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Letters / Shetland lost out on LPG

The 11th of July letter by Mr James Paton (We lost out big time) draws attention to the negotiations which are reported to be underway between the SIC and EnQuest as manager and part equity holder for the conditions and rent etc regarding the renewal of the SVT lease. Please also remember SGT.

We lost out big time

The object surely is to secure a much more beneficial deal for Shetland, and the SIC should not be shanghaied or sold out as in the present arrangement, and to obtain further benefits from other potential streams/derivatives as they become available.

It is to his credit that he has raised these concerns in print for all Shetland to see, and we should wish the SIC negotiators success to secure a good deal, which should be brought to the attention of the public for discussion and prior agreement before signature.

The availability of energy and derivatives (eg ammonia urea etc for agriculture) at reasonable (Shetland tariff etc) prices should be part of the arrangement – but beware of contracts within contracts which might prevent this being done, perhaps as an excuse by EnQuest or its commercial partners in regard to confidentiality etc which may prevent that, to Shetland’s disadvantage.

From the best of my memory I cite events over 40 years ago, and why LPG supplies from Sullom Voe were not available to Shetlanders, whereby expensive bottled gas continued to be imported from south.

When SVT was envisioned, the oil producers were concerned but acknowledged that the UK Government would take the lion’s share of oil, but the LPG (from the stabilisation of the crude) was lower in everyone’s thoughts.

Endeavours were made to keep the government’s hands away from LPG: two major oil companies pre-empted the situation by selling their LPG entitlements to a large company located in the USA. A product exchange in the USA may have been the other leg of the arrangement.

At a point after that the British National Oil Corporation (BNOC) was formed, who were then entitled to take 50 per cent and market the production.

However they had to honour the deal that the two oil companies had made committing their LPG entitlement in a contract to the USA.

In about 1978 a minor participant, Tricentrol, put forward plans for an LPG bottling plant at Orka Voe, but failed to obtain supplies from other small participants, larger producers or BNOC who had other fish to fry and did not want to invest in Tricentrol’s proposition.

Hence the venture failed much to Shetland’s disappointment and commercial disadvantage.

Shetland was not even at the discussions when the SVT operator and participants threw out Trecentrol’s proposal. Shetland was powerless to prevent that.

It would behove the SIC to take that experience into consideration when negotiating the conditions of any new lease to avoid being mere spectators over Shetland’s future.

In addition to securing an acceptable deal surely it would be more easily accomplished if Shetland had greater autonomy and more power and say over developments at Sullom Voe.

Cecil Robertson


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