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Energy / Jobs at risk at Sullom Voe Terminal as low oil price and coronavirus impacts North Sea sector

BP reported a gas leak at Sullom Voe oil terminal on saturday afternoon.

THERE could be further job losses at Sullom Voe Terminal as operator EnQuest looks to slash costs across the company, with a falling oil price and the coronavirus crisis having a big impact in the North Sea.

All EnQuest employees at the terminal have been told they will be put at risk of redundancy, according to Unite regional officer John Boland.

He said that also applies to EnQuest’s offshore staff in the North Sea.

It comes in addition to EnQuest announcing last year that it would cut 80 roles at the terminal in a bid to reduce costs.

Strike action from Unite members at Sullom Voe Terminal, meanwhile, was suspended last week to allow workers to be balloted on an improved offer on terms and conditions from employer EnQuest.

Boland told Shetland News that Unite is pressing for EnQuest to explore using the UK Government’s newly-established measures to protect jobs during the coronavirus pandemic instead of laying staff off.

“We have stated to EnQuest that we would expect them to consider the UK Government job retention scheme as a means of offsetting any proposed redundancies,” he said.

Boland said that Unite will look to highlight in future discussions the fact that Sullom Voe Terminal already suffered job losses last year.

A collective consultation period will begin in the near future, but how many redundancies will be made – or where they will come from – is not yet known.

A spokesperson for EnQuest said: “In line with operators in the North Sea, EnQuest PLC is reviewing its operations and making the necessary adjustments to lower its cost base while maintaining safe operations during this low oil price environment.

“The company does not comment in detail on specific plans or changes to the organisation.”

On 19 March EnQuest said in a financial update that the company is targeting base operating expenditure savings of around $150 million over 2020 – a cut of around 30 per cent.

EnQuest said this is driven primarily by cost savings at the Heather and Thistle oil fields in the North Sea, where its production will not be restarted after being suspended last year for repairs.

The price of oil has slumped recently, with shares in oil companies falling as a result. A price war between Saudi Arabia and Russia during the coronavirus crisis has contributed to the collapse.

EnQuest’s planned savings, however, would also be achieved through the “removal of non-critical and discretionary operating expenditures and support costs”.

Cash capital expenditure for 2020 is also expected to be reduced by around $80 million to circa $150 million.

EnQuest chief executive Amjad Bseisu said: “Given the prevailing low oil price environment, we are taking decisive action to reduce operating and capital expenditure in 2020 and beyond, with a view to targeting cash flow breakeven of c.$35/Boe [barrel of oil equivalent] in 2021.”

North mainland councillor and chairman of Shetland Islands Council development committee Alastair Cooper said in addition to employment, maintaining environmental safety at Sullom Voe was a key issue.

“We have to protect the environment because at the end of the day the whole of the Shetland industry depends on a pristine environment,” he said.

EnQuest took over the running of Sullom Voe Terminal from BP in December 2017 and it has since been working on restructuring its operations in order to win new business.

In its first year at the helm, operating costs at the terminal were cut by a quarter from £200 million to £150 million.

Energy giant BP is currently reviewing whether to continue sending oil from the Clair field by pipeline to Sullom Voe Terminal, and it is thought that if BP chooses to bypass Shetland then the terminal could close as soon as 2025.

Earlier this month EnQuest implemented a phased reduction in the number of personnel at Sullom Voe Terminal as a precaution in response to the coronavirus situation.

The operator is reviewing the work activity on-site daily and is postponing non-essential work where necessary.