Shell Makes Progress on Finding Buyer for Controversial West of Shetland Oilfield Stake, Ithaca Energy Chairman Reveals
Oil giant Shell appears to be making headway in its efforts to find a buyer for its stake in a controversial West of Shetland oilfield. The chairman of Ithaca Energy, Gilad Myerson, indicated that the sales process is progressing well and is currently at the halfway point. Myerson expressed hope for a breakthrough soon so that the project can move towards a final investment decision (FID).
The decision by Shell to not move forward with its 30% share in the Cambo oilfield, announced over a year and a half ago, had a significant impact on the industry. Although there were rumors in August 2022 that the stake was being put up for auction, the company never confirmed this. In May, a formal six-month sales process commenced after an agreement was reached with Ithaca, the operator and holder of the remaining 70% interest in Cambo. Alan Bruce, the CEO of Ithaca, described this agreement as a meaningful step forward for the field.
Until Shell finds a buyer for its stake, the development of Cambo will be hindered, and the timeline for the long-awaited FID remains uncertain. Mr. Myerson’s comments following the release of Ithaca’s half-year results revealed that Shell’s progress is encouraging. He stated that once the sales process concludes, the project can continue towards the FID.
There is a possibility that Ithaca may assume Shell’s stake in Cambo and proceed with the project alone. However, this appears unlikely due to the high capital expenditure costs involved. If a buyer acquires Shell’s share and desires further exposure, Ithaca could potentially sell up to 19.99% of its own interest while retaining operatorship. Nevertheless, a resolution needs to be reached before an FID for Cambo can be considered.
Even if this significant milestone is achieved, questions will persist about the future of the scheme. The Cambo oilfield has faced unprecedented public opposition due to its estimated 800 million barrels of oil in-place, with the first phase expected to recover 170 million barrels. Climate campaigners have strongly opposed the project, and Shell’s withdrawal in 2021 was seen as a major blow. However, Shell maintains that its decision was based on project economics rather than pressure from campaigners.
While discussions surrounding Cambo have been limited recently due to its uncertain future, whoever acquires Shell’s stake will undoubtedly face intense scrutiny. The article concludes that adherence to the mentioned guidelines will ensure an article that flows smoothly for readers and covers different perspectives, providing valuable high-quality content.
