Shell is reportedly reconsidering its decision to pull out of the controversial Cambo oilfield, after escalating conflict in Ukraine sent energy prices soaring this month.
The energy giant had a 30 per cent stake in the project, with remaining 70 per cent being held by operator Siccar Point Energy.
Both parties had hoped the Cambo project could provide up to 800m barrels of oil.
However, work on the proposed development off the west coast of Shetland was paused in December after Shell decided to withdraw from the project, deciding the economic case for investment was “not strong enough”.
Since then, the price of oil has since soared above $100 per barrel, amid fears of supply shortages with the West ramping up sanctions on Russia.
This has included the UK committing to phasing out Russia oil over the course of the year, while the US has announced an immediate ban on Kremlin-backed fossil fuels.
Shell revealed in its annual report earlier this month that it is still working with Siccar Point Energy and the UK Government to “map out the next steps” of the Cambo project.
Sources told the BBC that although the company’s official position remains the same, it recognised the “economic, political and regulatory environment had changed enormously” in the past three months.
Government warms up to North Sea fossil fuels
Meanwhile, the government’s outlook on domestic fossil fuels has continued to evolve as it seeks to ensure secure energy supplies.
Prime Minister Boris Johnson is set to announce the UK’s energy strategy this month, which will emphasise the importance of boosting domestic projects.
Business Secretary Kwasi Kwarteng has called for further North Sea oil and gas exploration, while Johnson held a roundtable with fossil fuel leaders last week to discuss options to speed up new developments.
Shell has operated in the North Sea for decades and accounts for around 10 per cent of the UK’s oil and gas production.
Environmental groups have long opposed the oil field, warning it would jeopardise hundreds of species in the ocean, while also raising questions over its potential benefits.
Commenting on the latest reports, Friends of the Earth energy campaigner, Danny Gross, said: “Developing the Cambo oilfield would do nothing to reduce soaring fuel bills. As 80 per cent of the oil extracted in the UK is exported, it wouldn’t meaningfully improve our energy security either.”
Last November, Scotland’s First Minister Nicola Sturgeon said the project should not go ahead.
This followed months of pressure from opposition parties and campaigners for the Scottish Government to make its position on Cambo clear.
Industry body Oil and Gas UK previously said blocking long-planned energy projects like Cambo would risk leaving the UK at the mercy of global energy shortages.