Shell has announced it is pulling out of the controversial Cambo oil field project.
The company, which has 30% equity in the development off the west coast of Shetland, said it had concluded the economic case for investment was “not strong enough”.
In a statement, Shell 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.”
The decision was welcomed by environmental groups, including Greenpeace, which said the decision should mark the “death blow” for Cambo.
Philip Evans, oil campaigner at Greenpeace UK, said: “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.”
Ed Miliband, shadow secretary of state for climate change and net zero, said the move was a “significant moment in the fight against the Cambo oil field”.
He stated: “It makes no environmental sense and now Shell are accepting it doesn’t make economic sense.
“Ploughing on with business as usual on fossil fuels will kill off our chances of keeping 1.5 degrees alive and carries huge risks for investors as it is simply an unsustainable choice.
“Shell have woken up to the fact that Cambo is the wrong choice. It’s long past time for the Government to do so.”
In November, as COP26 ended in Glasgow, Scotland’s First Minister Nicola Sturgeon voiced her strongest opinion so far on the proposed development, saying: “I don’t think that Cambo should get the green light.”
She had previously urged the UK Government to reassess the plans, amid growing concern over the impact of fossil fuels on climate change.
Private equity firm Siccar Point Energy, which owns a majority stake in the field, said it was “disappointed at Shell’s change of position”, but added: “We will continue to engage with the UK Government and wider stakeholders on the future development of Cambo.”
Liam Kerr, Scottish Conservative shadow cabinet secretary for net zero, energy and transport, said: “Cambo will be massively beneficial to our economy, securing our domestic supply of oil and gas while demand is still high.
“The industry supports 100,000 Scottish jobs and is crucial to the energy transition.
“It’s obviously disappointing Shell have pulled out from Cambo, but it is a business decision for them to make.
“Recently, Nicola Sturgeon’s language about oil and gas has been more harmful than helpful.
“This will no doubt make it harder for energy companies to invest in oil and gas, and the skills and technology needed to reach carbon net zero.”
Scottish Greens energy and climate spokesperson Mark Ruskell MSP said: “Today’s news shows that Scotland is approaching the end of the age of oil and gas, and it is time that governments started planning accordingly.
“For a company like Shell to publicly state that it is not economically viable to extract oil from this site is hugely significant.
“Scotland has the potential to lead Europe in offshore renewables, with 25% of the continent’s offshore renewable energy potential.
“So, in the wake of this announcement it’s clear that the UK Government must divert support that has previously been targeted at oil and gas toward industries of the future.”
Sir Ian Wood, chairman of the Energy Transition Zone in Aberdeen, said Shell’s decision is disappointing.
“However, we welcome Siccar Point’s continued commitment to the development and the very good reasons they have given as to why it must go ahead – we fervently hope that it does, as it will create thousands of jobs across the North East of Scotland, both directly and across our supply chain, and make a significant contribution to meeting our energy requirements.
“It has been made patently clear for some time we cannot put ourselves in the position of reducing domestic production only to increase carbon heavy imports from overseas – this would be entirely counter productive, both environmentally and economically.
“I urge politicians to reflect carefully on their public statements on oil and gas and the impact they have on investment in the industry – we must not create an adverse investment environment at this crucial moment in our energy transition journey.”
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