News / SIC looks at selling Sella Ness
SHETLAND Islands Council is considering selling off its oil port at Sullom Voe after hearing that it could earn an extra £2.5 million a year by investing the proceeds on the financial markets.
A financial model of the future of the port until 2050 has shown the council could expect to earn £2.8 million a year if it continues as the main operator.
However if it sold the port for the estimated value of £71.7 million, it could make £5.3 million a year by investing the cash on the stock markets, based on a projected 7.3 per cent return.
Councillors will start discussing the proposal next week as part of the authority’s long term financial plan.
The modelling exercise and a follow up report have been accepted by SOLACE, the Scottish local authority chief executive’s group, and by the Scottish government.
However the council has now commissioned an independent oil and gas analyst to strengthen its figures on potential throughput.
The number of oil tankers using the port has declined significantly since the heyday of North Sea oil in the 1980s when the council earned several million pounds a year from running the operation.
In recent years the majority of Sullom Voe’s oil has come from BP’s Schiehallion and Clair fields west of Shetland, both of which have suffered from interruptions to supply that have disrupted the council’s financial projections.
The port has played a significant role in keeping Shetland Islands Council afloat financially over the years, contributing to the high level of public services islanders had become accustomed to.
However now this income has declined substantially, the authority has been forced to question the viability of retaining the port as a round the clock operation.
SIC infrastructure director Maggie Sandison said that the council’s financial modelling showed that the current situation was not sustainable.
“What it shows is that the return on investment we get from running a harbour 24/7 is not as good as if we invested the same amount of money with our fund managers,” she said.
Sandison said they had been holding discussions with the oil industry at Sullom Voe on future options.
These include raising the level of harbour dues the industry pays, reducing the level of service the council provides or even closing the port altogether.
Meanwhile the council is relying on an independent expert to provide reliable figures on future tanker throughput on which it can base one of the most important financial decisions it has ever faced.
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