up from $70 a barrel to more than $130 and early today Brent futures were up $3.18, or 2.75%, to $118.80 a barrel as the Russian conflict has added to uncertainty over supplies.
It is now said to be looking again at Cambo, and last week the company resubmitted an application to develop the Jackdaw North Sea gas field – off the east coast of Scotland – having had it turned down in October by environmental regulators.
Shell has a 30% stake in Cambo with the majority owned by Siccar Point Energy which said Cambo could deliver 170 million barrels of oil over 25 years, and 53.5 billion cubic feet of gas.
A week after Shell withdrew from Cambo, Siccar Point said it was “pausing” its plans. But chief executive Jonathan Roger insisted at the time that Cambo was a “robust project that can play an important part of the UK’s energy security providing homegrown energy supply and reducing carbon intensive imports, whilst supporting a just transition.”
The exploration licence dates back to 2001, but UK government must approve drilling.
Scotland’s First Minister Nicola Sturgeon stated that Cambo should not go ahead and has been criticised for putting both UK supplies and energy jobs at risk.
Opponents of Cambo argue that the oil that would be produced from Cambo would not be suitable for UK refineries and would have to be exported. This may boost Britain’s balance of payments but would not ease the UK’s imports.
Prime Minister Boris Johnson is spearheading the UK government’s desire for more oil and gas to be produced domestically to reduce the need on foreign supplies, but it insists that investment decisions are a commercial matter for the companies involved.
The UK government will announce its new energy strategy next week, which may also bring it into further conflict with the SNP-Green government in Scotland over nuclear as well as oil and gas.
Later this year the Oil and Gas Authority will announce the first oil and gas licensing round for new fields since 2020.