Oil giant Shell has scrapped plans to develop the controversial Cambo oil field in the North Sea.
The project has become a focal point for campaigners seeking to stop the development of new oil and gas resources as Britain seeks to become a net zero carbon economy by 2050.
Greenpeace voiced hope that Shell’s decision on the oil field off the Shetland isles – which is majority-owned by private equity backed firm Siccar Point – would prove a “death blow” for its development.
The prospect of the UK developing the site had attracted particular scrutiny in the run-up to the COP26 climate change conference on Glasgow.
Shell said in a statement that following “comprehensive screening” it had “concluded the economic case for investment in this project is not strong enough at this time, as well as having the potential for delays”.
Siccar Point, which co-owns the field with Shell, confirmed in a separate statement that “Shell has taken the decision to not progress its investment at this stage”.
“Cambo remains critical to the UK’s energy security and economy,” Siccar Point Chief Executive Officer Jonathan Roger
“Whilst we are disappointed at Shell’s change of position… we will continue to engage with the UK government and wider stakeholders on the future development of Cambo.”
Activists campaigning against the development of the oil field have pointed to a report by the International Energy Agency (IEA) saying that no new oil and gas projects should be developed in order to restrict global warming to 1.5C.
But the UK government has highlighted the importance of energy security and during COP26 declined to join an alliance of countries pledging to stop new oil and gas developments on their territory.
In August, Scotland’s first minister Nicola Sturgeon called on Boris Johnson to “reassess” the licence for Cambo given the “severity of the climate emergency we now face”.
Philip Evans, oil campaigner at Greenpeace UK, said following Shell’s decision to pull out: “This really should be the deathblow for Cambo.
“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.”
Friends of the Earth – which won a climate court case against Shell in the Netherlands earlier this year – welcomed the move.
“The future of the project is now in serious doubt – as it should be,” it said on Twitter.
“There is no need for a new oil field during a climate crisis.”
Cambo is 30% owned by Shell and 70% by Siccar Point.
According to Siccar Point, it could produce the equivalent of up to 170 million barrels of oil and 53.5 billion cubic feet of gas over 25 years.
It was unclear whether the field could be developed without Shell’s support.