Energy giant Shell has sold its stake in the second largest undeveloped oil and gas discovery in the UK North Sea.

The company has offloaded its 30% stake in the controversial Cambo oilfield west of Scotland to Ithaca Energy, subject to regulatory approval.

The deal means North Sea-focused Ithaca, which bought into Cambo with its $1.5 billion acquisition of Siccar Point Energy in July last year, now has a 100% working interest in the discovery.

The Cambo field is anticipated to deliver up to 170 million barrels of oil equivalent during its 25-year operational life.

Andy Bruce, chief executive of Ithaca Energy, said: “We are pleased to conclude the marketing process with Shell and to take full ownership of the Cambo development.

"Our primary focus continues to be the delivery of our buy, build and boost strategy, including the future development of Cambo, subject to fiscal conditions. We believe that Cambo has an important role to play in providing energy security and economic benefit to the UK, while reducing overall emissions intensity."

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Ithaca’s commitment to Cambo will encourage those keen to see the UK boost domestic supplies of oil and gas following Russia’s invasion of Ukraine, which caused energy prices to spiral last year. The UK Government responded to the upheaval by issuing more than 100 licences for North Sea exploration in July this year, which it said would protect jobs in the north-east of Scotland and improve energy security.

But the prospect of bringing another North Sea field into production will dismay environmental campaigners, who have voiced their opposition to Cambo and the development of other new fossil fuels projects.

Former First Minister Nicola Sturgeon stirred controversy when she declared she was opposed to bringing the Cambo field into production when Glasgow hosted the COP26 conference on climate change in November 2021, albeit power for granting licences for North Sea exploration is ultimately reserved to Westminster.

Campaigners made clear their opposition to Cambo by staging demonstrations outside the conference venue in Glasgow.

Shell, which had previously been working on Cambo with Siccar Point, subsequently withdrew from the project, declaring that the economics no longer stacked up. The oil giant then put its 30% stake in the discovery up for sale in May.

Shell and Ithaca agreed a marketing process to sell the stake in Cambo which gave Ithaca the right to increase its ownership if a deal was not secured with a third party.

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Ithaca said yesterday that the acquisition of the 30% stake has “minimal near-term cost exposure” and will be payable on the earlier of first oil being delivered or the receipt of proceeds of any subsequent sale of a working interest in Cambo by the company. 

Ithaca has expanded its presence in the North Sea with a series of deals since its acquisition by Delek Group of Israel in a deal that valued the firm at £1 billion 2017. In 2019, it bought the North Sea portfolio amassed by Chevron of the US for $2bn ($1.6bn), transforming it into one of the biggest players in the area.

That deal was followed by the acquisition of Siccar Point Energy first announced in April 2022, which in addition to the interest in Cambo included a 20% stake in the undeveloped Rosebank field north-west of Shetland. It also included stakes in the Schiehallion (11.8%) and Mariner (8.9%) fields, two of the top 10 producing fields in the UK at the time.

The company acquired the 40% stake in the North Sea Fotla discovery it did not previously own, and three exploration licences, from Spirit Energy Resources, in July.

Ithaca floated on the London stock market in November 2022, when it was valued at nearly $3bn.

The company has expressed concern over the introduction of a windfall tax on oil and gas profits, introduced in response to Russia’s invasion of Ukraine which caused global gas prices to soar.

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Reporting its interim results in August, Ithaca noted the UK Government’s move in June to water down the energy profits levy but said that the additional tax had “severely dampened” new investment in the North Sea this year. It reported that it had incurred energy profits levy charges of $223m in the period to June.