Shell’s pull-out from North Sea oil project exposes UK political divisions
Shell’s decision to withdraw from the development of a contentious offshore oilfield has exposed divisions between the UK’s political parties over the future of North Sea oil and gas, with senior government figures warning that without new projects Britain will become more dependent on imports.
The Conservative government on Friday emphasised that Shell had made a “commercial decision” to pull out of the Cambo field, which lies north-west of the Shetland Islands.
Earlier this year, Shell, which has a minority stake in the field, had applied with its partner, Siccar Point, for regulatory approval to push ahead with the project. But environmentalists had pressured both ministers and the Anglo-Dutch oil major not to advance it.
One senior official expressed unease about Shell’s decision, stressing that even with the UK’s commitment to reach net zero carbon emissions by 2050 there would still be a domestic need for oil and gas for several decades.
The industry has warned that a failure to invest in new oil and gasfields to replace those in decline would further increase the UK’s reliance on imports.
“What we cannot have is a cliff-edge where oil and gas are abandoned overnight,” the official said. “Turning off the taps would put energy security, British jobs and industries at risk, and we would be even more dependent on imports.”
But the opposition Labour party hailed Shell’s decision. Ed Miliband, the shadow climate change secretary, described it as a “significant moment,” adding that continuing would have undermined the UK’s climate commitments and that for investors it was “simply an unsustainable choice”.
Jonathan Roger, chief executive of private-equity backed Siccar Point, said the company would continue to engage with the government on the development of Cambo and warned of the consequences if it did not go ahead. “The UK is at risk of damaging its economy and increasing imports with a higher carbon impact if new developments are not brought forward,” he said.
Although oil policy is reserved to the UK government, Nicola Sturgeon, leader of the Scottish National Party and Scotland’s first minister, last month called for the development of the Cambo field to be blocked on the basis that it could not pass any “rigorous climate assessment”.
Future oil and gas revenues were central to the SNP’s fiscal case for independence ahead of Scotland’s 2014 referendum, but Sturgeon has appeared increasingly sympathetic to arguments of the Scottish Green party, her junior partners in government, that new developments in UK waters cannot be justified.
Patrick Harvie, co-leader of the Scottish Greens and a junior minister in Sturgeon’s government, on Friday welcomed Shell’s exit from the Cambo project.
“It’s very good news that it makes it less likely that Cambo will go ahead [but] there is still a risk that other investors will come in,” Harvie to BBC Radio Scotland. He said the Conservative party was increasingly isolated in supporting new oil development.
Liam Kerr, Scottish Conservative shadow secretary for Net Zero, blamed Sturgeon’s opposition to new projects for “discouraging investment” and called on her to distance herself from Harvie’s remarks.
Union leaders also expressed alarm, accusing Sturgeon’s government of failing to set out a clear energy strategy and warning of the impact on jobs in one of Scotland’s most important industries. “What’s the plan for a jobs transition for oil and gas workers?” asked Gary Smith, general secretary of the GMB.
Siccar Point said the Cambo project would create more than 1,000 direct jobs and deliver up to 170m barrels of oil equivalent and 53.5bn cubic feet of gas over 25 years.
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