Total and SIC sign ‘historic’ deal

Total Signing

DETAILS of the lease agreement between Shetland Islands Council and oil and gas giant Total are expected to be made public as early as next week.

The local authority in Shetland is set to earn millions of pounds from their involvement with the multi-national that is unlocking the vast gas reserves in the deep waters to the west of Shetland.


Total Exploration & Production UK is investing £2.5 billion into developing the Laggan and Tormore reservoirs, regarded as vital for energy security in the UK.

As part of the massive project, the company is building a £500 million gas plant in Shetland, next to the existing Sullom Voe Terminal.

The first gas is expected by 2014. Other gas discoveries made in the area west of Shetland could potentially come on stream at a later time.

On Friday, the project’s manager Robert Faulds was in Shetland to sign a “deed of recognition” with the council, confirming that all the leases between the SIC and Total have now been signed. Once these documents have been officially registered they will become public documents.


The short ceremony in the Shetland Museum and Archives was also attended by council chief executive Alistair Buchan, convener Sandy Cluness and vice-convener Josie Simpson.

Shetland Islands Council is expected to earn an as yet undisclosed seven figure sum annually based on the throughput as well as the price of gas. In addition, Total has agreed to pay an annual six figure sum in rent.

Council convener Sandy Cluness described the deal as “historic” adding that this “was not another Sullom Voe, but still a good deal”.


Back in the seventies, the local authority had laid the foundations for the isles’ huge financial reserves by negotiating regular income streams from the emerging offshore oil and gas industry.

These monies are today held in the Shetland Charitable Trust and in the council’s own Reserve Fund.

Speaking after the signing, Mr Cluness said: “This agreement will have a huge impact on life in Shetland as it is the first agreement with the sector in 30 years. It will give a substantial job boost and there is the potential for more work coming from this.”

Mr Faulds said: “This is a milestone for Total, and it is a milestone for the whole of the UK economy because this gives us access to a large part of the remaining gas reserves that we know today, which are in the west of Shetland.”

There will be a three to four year lead in time before any substantial sums of money will start to flow into council coffers, but the economic spin offs are already well under way with construction of the gas plant running on schedule.

Total plans to erect an accommodation block at nearby Sella Ness to house up to 800 workers employed on the construction site.

“This development creates a buzz around the place, and that is something we haven’t had for a long time,” Mr Cluness added.