North Sea giant Shell will seek to sell its 30% stake in the Cambo oilfield after striking a deal on a six-month marketing process with operator Ithaca Energy.
However, this was never confirmed by the company.
Securing a new owner for Shell’s stake is an important step towards a final investment decision (FID) for developing the field.
Shell may sell its whole interest in Cambo and if a potential buyer wants more, Ithaca could sell some of its own interest – potentially giving any new owner up to 49.99%
Other possible outcomes from the sale agreement include Ithaca acquiring Shell’s entire stake.
If Shell sells part of its stake, Ithaca – which currently owns 70% – could buy the rest.
‘Meaningful step’ towards FID
Ithaca Energy chief executive Alan Bruce hailed the deal with Shell as a “meaningful step” towards Cambo’s development and progressing it to FID.
He added: “Ithaca Energy’s primary strategic focus is to maximise sustainable shareholder returns through the delivery of our buy, build and boost strategy, including the future development of Cambo.”
Mr Bruce also took a swipe at the energy profits levy, or windfall tax.
The “fiscal instability” it has created “continues to constrain our ability to invest”, he said.
‘Critical investment decisions’
He continued: “We are actively engaging, in a constructive manner, with the UK Government in pursuit of the fiscal stability required to make critical investment decisions.”
Simon Roddy, Shell’s senior vice-president for UK upstream, said: “We wish Ithaca Energy well in the future development of the field, which will be important to maintain the UK’s energy security, and to sustaining domestic production of the fuels that people and businesses need.”
The announcement comes a day after Shell’s chief financial officer, Sinead Gorman, said Cambo was “not economic” for the company.
Cambo, about 80 miles west of Shetland, is estimated to hold up to 800 million barrels of oil.
The plan is to develop it using a purpose-built Sevan floating, production storage and offloading vessel (FPSO).
A first phase of development is expected to recover 170m barrels.
The project is at the heart of an ongoing debate over the future of oil and gas exploration and production in the UK North Sea.
Cambo has been the focus of a string of protests by climate campaigners.
Shell announced its exit plan in December 2021, to the elation of activists.
Opposition had ramped up during that year’s COP26 climate summit in Glasgow.
Market experts have suggested the cost of the project and environmental concerns could result in only a small pool of potential buyers.
Announcing its sale agreement with Shell earlier today, Ithaca noted Cambo is expected to produce at less than “half the CO2 intensity” of a typical UK oilfield.
Cambo’s FPSO would be “fully electrification ready” – subject to grid connection availability – and boast “zero routine flaring”, the Aberdeen-headquartered company said. Its hull design will also reduce power demand, added Ithaca.