Ithaca buying Shell’s stake in UK’s ‘second largest undeveloped oil and gas discovery’

UK-headquartered energy giant Shell has wrapped up a marketing process with Ithaca Energy for its interest in the controversial Cambo offshore development, which the oil major decided to exit after an internal review.

Following the signing of an agreement with Shell in May 2023, which defined a marketing process for the oil major’s working interest in the Cambo field, Ithaca has agreed, subject to regulatory approval, to acquire the remaining 30 per cent stake in the field, consolidating its ownership to 100 per cent.

According to the company, this acquisition, which has minimal near-term cost exposure, will provide it with full control over the progression of the future development of Cambo, which is perceived to be “the second largest undeveloped oil and gas discovery” in the UK North Sea.

Ithaca explains that the consideration to Shell is payable on the achievement of the first oil or the receipt of proceeds of any subsequent sale of a working interest in Cambo. This is subject to the firm proceeding with FID and/or the NSTA providing development consent.

Alan Bruce, Chief Executive Officer of Ithaca Energy, commented: “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.”

Located in the West of Shetland region, the Cambo field is anticipated to deliver up to 170 million barrels of oil equivalent during its 25-year operational life and would also provide a further 53.5 billion cubic feet of gas. With its modern, energy-efficient design and potential for electrification, Ithaca believes that Cambo could be one of the lowest-emission intensity assets in the North Sea.

The field is expected to produce at less than half the CO₂ intensity than the average UK field, enabled by the FPSO design which includes features such as being fully electrification ready (subject to grid connection availability), zero routine flaring and the Sevan FPSO hull design reducing power demand.

Ithaca is actively working on expanding its portfolio which was demonstrated in July 2023 when the firm also signed a sale and purchase agreement with Spirit Energy Resources Limited to acquire the remaining stake in a gas discovery and three exploration licenses in the North Sea.

This will enable it to get the 40 per cent stake in the Fotla discovery it does not already own and three exploration licences – P.213 Area C, P.345 Area A and P.2536.