Royal Dutch Shell PLC (LSE:RDSB) dropped plans to develop the controversial Cambo oil field in the North Sea on commercial grounds.
"The economic case for investment in this project is not strong enough at this time, as well as having the potential for delays", the oil giant said in a statement.
Cambo is 30% owned by Shell, with Siccar Point Energy holding the remaining 70%. Siccar confirmed Shell had decided “to not progress its investment at this stage”.
The Cambo field, which is located off the Shetland islands, has been at the centre of campaigns by climate activists trying to stop new fossil fuel developments as the UK seeks to become a net zero carbon economy by 2050.
"This really should be the deathblow for Cambo," Philip Evans, oil campaigner at Greenpeace UK, said.
"With yet another key player turning its back on the scheme the government is cutting an increasingly lonely figure with their continued support for the oil field."
Meanwhile, Friends of the Earth tweeted: "The future of the project is now in serious doubt - as it should be."
"There is no need for a new oil field during a climate crisis."
Siccar CEO Jonathan Roger said: “Cambo remains critical to the UK’s energy security and economy. Whilst we are disappointed at Shell’s change of position, we remain confident about the qualities of a project that will not only create over 1,000 direct jobs as well as thousands more in the supply chain, but also help ease the UK’s transition to a low carbon future through responsibly produced domestic oil instead of becoming even more dependent on imports, with a relatively higher carbon intensity.“
He said Siccar will continue to engage with the UK government and wider stakeholders on the future development of Cambo.