Hans J Marter

3 February, 2009

THE CHAIRMAN of the council's harbour board in Shetland has called on the oil industry to join them in talks to secure the future viability of port operations at the Sullom Voe Terminal.

Councillor Alastair Cooper's plea came after the board agreed to hike harbour dues by 17 per cent to secure the profitability of the council operated port.

During a board meeting yesterday (Monday) the oil industry was accused of giving unreliable forecasts for oil throughput, as well as not responding to council requests to discuss the future.

The council is faced with £1.7 million less in income than expected, due to less North Sea oil being exported from the terminal.

In addition, the Schiehallion floating production vessel, to the West of Shetland, was out of action for three months last summer due to urgent repairs, which resulted in significantly less business for the port's tugs and pilot boats handling the shuttle tanker Loch Rannoch.

The transfer of Schiehallion oil presently accounts for 40 per cent of business at the port.

As a consequence, the harbour operation only made £2.3 million in profit rather than £4 million as budgeted for and required for the council's own investment programme.

In 2008, the number of tankers using Sullom Voe dropped to 184, the lowest ever recorded in more than 30 years of operation.

Yesterday the board heard harbour dues would have needed to be increased by 37 per cent in 2009/10 should the council adhere to its policy of making £4 million in profits.

Instead they settled for a projected profit of £2.5 million and approved a 17 per cent increase to compensate for a continued drop in throughput from the East of Shetland basin as well as for another five months period of Schiehallion repairs later this summer.

Terminal manager Lindsay Boswell, a member of the harbour board, came under pressure yesterday from members about why the industry's forecast were so much off the mark.

Board member Jim Tait said: "If we are not getting accurate predictions it is impossible for this board to set charges."

Mr Boswell said the industry had access to the best oil production forecasts available, and added that 2008 had been a particularly difficult year with volatile oil prices.

And he denied that the industry was not interested in a dialogue with the council. In fact, he said, the dialogue had already commenced following the last meeting of the Sullom Voe Association last month.

"The dialogue has commenced around the Sullom Voe Association, but this now is a matter for further discussion.

"We are disappointed with the increase of 17 per cent in harbour charges and call on the council to review this and make efficiency savings," he said.

Speaking after the meeting, Mr Cooper said 2009 would be a hard year for the board as it needed to look at the short, medium and long term future of the oil port.

"For two and a half years we have been discussing with the industry the need for a dialogue, and it has got no further than that. They recognise the need for a dialogue but there has been no substantive discussion on the short, medium and long term future of the terminal. We have not had any in depth discussion.

"The relationship with the oil industry is not bad in the way that there would be antagonism between the industry and the council, but it is not as pro-active as I have seen it in the past.

"We need to match our workforce to the needs of the clients and then the clients have to respect that they then have to pay the going rate," Mr Cooper said.