Why has Shell really decided to ditch the Cambo oil field?

One of the unfortunate side effects of a steeply rising oil price this year is that it seems to have undermined the potential profitability of the Cambo oil field off the Shetlands. Announcing this morning that it was pulling out of the project, in which it had a 30 per cent share, Shell said it had re-examined the figures and ‘concluded the economic case for investment in this project is not strong enough at this time.’

No, it doesn’t make much sense to me, either. If Shell was happy to go ahead with the Cambo project this time last year, when oil was $40 a barrel it is hard to see what has changed to make it less economic with oil at $70 a barrel and the longer-term outlook for oil prices much higher. I suspect that it would be much closer to the truth to say that Shell has decided that opening a new oil field in the North Sea has become too much of a political liability and that its board is too feeble to stand up to environmental activists who have targeted the company, and who are bound to turn up at every AGM from now on and glue themselves to the lectern.