Shetland Cambo Project on Hold Due to COVID-19

In the latest blow to the British oil and gas industry, Siccar Point Energy and Shell UK have confirmed plans to develop the Cambo field off the coast of the Shetland Islands have been put on hold until the coronavirus pandemic is under control. The field, which sits at a depth of 1100 metres, was discovered in 2002 and is operated by British-based oil and gas company Siccar Point Energy, in conjunction with joint venture partner Shell UK.

In August last year, the company announced it had awarded the Cambo Front End Engineering Design (FEED) contract to Singapore-based company Sembcorp Marine Limited. The plan was to develop a proprietary Sevan cylindrical floating production storage and offloading system (FPSO) for use in the Cambo field. The pair were on track to confirm a Final Investment Decision (FID) towards the end of 2020, though the COVID-19 pandemic has caused major interruptions.

Development plans pushed to 2021

A recent statement from Siccar Point Energy confirmed plans have now been pushed to the second half of 2021, with the company saying the decision was made "in light of the unprecedented worldwide macroeconomic dislocation resulting from Covid-19."

According to Siccar Point Energy, the Cambo field contains around 800 million barrels of oil and could emerge as a hugely lucrative opportunity for the UK Continental Shelf. While plans are temporarily on hold, Siccar Point Energy CEO Jonathan Roger asserts "Cambo remains an extremely attractive development with compelling economics." He adds that while the global situation remains uncertain, "it makes sense to hold-off final approval until some normality returns to the market and a clear and robust path forward can again be established."

Siccar Point Energy looks towards "swift and efficient ramp-up"

Investors were reassured with comments sanctioning the financial position of the company. "In the meantime, Siccar Point is very well positioned with respect to this downturn having both substantial cash balances and very full hedging for 2020 and 2021," says Roger. "During the period of delay, we will continue to mature key aspects of the project to facilitate a swift and efficient ramp-up when market conditions stabilise."

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