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By Ron Bousso and Shadia Nasralla
LONDON, Dec 2 (Reuters) - Royal Dutch Shell said on
Thursday it had scrapped plans to develop the Cambo oilfield in
the British North Sea, which became a lightning rod for climate
activists seeking to halt the development of new oil and gas
resources.
Following "comprehensive screening" of the Cambo field,
Shell "concluded the economic case for investment in this
project is not strong enough at this time, as well as having the
potential for delays," the company said in a statement.
Private equity-backed Siccar Point, which owns a majority
stake in the field, confirmed in a separate statement that
"Shell has taken the decision to not progress its investment at
this stage."
The Cambo project off the Shetland Isles has been at the
centre of a political debate on whether Britain should develop
new fossil fuel resources as it seeks to become a net zero
carbon economy by 2050.
Climate activists have pointed to a report by the
International Energy Agency (IEA) saying that no new oil and gas
projects should be developed in order to restrict global warming
to 1.5 degrees Celsius.
"Cambo remains critical to the UK's energy security and
economy," Siccar Point Chief Executive Officer Jonathan Roger
said in a statement.
Britain's government has also responded to the IEA report by
saying energy security is important. During the COP26 climate
conference which was held under British auspices last month,
Britain also declined to join an alliance of countries pledging
to stop new oil and gas developments on their territory.
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"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," Roger said.
Adam Matthews, chief responsible investment officer at
Church of England Pensions Board, a shareholder which leads
engagement with Shell over its energy transition strategy,
welcomed the move.
"The message is clear to the U.K. Government (that
ultimately decide if the field is exploited) that companies
beginning to transition will not allocate the capital to such
projects," Matthews said in a tweet.
Friends of the Earth, an activist group which won a climate
court case against Shell in the Netherlands this year applauded
the move.
"The future of the project is now in serious doubt - as it
should be. There is no need for a new oil field during a climate
crisis," the group said on Twitter.
Shell owns 30% in the project, while Siccar Point, which
operates it, holds the remaining 70%. The field could produce up
to 170 million barrels of oil equivalent and 53.5 billion cubic
feet of gas over 25 years, according to Siccar Point.
It was unclear whether the field could be developed without
Shell's support.
Shell faced another setback for its plans in the British
North Sea in October when a regulator rejected plans to develop
the Jackdaw gasfield after considering its environmental
statement, industry sources said.
(Reporting by Ron Bousso and Shadia Nasralla
Editing by Mark Potter, Aurora Ellis and Marguerita Choy)