Monday 24 June 2024
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Letters / We lost out big time

Given your article on the forthcoming negotiations about Sullom Voe Terminal, I would like to remind readers of the SIC ‘Oil Renegotiation Group’, as was, and the very tortuous process in went through in the late 80s, finally succumbing to the appalling BP scaremongering rental ‘deal’.

The council had a sound case in Scottish law for the rental figure. It ended up agreeing to a one-off payment in the region of £54million and about £1million per year as I recall, which has reduced over time to now £500k.

It could have had nearer £100million per year. Even half that per year would have been very reasonable on the council’s part.

The council should dig out the papers from that time and the case prepared by their then barrister with Edinburgh lawyers Dundas & Wilson in the background. They cost us a lot of money and we chose to ignore it.

The council also appointed consultants to train us how to negotiate – game theory etc. It seemed the ‘training’ was also ignored. Pay for advice, then not take it.

It may well be that Scottish law has changed, however the rental then should have been based on the value of the developed land, not the relative worthless heather/peat moorland.

We lost out big time because we blinked and caved in to BP pleading poverty and threatening the terminal would become untenable. Absolute rubbish.

Anyone in the oil industry – I had been a cargo surveyor for crude buyers just before becoming a councillor – knew the value going through the terminal. One tanker load was worth about £10million, often much more.

I am not suggesting that the value of Sullom Voe is the same as it was in the late 80s. We know throughput is much, much less. However, an independent evaluation of the site is required, and if the law remains the same, rental should be based on that evaluation first and foremost.

If rental was to be based on Brent Crude – it’s about $80 (or £64) per barrel at the moment – a tanker load of 500,000 barrels is worth £32 million.

It takes about three to four days for a tanker load to come in. That’s about 100 tankers a year, taking away £3,200 million away.

It strikes me that £100million per year in rent, about three per cent, sounds about right. I haven’t even factored in the gas. The hydrogen/ammonia is not going to be worth any less than it is now.

We should wish our councillors all the very best and be right behind them in the coming negotiations, especially given a new boom era in hydrogen/ammonia on the horizon.

Mindful of the atrocious deal on the rental back in 1990/91 and the pittance agreed from SSE Renewables (Viking Energy to some) through the community benefit(?) fund, please, I beg the council, do not sell Shetland short this time.

I hope our chief executive’s words about ‘community benefit’ will indeed result in a just benefit.

James J Paton

See also:

Council seeks to renegotiate Sullom Voe lease


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