Royal Dutch Shell said Thursday it had decided not to invest in British oil development off the coast of Scotland, which was a test of the government’s environmental competence.
The field, known as Cambo, is located in deep water northwest of the Shetland Islands. This is considered a harbinger of the future decline of the British but still large North Sea oil industry.
The British government is considering approving the project, which environmental groups and some politicians believe should be rejected as it will lead to carbon emissions responsible for climate change.
Shell, which owns 30 percent of Cambo, said it “has concluded that the economic case for investing in this project is not strong enough at this time.”
The company also said there was a “potential for delays,” apparently referring to the possibility that the drilling would spark protests from environmental groups and possibly lawsuits trying to stop it. Shell recently announced that it plans to move its headquarters from the Netherlands to the UK.
Shell’s decision to abandon its investment in Cambo is a major blow to the project. Siccar Point Energy, the privately-owned firm that is the main owner and developer of Cambo, said that while it is “disappointed” with Shell’s decision, it remains “confident in the quality” of the project, saying it will create 1,000 jobs.
Siccar Point said it plans to invest $ 2.6 billion in Cambo and has already spent $ 190 million in the four years since acquiring the rights to the mine, which was discovered in 2002.
The oil industry argues that as long as the UK consumes more oil and natural gas than it produces, it is preferable that these fuels come from the North Sea, where emission standards can be set, rather than places with potentially less control.
Environmental group Greenpeace UK said the Cambo development permit “would be a disaster for our climate and leave UK consumers vulnerable to volatile fossil fuel markets.”