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Shell: ditched Cambo project another bump on the road to net zero

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Royal Dutch Shell cannot seem to catch a break. In its latest retreat, the Anglo-Dutch oil and gas major is pulling the plug on its contentious Cambo development in Britain’s North Sea. That leaves the proposed project, in which Shell was to have had a 30 per cent interest, wholly in the hands of private equity-backed Siccar Point Energy.

The duo applied for regulatory approval in June. The UK government, under pressure from activists, has yet to give the go-ahead. That is irksome, but hardly cause for investors to break into a sweat.

Cambo is small-scale. The developers expect it to produce up to 170m barrels of oil equivalent over 25 years. Divide that pro rata between the two parties and Shell’s share equates to roughly a fortnight’s production — but spread over a quarter of a century. Sure, the field may ultimately yield more and there is also an expected 53.5bn cubic feet of gas included. But its removal hardly sparks immediate financial concerns.

Seen another way, however, the scuppered project illustrates Shell’s difficulties managing the energy transition. Cambo would have added to Shell’s carbon baggage, justified by it being nearer to home and generating cash for greener endeavours. That did not carry much weight with eco-activists, whose complaints likely found more receptive ears with watchdogs as the UK hosted COP26.

Its efforts in other arenas have also hit setbacks in recent months. The Jackdaw gasfield development, also in the North Sea, was iced in October when the UK’s Offshore Petroleum Regulator for Environment and Decommissioning refused to sanction it without amendments.

The greener Scottish Acorn carbon capture and storage project, a Shell partnership with Storegga, has also failed to secure fast-track approval. The decision to restrict the ready-to-go project, which would have redeployed industry workers, to “reserve” status was an unexpected knock-back.

Both projects remain live and may yet see the light of day, albeit in amended form in the case of Jackdaw. But Shell’s stumbles demonstrate the pitfalls on the road to decarbonisation.

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