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 Government is cutting an increasingly lonely figure with their continued support for the oil field
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”.
“It makes no environmental sense and now Shell are accepting it doesn’t make economic sense,” he said.
“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.
“The right choice for the UK’s future energy security is to rapidly accelerate renewable alternatives and ensure we protect the interests of oil and gas workers with a just transition.
“Britain could lead the world in the global race for green energy and a Labour government will make the necessary investment in the transition, ensuring we protect workers and communities.”
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.
“It is vital that work on building a just transition for workers in Scotland’s energy industry begins now.
“We know that hundreds of thousands of jobs will be created in Scotland’s renewable future, and there’s no time to waste.”