The planned entry of Italian oil major Eni “de-risks” the Cambo oilfield in the West of Shetland, owner Ithaca Energy has said.
An exclusivity agreement was unveiled on Wednesday morning for a merger between Ithaca Energy (LON: ITH) and Eni’s (BIT: ENI) UK business, giving the pair four weeks to combine – and adding Eni to the roster on the controversial oilfield which is 100% owned by Ithaca.
Cambo, once hoped to reach a final investment decision in 2022, has been in doldrums due to changes to the UK Government windfall tax and the exit of partner Shell last year.
The licence was due to lapse this weekend, however Ithaca today announced a two-year extension being granted by the regulator to March 31, 2026.
Eni’s entry could help de-risk the development, Ithaca chairman Gilad Myerson told Energy Voice.
Asked whether Ithaca would sanction the project with only Eni as partner, he said: “We would look into different options. Obviously having potentially having Eni as a core partner in Cambo de-risks the project. They add a lot of operational expertise and development experience.
“Most large projects have two or three partners, and therefore we would remain open to bringing in additional partners.
© Supplied by DCT/ Kenny Elrick“On the exact sanctioning timing, we really need to first understand the fiscal environment and government support for additional developments.
“I think it’s clear to everyone that the UK population requires this energy, the question is if the government will make the right decisions to develop these projects or support the development of these projects locally versus importing energy from abroad.”
Mr Myerson would not be drawn on the exact timeline, with questions over whether an FID would have to wait until after the UK holds its general election.
“It’s still too early to say. We are very happy that the NSTA has seen us as a credible and viable operator of Cambo and extended our licence.
“Together with the NSTA and with the Treasury we will find the appropriate timeline that that also helps deal with the political uncertainty.”
Cambo: Climate battleground
© PACambo has been a battleground for climate protestors, reaching a peak in December 2021 when Shell said it wouldn’t invest in the scheme.
Protestors argue the oil would be exported, while industry notes that’s due to a lack of refineries in the UK – as has been the case for decades – but oil is imported back as refined products.
On the licence extension, NGO Uplift said it will do nothing to bring down bills.
Executive director Tessa Khan said: “Cambo’s owners have been forced to extend the licence again and again because there is absolutely no public case for developing this doomed field, only massive harm.
“The government has admitted that new fields won’t bring down energy bills or increase UK energy security. This is oil for export that only Ithaca, which owns the reserves, will benefit from
“This government seems intent on inflicting as much harm as it can while it can, just to enrich a few already obscenely wealthy oil execs and their shareholders. Meanwhile, millions of British households are still struggling with unaffordable energy bills.
“We need a government prepared to stop their endless profiteering and pollution by shifting the UK to clean, affordable homegrown renewable energy. Developing Cambo would only prolong it.”
