[A-List] BP watch: scaling down Shetland operations

["Michael Keaney" <michael.keaney@xxxxxx>]

Sullom Voe base to axe 225 jobs
DAVID ROSS
The Herald, 21 November 2002

ABOUT 225 jobs are to be lost at the Sullom Voe oil terminal in Shetland as
operator BP tries to cut its £72m running costs by almost half, it was
confirmed yesterday.

The news comes at a time when Shetland's fishing community is already in
difficulty. The island MSP last night called on the executive to make more
resources available to lessen the impact. However, unemployment is
relatively low, at just 1.5%, and, if anything, there is a labour shortage.

Everybody at the terminal should know their fate by the end of March, with
the first redundancies beginning by the middle of next year. About 375 will
be left on a site where more than 800 worked in the 1980s.

That was when Sullom Voe was producing and shipping 1.5 million barrels of
oil per day. However, current throughput, including oil from the west of
Shetland development, has dropped to about 600,000 barrels a day, and will
decline further over the next decade.

These figures forced BP to restructure its operations in order to extend the
competitive life of the terminal - which had been due to close in 2000 -
beyond the year 2015.

BP said that, of the 300 BP jobs at the site, about a quarter would be lost
in 2003. There was also likely to be about a 50% reduction in the 300
contractors employed.

Paul Dymond, general manager of the Sullom Voe terminal, said: "This review
is all about ensuring that the terminal's core business remains competitive.
Streamlining the operations is critical if we are to create a successful and
sustainable future."

He said the company would establish a liaison group with councillors and
Shetland Enterprise to help manage the effect of the change on the Shetland
economy.

Tavish Scott, LibDem MSP for Shetland, said: "This is an extremely serious
blow to the Shetland economy. The scale of the job losses is greater than
had been expected. It will have a serious impact on the Shetland economy.

"I will be speaking to Scottish ministers, and will be seeking additional
funding for Shetland Enterprise, through Highlands and Islands Enterprise.
Resources are needed to fund alternative jobs for those being made
redundant.

"Safety and environmental standards must not be allowed to drop. BP must
demonstrate to the Shetland public that the cutbacks will not reduce their
standards. Corners must not be cut in the harbour operations at Sullom Voe."

Dr Anne Black, deputy chief executive of Shetland Enterprise, was
optimistic: "It is obviously a great concern to lose these jobs. But the
labour market is tight, with just 1.5% unemployment compared to the Scottish
average of 3.8%, which is also low. So we are very hopeful that we can
retrain and reskill and keep these people in Shetland."

But Alistair Cooper, chairman of the community council for neighbouring
Mossbank, said the cuts would dig deep. "My concern is for the young folk in
the community."

BP operates Sullom Voe on behalf of a number of companies.Principal owners
are: BP, Shell, ExxonMobil, Kerr-McGee, TotalFinaElf, CNR International,
Agip, Murphy, Statoil, Cieco, Conoco, Nippon Oil, DNO, BG, ChevronTexaco,
OMV, Dana, Westoil.
Terminal Facts
In 1972, the Zetland County Council Act was passed, giving the local
authority considerable controls over the oil companies and initially a rent
of £12m a year.

Sullom Voe was one of the biggest construction sites in Europe, with up to
7000 people involved in building the terminal.

It went on to become one of the largest oil and liquified gas terminals in
Europe.