Cambo: Jobs warning as Shell pulls out of oil field development

Business leaders have warned that thousands of oil and gas jobs could be at risk in the UK after Shell pulled out of the Cambo oil field development.

Aberdeen's Chamber of Commerce said a "premature" end to domestic production could see some areas suffer the fate of mining communities in the 1980s.

Environmentalists say new fossil fuel projects like Cambo are incompatible with action on climate change.

Cambo's majority stakeholder said it was "disappointed" by Shell's decision.

Siccar Point Energy said it would continue talks with the UK government about developing the oil field, located west of Shetland.

Shell, which has faced widespread criticism over its 30% stake in Cambo, said it now believed the economic case for investment was "not strong enough".

Greenpeace welcomed the announcement, describing it as the "death blow" for the plans.

But industry body Oil and Gas UK insisted developments such as Cambo were needed during the transition to sustainable energy.

External relations director Jenny Stanning said: "This is a commercial decision between partners but doesn't change the facts that the UK will continue to need new oil and gas projects if we are to protect security of supply, avoid increasing reliance on imports and support jobs."

It is too early to write the obituary of the North Sea oil and gas industry, despite claims by some environmental campaigners that Shell's decision marks the beginning of the end.

That's because, whatever Shell says in public, this is about reputational cost not conventional economics.

Battling environmentalists and the Scottish government for the right to drill for oil is not a good look for a company that claims to be transitioning away from fossil fuels.

But the Cambo oilfield is reckoned to hold hundreds of millions of barrels of oil, each worth some $70 at current prices, and there are lots of less high-profile companies who would be willing to suffer some bad publicity for a cut of that prize.

So, the real question Shell's decision raises is whether the UK government is willing to put its net-zero ambitions ahead of the huge tax revenues the project could deliver and deny a licence to develop the oilfield.

The chief executive Aberdeen and Grampian Chamber of Commerce called for a "reasoned debate" about oil and gas extraction, which he said directly supported more than 120,000 UK jobs.

Russell Borthwick said there was enormous potential for the renewable energy sector in the region but he warned against a "knee jerk" reaction to climate change.

He told the BBC's Good Morning Scotland programme: "If we get this wrong, all of those people and organisations demanding a premature end to domestic oil and gas production might want to be able to reflect back to their role in scripting a repeat of what happened to our mining communities in the 1980s."

The fallout from the 1984/85 miners strike and the long term decline of UK coal mining left many communities facing high unemployment and other problems that were still being felt decades later.

Businessman Sir Ian Wood chairs Aberdeen's Energy Transition Zone, a not-for-profit company set up to support the shift to renewable energy. He said: "We must not create an adverse investment environment at this crucial moment in our energy transition journey.

"The future prosperity of our region and the country's ability to meet net zero, depends on it."

Scottish Greens co-leader Patrick Harvie welcomed Shell's announcement and said it made it less likely Cambo would go ahead in the "near term".

"It's absurd to suggest that our transition to a zero carbon economy depends on drilling for ever more oil and gas," he said.

He said Scotland had a quarter of Europe's wind energy potential, and that investment should be focused on renewables instead.

"We could be exporting renewable resources and make that the backbone of Scotland's economy," he told the BBC.

He continued: "The idea of keeping global warming below 2 degrees and 1.5 degrees if we possibly can - this is not optional.

"This is not a normal political choice. This is mission critical for our survival.

"It is humanity's only survival strategy and we need to invest now in the transition that has to be fair, but it has to be fast."

Scotland's First Minister Nicola Sturgeon, now in a power-sharing deal with the Scottish Greens, has recently signalled her opposition to Cambo.

"The presumption would be that Cambo could not and should not pass any rigorous climate assessment," she told MSPs.

The UK government, which makes the decision on a drilling licence, insists an environmental impact assessment will be carried out but appears far more supportive.