Ithaca Energy, a UK-based energy company, is set to purchase Shell's stake in the Cambo oilfield, making it the sole owner of the West of Shetland project. This development follows a fresh sales process initiated in May to identify a new buyer for Shell's stake after the supermajor announced its withdrawal from the project in December 2021.

Ithaca has now confirmed its acquisition of the stake with minimal near-term cost exposure, pending regulatory approval. This move aligns with Ithaca's ongoing strategy, which includes the future development of the Cambo oilfield, contingent on fiscal conditions.

Cambo is considered the second-largest untapped oil and gas discovery in the UK, holding an estimated 800 million barrels of oil in-place, with the first phase anticipated to recover 170 million barrels. Both the Cambo and Rosebank projects, in which Ithaca also holds a stake, have been focal points for climate campaigners.

While the financial details of the deal have not been disclosed, the terms involve payments tied to first oil production or subsequent farm-downs of the stake by Ithaca, subject to their final investment decision and regulatory approval. This suggests that Ithaca may consider further sales once the deal is completed.

Ashley Kelty, an analyst at Panmure Gordon, noted that the deal would add 52 million barrels of oil equivalent (mmboe) to Ithaca's resource base, removing partner-related complications following Shell's exit. This development enhances Ithaca's position west of Shetland, as the company now has stakes in the two largest UK Continental Shelf (UKCS) developments, Cambo and Rosebank.

Ithaca has been vocal about its concerns regarding the UK tax regime, particularly the windfall tax, which it claims has significantly impacted investment in the industry. The company had originally aimed to make a final investment decision on Cambo in the first half of 2023 but had warned of potential delays due to the windfall tax. It remains uncertain how this sale will affect the FID timeline.

This transaction has drawn criticism from environmental activists who argue that new oil and gas projects will exacerbate the climate crisis. They call for the government to halt new drilling in the North Sea and instead invest in energy-efficient home improvements and grid upgrades to support renewable energy development.