Cambo find off Shetland may be developed by Israeli-owned firm

The deal was struck just four months after Siccar Point’s partner in the Cambo project, Shell, decided to put the relevant plans on hold.

After facing fierce opposition from environmentalists, Shell said it had decided that the economics of the project did not stack up and cited the prospect for delays.

READ MORE: Shell boss says energy giant is eyeing North Sea gas developments after Cambo U-turn

Ithaca made its move after Russia’s assault on Ukraine triggered a surge in oil and gas prices which may have made the economics of Cambo look more attractive.

It was probably able to strike the deal on attractive terms given the fact the private equity firms that owned Siccar Point had reportedly been trying to offload the business for months before Shell decided to think again about Cambo.

Ithaca Energy executive chairman Gilad Myerson Picture: DELEK PR (Image: Delek)

Ithaca Energy executive chairman Gilad Myerson noted Siccar Point has stakes in big producing fields such as Schiehallion and Mariner, as well as in Cambo and the undeveloped Rosebank find.

As Ithaca made clear that it hoped to develop both Cambo and Rosebank, Mr Myerson indicated the company believes the chances of winning support for such projects has increased as a result of recent events.

“What we see now is a bit of a change in the narrative from the Government; the importance of energy security and domestic supply given the very unfortunate situation in Ukraine is causing people to rethink,” he told The Herald. “Everyone in Europe, the Dutch are rethinking their strategy, so are the Germans who are very reliant on Russian gas and also the UK with the energy paper.”

The comment refers to the energy security strategy published by the UK Government last week.

In the forward to the strategy, Prime Minister Boris Johnson said: “As even the most evangelistic environmentalist would concede that we can’t simply pull the plug on all fossil fuels overnight without the lights going out all over Europe, we’re going to make better use of the oil and gas in our own backyard by giving the energy fields of the North Sea a new lease of life.”

READ MORE: Israeli-owned North Sea firm posts $1bn profit after surge in oil and gas prices

The Government said the strategy will involve ambitious, quicker expansion of oil and gas along with nuclear, wind, solar and hydrogen power sources.

Other countries have noted the role that nuclear power can play in the net zero drive.

On Tuesday Bloomberg reported that South Korea’s President-elect Yoon Suk Yeol plans to embrace nuclear energy to help the country accelerate cuts in emissions

The SNP Government appears steadfast in its refusal to consider new nuclear power plants that use fission technology, although the end of generation at the Hunterston complex in Ayrshire in January has left a big gap to fill.

The development of Cambo could help reduce reliance on imports and generate thousands of jobs in the process. However, after coming out against Cambo last year as she looked to cosy up to the Scottish Greens, First Minister Nicola Sturgeon has given no indication that she will drop her opposition to the prospect of a development. Her priority appears to be keeping the greens on board as she bids to separate Scotland from the rest of the UK.

First minister Nicola Sturgeon on a visit to the Pipelines 2 Data oil services business in Aberdeen in February 2015, during which she said the UK Government could no longer ignore calls for urgent tax changes that could spark a “resurgence” in the North Sea oil industry. Picture: Danny Lawson/PA Wire

Environmentalists reacted with predictable outrage last week to news that plans for Cambo could be revived.

Friends of the Earth Scotland said: “Exploiting Cambo will do nothing for soaring energy bills but it will further risk our collective safety by worsening climate change.”

Greenpeace declared: “Cambo’s oil won’t improve UK energy security since the kind that can be extracted from this field can’t be processed in UK refineries.”

However, a spokesperson for Ithaca said it was incorrect that oil from Cambo couldn’t be processed by any UK refinery.

Mr Myerson said there appeared to be a good case to be made for Cambo on both energy security and environmental grounds, as the output from the field could materially reduce the need for more carbon intensive imports.

Unless alternative ‘clean’ power sources such as hydrogen are made available on the required scale much faster than expected or use of energy plunges the UK will need to import huge amounts of oil and gas in coming decades.

Mr Myerson noted that under the plans developed to date, the carbon intensity of production from Cambo would be around half that of output from the average field. He said Ithaca would review the plans prepared by Siccar Point and Shell in detail to make sure any development is sustainable, in consultation with partners and regulators.

Asked about the prospect of facing opposition from environmentalists, Mr Myerson insisted Ithaca wanted to have an open debate with any interested parties.

READ MORE: North Sea firm targets big gas prospects after making 'significant' oil find 

Those who have concerns about Cambo should take Ithaca at its word and engage in debate. The fear must be, however, that the green lobby will engage in the usual sloganeering and that the complexities of the arguments involved will be drowned out.

We can expect calls for a just transition away from fossil fuel dependence to increase in volume while we wait for the Scottish Government to provide details of how it thinks that could be achieved.

In March cabinet secretary for net zero Michael Matheson said the Energy Strategy and Just Transition Plan ministers had said would be published this Spring wouldn’t be published until the Autumn.

While the Scottish Government’s views on nuclear power and Cambo seem to be fixed, Mr Matheson said: “We are working to deliver the ESJTP in the context of a fast-moving energy landscape. The revised timeline will allow time for robust evidence and analysis to be produced and take account of ongoing projects, which are progressing at pace in response to the rapidly evolving global energy environment.”