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Cambo oilfield: Does Shell withdrawal spell end for the controversial project?

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  • COP26

Shell has scrapped its plans to develop the Cambo North Sea oilfield, throwing the future of the controversial project firmly opposed by climate activists into doubt.

The oil giant said it had concluded the economic case for investment in the project off the Shetland Isles is “not strong enough” and also cited the potential for delays.

What is the Cambo oilfield?

The site, 75 miles west of Shetland in Scotland, is an oilfield is believed to hold around 800 million barrels of oil.

If the Cambo licence is approved by the UK’s Oil and Gas Authority, the project would produce up to 170 million barrels of oil between 2025 and 2050 and drilling could start as early as next year.

The original exploration licence for the site was granted back in 2001, and earlier this year the government said it would allow oil companies to keep exploring the North Sea, despite legally binding targets to reduce UK greenhouse gas emissions to net zero by 2050, provided new drilling passed a “climate compatibility” along with existing environmental checks.

Why is it controversial?

The Cambo project has been at the centre of political debate on whether the UK should develop new fossil fuel resources, as Boris Johnson’s government seeks to cut carbon emissions to meet net zero targets in the decades ahead.

Greenpeace says the oil extracted would produce emissions equivalent to 16 coal-fired power plants running for one year.

Environmental activists also claim Cambo represents a risk to “hundreds” of marine species including rare deep-sea sponges, long-lived clams, and whales and dolphins in the area.

As well as the drilling and industrial activity impacting mammals which depend on sonar for navigation and hunting the area, the project “could jeopardise hundreds of species over several decades, as well as livelihoods”, a review by the Environmental Law Alliance Worldwide (Elaw), warned.

But supporters say scrapping Cambo will do nothing to reduce the UK’s demand for oil and will lead to more oil imports.

Is Shell’s decision the death knell for Cambo?

Private equity-backed energy firm Siccar Point, which owns a majority stake in the field, insists the project could still go ahead,

“Cambo remains critical to the UK’s energy security and economy,” Siccar Point’s chief executive, Jonathan Roger, said in a statement.

“While 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,” he added.

However, Greenpeace hailed the news as potentially fatal for the project.

Philip Evans, oil campaigner at the environmental campaign group, said: “This really should be the death blow for Cambo.

“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.”

Calling on the government to reject the drilling license, the Greenpeace campaigner added: “Anything else would be a disaster for our climate and would leave the UK consumer vulnerable to volatile fossil fuel markets.”

Friends of the Earth Scotland’s Climate and Energy campaigner Caroline Rance said: “People power has made the climate-wrecking Cambo development so toxic that even oil giant Shell doesn’t want to be associated with it anymore.

“Shell could see what way the wind was blowing with the project facing fierce opposition, and costly delays, from the public, climate groups and politicians.

“This marks the beginning of the end for all new oil and gas projects.

“Climate science is clear that there can be no new fossil fuels, and now Shell has admitted there’s no economic case in new oil and gas either.

“Both the UK and Scottish governments must now officially reject Cambo, say no to any future oil and gas developments in UK waters and get on with planning a fair and fast transition for people working in this industry.”

Why did Shell pull out?

A Shell spokesperson said: “Before taking investment decisions on any project we conduct detailed assessments to ensure the best returns for the business and our shareholders.

“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 having the potential for delays.

“However, 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.”

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