SIC and Total sign formal deal for gas plant to service Laggan-Tormore field

Shetland Islands Council and Total have formally signed off the financial deal allowing the company to build the gas plant at Sullom Voe for its £2.5 billion Laggan-Tormore field west of Shetland.

The ceremony at the Shetland Museum today marked the completion of the formal lease documentation relating to the deal clinched back in June last year to build the £500 million gas plant. The paperwork was so long and complicated it required signatures in 95 places before today’s symbolic signing.

In a short speech council convener Sandy Cluness said it had been 30 years or more since the council last signed a deal with an oil company. The negotiations are known to have been tough for the local authority but Mr Cluness said the relationship had been very good “once we got the deal signed”.

The lease details will become publicly available soon once the documents are formally registered with the Registers of Scotland.

Although the financial benefits of the agreement have yet to be revealed, Mr Cluness said there were many other bonuses for the community, including good jobs and new opportunities to help keep young people in the islands.

“The money is perhaps not as important as the overall impact and the contribution it is going to make to the community as a whole,” he said.

He has stated previously that the value of hosting the gas terminal on council and charitable trust land, including wages, should be in the region of £200 million over the 30-year lifespan of the plant.

Laggan-Tormore project manager Robert Faulds said the company was looking forward to coming to the islands and being integrated into the local community. He said it was a milestone deal for Total with the creation of its third hub in the UK which was a very important one for it and for Shetland and the UK.

Council chief executive Alistair Buchan commended his staff for their efforts in completing the deal, which he described as “a very ground-breaking agreement in this day and age”.

Work is progressing flat out at the new gas plant site next to the oil terminal. Mr Faulds said it was “pretty close” to being on schedule and the target of bringing the field on-stream in June 2014 was still “very achievable”.

Pipes are due to start being laid in the water next month. Most of the earthworks at the plant site are expected to be complete by the beginning of summer and the workers’ temporary accommodation blocks at Sella Ness are expected to be up by the end of summer.