Shell holds 30pc of the licence alongside private company Siccar Point Energy, which said it was “confident about the qualities” of the project and would “continue to engage” with the UK Government and others over its future. 

Shell has been in the North Sea for decades and accounts for about 10pc of the UK’s oil and gas production. Its decision marks a significant moment in the increasingly bitter battle over the pace and shape of the shift to greener energy. 

Despite efforts to shift to renewable energy, oil and gas still provide more than 75pc of total energy in the UK, fuelling most cars, boilers and 40pc of electricity.  

Backers of Cambo argue that the UK will become more reliant on imports from Russia and the Gulf  without it, while opponents fear it will only prolong the life of fossil fuels, adding to carbon emissions. 

The debate is particularly raw for the UK oil and gas industry which has suffered through the oil price crash and the pandemic and declining interest from majors due to dwindling reserves. 

Ministers have pledged to support the industry to develop cleaner hydrogen and carbon capture systems and run platforms on clean energy, helping replace lost oil and gas jobs, but this will also require significant private investment from the likes of Shell.  

Liam Kerr, Scottish Conservative shadow cabinet secretary for energy, said Cambo will be “massively beneficial to our economy, securing our domestic supply of oil and gas while demand is still high”.

“It’s obviously disappointing that Shell have pulled out from Cambo but it is a business decision for them to make,” he added.

“Recently, Nicola Sturgeon’s language about oil and gas has been more harmful than helpful. This will no doubt make it harder for energy companies to invest in oil and gas, and the skills and technology needed to reach carbon net zero.”