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Shell seals exit from controversial Cambo oilfield in UK North Sea

Ithaca Energy has styruck a deal to acquire the supermajor's 30% stake for an undisclosed sum.

Artist's impression of the Cambo floating production and offloading vessel.
Artist's impression of the Cambo floating production storage and offloading vessel. Image: Ithaca Energy

Ithaca Energy is to buy out Shell’s 30% stake in the Cambo oilfield, becoming the 100% owner of the west of Shetland project.

A sales process to find a buyer for Shell’s stake was launched in May.

The supermajor had announced in December 2021 that it would not progress with the controversial project.

Today, Aberdeen-based Ithaca said it was to acquire the stake with “minimal near-term cost exposure,” subject to regulatory approval.

Shares in the London-listed firm rose more than 2%, worth £1.52 at market close.

North Sea oil firm’s boss says Cambo has key role in UK’s energy security

Ithaca chief executive Alan Bruce added: “We are pleased to conclude the marketing process with Shell and to take full ownership of the Cambo development. Our primary focus continues to be the delivery of our ‘buy, build and boost strategy, including the future development of Cambo, subject to fiscal conditions.

“Cambo has an important role to play in providing energy security and economic benefit to the UK, while reducing overall emissions intensity.”

What Shell has said today

A Shell spokesperson said: “After comprehensive screening of the Cambo development, we concluded at the end of 2021 that we did not wish to move forward with the project at that time.

“Having now agreed the sale of our stake in it, we wish Ithaca every success in developing the field.”

Ithaca cambo shell
Ithaca Energy chief executive Alan Bruce

Cambo is the second-largest untapped oil and gas discovery in the UK after Rosebank, which Ithaca also holds a stake in.

Both projects are major battlegrounds for climate campaigners.

Cambo is estimated to hold up to 800 million barrels of oil, with a first phase of development expected to recover 170m barrels.

Cambo farm-out deal likely

The value of the Shell deal was undisclosed but Cambo’s operator said terms were payable on first oil, or receipt of payment for any subsequent farm-down of the stake by Ithaca. It also stressed the deal is subject to it proceeding to a final investment decision and/ or offshore industry regulator the North Sea Transition Authority approving the project.

Ithaca is expected to pursue a Cambo farm-out deal once Shell’s stake sale completes.

Windfall tax and project timeline

Ithaca has been highly critical of the current UK tax regime, saying last month “there are no windfall profits” left in the industry.

The independent claimed the energy profits levy (EPL), or “windfall tax”, had “severely dampened” investment.

At one point, the firm hoped to take a final investment decision (FID) on Cambo in the first half of 2023 but it warned the date may be pushed back due to the levy.

It is unclear whether Shell’s stake sale will impact the FID timeline.

It’s a strong resource so we’ll continue to progress.”

Alan Bruce, chief executive, Ithaca Energy

Interviewed by Energy Voice, sisister website to The Press and Journal, Mr Bruce said: “It’s positive in terms of having control of the development.

“All the challenges that we’ve spoken about before are still things we need to overcome, particularly around fiscal certainty and the broader investment climate, but those are all things that we can work and and we will.

Ithaca's Cambo project is a battleground for climate change campaigners.
Ithaca’s Cambo project is a battleground for climate change campaigners. Image: Vuk Valcic/SOPA/Shutterstock

“The good thing is this is the second-largest undeveloped discovery in the UK. It’s a strong resource so we’ll continue to progress, and still look to farm out some of the share to bring a partner along to support the… development.”

Asked about his hopes for a successful farm-out, Mr Bruce said the outcome of a review of the current tax regime and investment allowances for energy producers would be key.

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