Yahoo Finance Shell reconsiders decision on key oilfield near Shetland Islands
Shell (SHEL.L) is eyeing up a return to its Cambo North Sea project, an oil field 75 miles off the Shetland Islands, according to new reports.
In December last year, the oil major said it was pulling out of the controversial project amid mounting pressure over climate change, pressure from green activists, and potential regulatory delays.
However, the Ukraine war has since sent energy prices soaring, with Brent crude oil (BZ=F) climbing from $70 per barrel before Christmas, to almost double at $139 (£105). It is currently trading at $114 per barrel amid fears of reduced Russian supply.
Shell has not yet sold its interest in Cambo, and still holds a 30% stake. This could produce more than 170 million barrels of oil equivalent.
The project is majority owned by private equity-backed fossil fuel explorer Siccar Point Energy, who has vowed to press on and seek alternative ways to continue exploration at Cambo.
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According to the BBC, sources close to the matter said that, while the company’s official position had not changed, it acknowledged that “the economic, political and regulatory environment had changed enormously” since the decision was announced three months ago.
Shell, which has been in the North Sea for decades, currently accounts for around 10% of the UK’s oil and gas production.
Kwasi Kwarteng, UK business secretary, tweeted on Monday: “The UK must back North Sea oil and gas while we transition to cheap, clean power. It would be complete madness to turn off our domestic source of gas in such an uncertain world.”
The UK must back North Sea oil and gas while we transition to cheap, clean power.
It would be complete madness to turn off our domestic source of gas in such an uncertain world.
My interview with @LiamHalligan 👇🏾 pic.twitter.com/U3qCHRdtNB— Kwasi Kwarteng (@KwasiKwarteng) March 21, 2022
However, after the COP26 UN climate summit in Glasgow last November, Scotland’s first minister Nicola Sturgeon said she did not believe the project should go ahead, and that it should be subject to a climate assessment.
The news also comes as Shell resubmitted an application to develop the Jackdaw North Sea gas field off the east coast of Scotland last week, having been rejected in October by environmental regulators.
The company said it had modified the chemical processes involved in the gas extraction to meet requirements.
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Elsewhere, British and Dutch gas prices have risen again on Tuesday amid forecasts for colder weather.
The British gas for day-ahead delivery rose 10p to 219p per therm, while the Dutch contract increased €1.88, or 2%, to €94.28 per megawatt hour.
Analysts at Refinitiv said: "The cold snap expected next week may lift residential consumption and provide a bullish signal to the prompt prices."
