Aberdeenshire Council could make a financial contribution to the expansion of Aberdeen Harbour as part of the Aberdeen City Region Deal, if councillors agree next week.
To accommodate existing and future demands for harbour services in the region, including support for decommissioning, offshore renewables, large cruise liners and a bigger Northern Isles ferry, Aberdeen Harbour Board is expanding into the Bay of Nigg, south of the existing harbour.
Already a key commercial port supporting the economy of the whole of the north east of Scotland, the expansion project has both regional and national significance with potential to generate £0.8billion GVA to the regional economy per year.
Land-based construction, road strengthening and breakwater construction work began earlier this year and the project’s target completion date is June 2020.
The overall cost of the core harbour project, including major road improvements, is expected to be around £350million, which will mostly be privately funded.
A key project of the Aberdeen City Region Deal, the Aberdeen Harbour expansion includes a commitment of up to £11million of funding in total from Aberdeenshire and Aberdeen City councils to fund supporting infrastructure. It is anticipated that return on total public sector investment would be £42.53 per £1 invested.
Members of Aberdeenshire Council’s Infrastructure Services Committee will next week be asked to approve a £5.5million contribution and the Aberdeen Harbour Business Case.
The Business Case sets out the strategic, commercial and economic case for the project and the need for the funding to support port infrastructure.
If councillors agree, the contribution is expected to be matched by Aberdeen City Council and the £11million used for supporting infrastructure.
The harbour’s expansion into Nigg Bay is a Scottish Government National Planning Framework Project and facilities would include 1,400 metres of new quay with a water depth of up to 10.5 metres.
An independent study estimates the development will generate an additional £1billion per annum for the economy by 2035. The project could also create an additional 5,500 additional jobs within Aberdeenshire and Aberdeen City combined.
In addition to the funding proposed within the City Region Deal, Scottish Enterprise will contribute a further £11.7million for infrastructure and facilities. This is contingent on the two local authorities’ financial contributions.
The economic benefits for Aberdeenshire include supporting the area’s oil and gas subsea and decommissioning industries which use the port, and facilities to attract larger and more cruise ships. The new facilities would also allow for servicing of offshore renewables and diversification in the offshore energy industry.
With increasing inspection, repair and maintenance requirements, it is important that the ports of north east Scotland are able to support the activities of the subsea industry and further exploration activity.
To be able to do this, longer and deeper quays are essential. The opportunities for decommissioning in the north east are also significant and the harbour is positioning itself, along with Peterhead Port, to provide support for well plugging and abandonment work.
This is expected to account for nearly half of the estimated £17.6billion of decommissioning spend in Scotland up to 2025. After 2025 there is expected to be a significant increase in activity in this area.
Diversification into this area fits the Regional Economic Strategy’s aims to accelerate the transition from current oil and gas work to a more balanced economy by maximising new technologies and growing clusters within the oil and gas industry.
The new Aberdeen Harbour facilities would also become the main port for large cruise vessels visiting the region, increasing tourism spend and visitor numbers to the north east.
The facility to support significantly larger cruise ships with up to 3,000 passengers per vessel is expected to provide additional income of 13.5million Euros (£12.2million) to Aberdeenshire and Aberdeen City by 2035.
It is thought that by this time the area could have as many as 85 vessels visiting per year, bringing large numbers of people into the area to explore and enjoy what it has to offer.
The average spend in the local economy per cruise ship visit is expected to be in the region of 160,000 Euros (£145,600), based on a ship with 1,800 passengers and 680 crew.
Leader of Aberdeenshire Council and chair of the City Region Deal Joint Committee, Jim Gifford, said: “While we clearly have a number of our own ports in Aberdeenshire, Aberdeen Harbour is of regional significance in terms of the opportunity it provides for the diversification of the area’s economy relating to oil and gas and the cruise ship market.
“The focus of our Regional Economic Strategy is principally about diversification of oil and gas and tourism and so contributing to the project aligns with Aberdeenshire’s wider aims.
“The benefits to Aberdeenshire of the Aberdeen Harbour expansion as part of the City Region Deal are likely to be very high, which is why this financial support is proposed.”