EurOil: Shell reconsiders Cambo withdrawal following oil price spike

Shell is reportedly reconsidering its withdrawal from the giant Cambo oilfield west of the UK Shetland Islands, in light of soaring oil and gas prices in recent months triggered by Russia’s war in Ukraine.

The UK major announced in early December it was leaving the Siccar Point-operated project because its economic case “was not strong enough” and there was a risk of delays. While Shell did not cite this as a factor behind its decision, Cambo was also the subject of a sustained campaign by environmentalists. And Shell announced its exit just weeks after Scottish First Minister Nicola Sturgeon said she did not feel the project should go ahead because of its climate impact.

Shell’s move effectively left Cambo up in the air, as Siccar Point lacks the financial and operational capability to take the project forward on its own.

Conditions are radically different from when Shell announced its exit, however. Oil prices are now above $110 per barrel, up from $70 per barrel, as Russia struggles to export its oil because of transactional difficulties caused by sanctions and traders simply shunning Urals crude because of the political situation. And gas prices also remain elevated owing to the crisis, despite buyer hopes they would subside with the arrival of warmer weather.

Shell has not yet sold its interest in Cambo. But the BBC cited sources on March 22 as saying that while the company’s official position on the project had not changed, it did appreciate that the economic, political and regulatory environment in the UK had altered significantly over the past few months.

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