Field progress

Shell and Ithaca strike Cambo oil and gas deal

Ithaca Energy

Ithaca Energy sees Cambo as vital to energy security

A controversial North Sea oil and gas field has moved another step towards production after Ithaca Energy agreed to help Shell sell its 30% stake in the Cambo field.

Cambo, west of Shetland, is the second largest undeveloped field in the UK Continental Shelf and is seen by the oil companies as a key asset in securing the country’s energy supply.

Climate change opponents say it should not go ahead and have called on the UK government not to grant further licences in the region.

Shell is looking for a buyer for its 30% holding in the project, with Ithaca owning the remaining 70%. The agreement provides an option for Shell to sell any remaining portion of its own stake which is not sold to a third party to Ithaca Energy.

If any buyer wants more than 30% of the field, Ithaca would be prepared to sell up to 19.99% of its interest.

In all the sale scenarios, Ithaca would retain at least 50% of Cambo and remain the asset’s operator, the company said.

Ithaca, meanwhile, says the key obstacle to making progress on the prospect is the government’s energy profits levy, or windfall tax, which is “constraining our ability to invest”.

The company has stakes in six of the ten largest fields in the UKCS and two of UKCS’s largest pre-development fields.

Stop Cambo

Cambo has been targeted by climate campaigners

The Cambo development provides Ithaca Energy with long term production growth at a low expected unit operating cost per barrel. With its modern, energy efficient design and potential for electrification, Cambo could be one of the lowest-emission intensity assets in the North Sea.

The field is expected to produce less than half the CO2 intensity than the average UK field, able to be fully electrification ready, with zero routine flaring.

Alan Bruce, chief executive at Ithaca Energy, said: “Our agreement with Shell represents a meaningful step towards the development of Cambo, the second largest undeveloped field in the UKCS and a key asset in helping maintain the UK’s future energy security.

“Securing a new owner for Shell’s stake is an important step in Ithaca Energy progressing to Final Investment Decision.

“Ithaca Energy’s primary strategic focus is to maximise sustainable shareholder returns through the delivery of our buy, build and boost strategy, including the future development of Cambo.

“Ithaca Energy remains committed to investing in the UK North Sea, however, the impact of the amended Energy Profit Levy and the fiscal instability it has created continues to constrain our ability to invest. 

“We are actively engaging, in a constructive manner, with the UK government in pursuit of the fiscal stability required to make critical investment decisions that will support the UK’s long-term energy security.”

Shell’s senior vice president, UK Upstream, Simon Roddy, added: “Following an internal review, we have decided to sell our 30% working interest in Cambo and have agreed a process with Ithaca Energy for the sale of Shell’s stake in the field this year. 

“We wish Ithaca Energy well in the future development of the field, which will be important to maintain the UK’s energy security and to sustaining domestic production of the fuels that people and businesses need.”

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