Shell has withdrawn from the contentious Cambo oil field development west of Shetland.
The corporation owned a 30% interest in the field, which has been heavily criticized by environmentalists.
The economic argument for investing in the North Atlantic project, according to Shell, is “not strong enough.”
Siccar Point Energy, the field’s majority investor, stated it will continue negotiations with the UK government over the field’s future.
Shell stated that it conducted “extensive screening” before making a decision in order to “ensure the highest possible returns for the business.”
According to a spokeswoman, “The economic rationale for investing in this project is now insufficient, and it also has the potential for delays.
“However, ongoing oil and gas investment in the United Kingdom is crucial to the country’s energy security.
“We think the North Sea – and Shell’s participation in it – has a key role to play in the UK’s energy mix, enabling a seamless transition to Britain’s low-carbon future.”
The Cambo oil field is located about 125 kilometers (75 miles) west of Shetland, in ocean depths ranging from 1,050 meters (3,445 feet) to 1,100 meters (3,445 feet) (3,609ft).
It was first permitted for exploration in 2001, and it has the potential to produce hundreds of millions of barrels of oil.
Drilling may begin as early as 2022 if the Oil and Gas Authority approves it, and last for 25 years.
The development “remains important” to the UK’s economy and energy security, according to project leader Siccar Point Energy.
Jonathan Roger, the CEO, stated: “While we are upset by Shell’s change of heart, we remain optimistic about the project’s prospects.
“It will not only generate over 1,000 direct employment and thousands more in the supply chain, but it will also aid the UK’s transition to a low-carbon future by supplying ethically produced local oil.
“In light of Shell’s decision, we are currently discussing possibilities with our contractors, supply chain, and other stakeholders.”