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The Herald (Scotland): £350m Shell investment to secure gas for 25 years

GRAEME SMITH April 10 2007

Shell will announce a £350m investment today which will safeguard hundreds of jobs and secure gas supplies for the next 25 years at two Scots plants.

The upgrade involving Mossmorran and St Fergus will lead to supplies from Norway being piped to the St Fergus terminal north of Peterhead.

It is expected that the Shell facilities at St Fergus will be upgraded over five years and that the Norwegian gas will allow the terminal to operate at full capacity.

Declining UK North Sea gas supplies have meant that it has been operating below capacity. The upgrade secures the future of around 300 jobs at St Fergus as well as generating more work for contractors who will be required over the period of the upgrade.

St Fergus is the landfall for four subsea pipelines. Natural gas fluid is separated by distillation into ethane, propane, butane and natural gasoline. The liquids are then transported via pipeline to the marine terminal at Braefoot Bay on the Firth of Forth for loading into tankers.

The benefits for the workforce are expected to include investment in trainee and apprenticeship programmes and skills development for the established workforce. There will also be benefits for the communities and the environment while the project supports the government’s thrust in ensuring the gas supply security in the UK and providing an outlet to the Norwegian Gas.

Gordon Brown, the Chancellor, will be in his native Fife to give details of the investment with Stewart Stevenson, SNP MSP for Banff and Buchan.

Mr Stevenson said last night: “Obviously I very much welcome the news. It is a vote of confidence in the North Sea oil and gas sector and it secures gas supplies for consumers across Scotland for many years to come.

“St Fergus is a very important part of the north east economy and where most of the UK’s gas comes ashore so it is a critical part of our energy infrastructure.”

Meanwhile, the world’s largest natural gas exporting countries plan to establish a high-level group on gas pricing, the Russian energy minister said yesterday, though his Iranian and Qatari counterparts denied the producers aim to establish a cartel.

Europe and the United States have expressed worries that the gas exporters are seeking to establish a cartel along the lines of Opec that would control production levels and pricing.

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