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Government faces backlash after Shell abandons North Sea oil project

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Cambo protesters
Cambo protesters

The Government is facing a backlash after Shell pulled out of a controversial North Sea oil and gas project amid rising pressure over climate change.

Top industry figures accused ministers of failing to stand up for the Cambo project, which is expected to create 1,000 jobs and pump 170m barrels of oil, in the face of sustained opposition from climate campaigners.

They warned the lack of political support risked creating a hostile environment for investors needed to fund projects vital for oil and gas, which still accounts for 75pc of the UK’s energy needs, as well as the green shift.

Sir Ian Wood, an oil and gas industry veteran now leading efforts on green technologies in Scotland, said: “The skills, experience and infrastructure of a world class oil and gas industry will play a crucial role in accelerating energy transition and meeting net zero.

“We must support the industry in meeting this ambition and it is essential the Scottish and UK Governments do too. I urge politicians to reflect carefully on their public statements on oil and gas and the impact they have on investment in the industry.”

Shell said on Thursday that it would not invest in the planned Cambo oil and gas field 75 miles to the west of Shetland, where it owns 30pc of the licence alongside Siccar Point Energy.

The FTSE 100 oil giant said the economic case for investing was not strong enough, but that it also had the potential for delays - believed to reflect concerns about becoming mired in legal challenges or red tape.

A Whitehall source hit back at Shell, arguing that it “didn’t pull out because the project is economically unviable. They bowed to pressure from a vocal minority of activists who, perversely, would rather the UK imports more foreign oil.”

Cambo has a licence but is waiting for the go-ahead from the government’s Oil and Gas Authority. Nicola Sturgeon, Scotland’s First Minister, said last month the project should not get the green light.

Nicola Sturgeon North Sea oil Cambo Shell
Nicola Sturgeon North Sea oil Cambo Shell

The UK Government backs the domestic oil and gas industry and has set out a plan to help it move towards cleaner energy and decarbonise its rigs.

However, Scotland’s opposition combined with a lack of vocal public support for Cambo from the UK Government are believed to have frustrated senior figures at Shell.

Mike Tholen of Oil and Gas UK said: “We have got to be very careful about the signals we send to potential investors, because otherwise all we will end up doing is importing more oil and gas and destroying skills that we need here in the UK.

"We shouldn't be slamming the door on these projects just because they are no longer the flavour of the month."

Ryan Crighton of the Aberdeen and Grampian Chamber of Commerce warned that ministers risked creating a "hostile environment" for energy investors.

"There is no reality where we do not need oil and gas to make the transition to net zero,” he said.

A Government spokesperson said: “We cannot have a cliff-edge where oil and gas are abandoned overnight. Turning off the taps would put energy security, British jobs and industries at risk, and we would be even more dependent on foreign imports.

“We remain committed to Britain’s domestic offshore oil and gas sector. At present 75 per cent of the UK’s primary energy demand comes from oil and gas and it is therefore an important part of our energy mix while we transition to lower carbon alternatives.”