Page 14 - EurOil Week 12 2022

EurOil PROJECTS & COMPANIES EurOil

Shell reconsiders Cambo withdrawal

following oil price spike

RUSSIA SHELL is reportedly reconsidering its with- has also said it will keep an open mind regarding
drawal from the giant Cambo oilfield west of the onshore hydraulic fracturing for shale gas.
Shell left in December UK Shetland Islands, in light of soaring oil and Even so, Cambo still faces pressure from cli-
citing economic gas prices in recent months triggered by Russia’s mate activists and this could deter Shell from
inviability. war in Ukraine. making a U-turn. Activist investor Follow This
The UK major announced in early Decem- has said a decision to develop Cambo would
ber it was leaving the Siccar Point-operated pro- ignore guidance from the International Energy
ject because its economic case “was not strong Agency that no new oil and gas fields should be
enough” and there was a risk of delays. While developed if the world is to reach its net-zero by
Shell did not cite this as a factor behind its deci- 2050 goal.
sion, Cambo was also the subject of a sustained “Any new fields will be stranded if we are to
campaign by environmentalists. And Shell meet Paris climate targets,” Follow This leader
announced its exit just weeks after Scottish First Mark van Baal said in response to the report
Minister Nicola Sturgeon said she did not feel the about Shell reconsidering its position. He
project should go ahead because of its climate warned that Shell’s own net-zero target would be
impact. “really empty without action this decade.”
Shell’s move effectively left Cambo up in the “We know this is a response to the Ukraine
air, as Siccar Point lacks the financial and oper- war,” he said. “The only good response to the
ational capability to take the project forward on Ukraine war is to replace Russian fossil fuels with
its own. renewables.”
Conditions are radically different from when Cambo is primarily oil-focused, with an esti-
Shell announced its exit, however. Oil prices are mated 175mn barrels of oil in place, making it
now above $110 per barrel, up from $70 per bar- one of the largest known but undeveloped oil-
rel, as Russia struggles to export its oil because of fields left on the UK continental shelf. But it also
transactional difficulties caused by sanctions and holds some 1.5bn cubic metres of gas.
traders simply shunning Urals crude because of Shell is also reconsidering other projects in
the political situation. And gas prices also remain light of altering market conditions. Earlier this
elevated owing to the crisis, despite buyer hopes month it announced it had submitted an updated
they would subside with the arrival of warmer environmental development plan for the Jack-
weather. daw gas field in the UK North Sea. If regulators
Shell has not yet sold its interest in Cambo. consent, drilling could start at the project as early
But the BBC cited sources on March 22 as saying as the third quarter of this year and wrap up by
that while the company’s official position on the the end of 2023. First gas would then come by the
project had not changed, it did appreciate that second half of 2024.
the economic, political and regulatory environ- Shell’s previous bid for environmental
ment in the UK had altered significantly over the consent was rejected by UK regulators last
past few months. year. In its new submission, the company
UK Prime Minister Boris Johnson has also said there would be “no environmental or
called for increased North Sea oil and gas extrac- social-economic impacts” as long as mitiga-
tion to wean the country off Russian imports tion measures are implemented. While there
while also ensuring that energy bills do not spike will be “incremental emissions” from Jackdaw’s
too high. The UK is looking to resume oil and development, Shell is striving to keep the car-
gas licensing, halted in the run-up to the COP26 bon footprint to a minimum from “day one of
climate summit in Glasgow last November, and operations.” ™

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