UK oil firm Siccar Point Energy is, with its partner Shell, delaying the planned sanction for the Cambo offshore project to 2021.
Siccar, the operator of the project, blamed the decision on "the unprecedented worldwide macroeconomic dislocation resulting from Covid-19."
The Cambo field, located 125km northwest of the Shetland Islands and in a water depth of 1100m, was discovered in 2002, and subsequently had 4 appraisal wells drilled up to 2012 and a final successful appraisal well was drilled and flow tested by Siccar Point during the summer of 2018.
According to Siccar, Cambo is one of the largest undeveloped fields in the UKCS and will open-up other prospects for potential development in the area.
The partners had been planning to bring the project to a Final Investment Decision (‘FID’) in the third quarter of 2020.
"This will now be targeted for the second half of 2021, subject to the approval of the necessary license extension, a request for which has been submitted to the Oil and Gas Authority," Siccar said.
Jonathan Roger, CEO of Siccar Point, commented: “Cambo remains an extremely attractive development with compelling economics. However, given the uncertainty of the global situation, including whether any people, goods, and services can be mobilized in OECD countries, it makes sense to hold-off final approval until some normality returns to the market and a clear and robust path forward can again be established.
In the meantime, Roger said, Siccar Point is very well positioned with respect to this downturn having both substantial cash balances and very full hedging for 2020 and 2021.
"During the period of delay, we will continue to mature key aspects of the project to facilitate a swift and efficient ramp-up when market conditions stabilize," Roger added.
Siccar Point in August last year awarded an exclusive Front-End Engineering and Design (FEED) contract to Sembcorp Marine for the design of a Sevan cylindrical FPSO for the Cambo field development on the UK Continental Shelf. FEED work was also awarded to Baker Hughes for wells, subsea and riser systems.