The oil giant said it had concluded the economic case for investing in the project off the Shetland Islands was “not strong enough” and also raised the potential for delays in a surprise statement on Thursday.
The privately held energy company Siccar Point – which owns a majority stake in the field – confirmed that Shell had “made the decision not to advance its investment at this stage.”
The Cambo project has been at the center of political debate over 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 decades to come.
While Shell’s decision to pull out does not necessarily mean the end of oil development in the Shetland field, Greenpeace hailed the news as a potential “death blow” to the project.
Philip Evans, an oil activist in the environmental campaign group, said: “This should really be the fatal blow for Cambo. As another key player turns its back on the project, the government is increasingly ignoring its continued support for the oil field. “
Calling on the UK government to reject the drilling license, the Greenpeace activist added: “Anything else would be a disaster for our climate and leave the UK consumer vulnerable to volatile fossil fuel markets. “
Shell owns 30 percent of the Cambo project, while Siccar Point, which operates it, owns the remaining 70 percent. “Cambo remains essential for energy security and the UK economy,” Siccar Point chief executive Jonathan Roger said in a statement.
Despite Siccar Point’s insistence that the project could still go ahead, Labor said it was an “important moment in the fight against the Cambo oil field”.
Ed Miliband, shadow secretary for climate change, said: “It doesn’t make environmental sense and now Shell accepts that it doesn’t make economic sense. “
Urging the government to reject the drilling permit, the Labor leader said: “Shell woke up to the fact that Cambo was not the right choice. It is high time the government did it.
Mr Miliband added: “Carrying on as if nothing has happened on fossil fuels will kill our chances of keeping 1.5 degrees alive and carries huge risks for investors as it is simply a no-go choice. sustainable. “
Mr Johnson and his ministers have come under intense pressure to exclude support for Cambo’s planned development. If approved, the project would produce up to 170 million barrels of oil between 2025 and 2050.
If Cambo’s permit is approved by the UK oil and gas authority, drilling could begin as early as next year. Mr Johnson’s Scottish Secretary Alister Jack recently told the BBC that we should ‘open up the Cambo oil field 100%’.
Scottish First Minister Nicola Sturgeon has also come under pressure to oppose the fossil fuel project, although she has stressed that the decision on the licenses rests with the British authorities.
After only asking that the drilling request be “reassessed”, the SNP leader made it clear last month that she believed the proposed oil field off the Shetlands “should not be given the green light”.