Council / Sullom Voe harbour will never be ‘loss maker’ for SIC, chief executive says
SULLOM Voe harbour “will never operate at a loss” for Shetland Islands Council, its chief executive has said.
Maggie Sandison said they have been “repeatedly clear” with the oil industry that activities at the harbour, which is owned and operated by the council, will not continue if the SIC is not making a profit from it.
The council currently receives between £6-8 million annual from exports from the port of Sullom Voe, the full council meeting heard on Wednesday.
Business challenges at Sullom Voe was rated as a “high” risk to council finances, the SIC’s latest risk register stated, with a risk that the terminal could close between 2030-35 if it does not secure long-term business.
North Mainland councillor Andrew Hall was particularly concerned, saying that it was not that long ago the council was earning £20 million from Sullom Voe harbour.
He said with the contribution continuing to fall, in a couple of years it “may go down to zero.”
Hall questioned what would happen if Sullom Voe harbour was “actually a loss maker” for the SIC.
But Sandison said they would not be allowed to operate the harbour at a loss, and to use public money to sustain a private sector.
“We have been repeatedly clear, and always clear with the industry that use Sullom Voe harbour, that we will never operate at a loss,” she told councillors.
“It’s quite a significant commercial activity, we shouldn’t do that without benefits.
“There should always be profit …with something that carries that level of risk.”
The council’s chief executive said she was in “no doubt” that the oil industry understood the SIC’s position, and that the harbour could not operate if the SIC was not generating a benefit which supported its work.
“Why would we do it otherwise?” she asked.
Hall said he was still concerned about the fall in income from Sullom Voe harbour, which he called “quite a steep drop”.
He questioned if the fall to zero could happen in the “not too distant future”.
Sandison admitted that there had been a “change in oil activity” over the year, but said she was confident there would be a long-term need for Sullom Voe harbour.
“There’s an expectation that there will continue to be activity that will cover the cost and provide a level of income to the organisation,” she added.
Councillor Allison Duncan asked if there was any update on the Clair field, with Shetland News reporting in April that a final decision had not been made on whether oil would continue to flow through Sullom Voe in the long-term.
Sandison said that was the “discussion I was alluding to”, and said she did not have any update that she could share with councillors at present.
She added that, when she did, it would come to the SIC in the form of an exempt report.
The Brent and Ninian pipelines were at “end of life” she said, with Brent being decommissioned “as we speak”.
There was the expectation that Ninian could be decommissioned between 2030 and 2035, Sandison added.
She said there had been no discussions about oil from the potential Rosebank development coming to Shetland, saying that it was “never intended” that any of that activity would tie back to the isles.
Instead oil from Rosebank is set to be processed by a floating production storage and offloading (FPSO) vessel.
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