As hydrocarbon activity declines faster than expected, the markets intended to support the energy transition are not yet arriving at scale, creating commercial and strategic risk for ports heavily exposed to offshore energy. <\/p>\n
For ports such as Scotland\u2019s Port of Aberdeen, which traditionally traded in oil and gas and now heavily rely upon the offshore renewables market, this challenge is immediate and operational. <\/p>\n
The transition must be managed while maintaining energy security, protecting skills and sustaining the infrastructure investment required to support future low-carbon industries. <\/p>\n
\u201cWhat we\u2019re seeing is a much more rapid decline of oil and gas activity, right across from exploration and drilling through to operations and maintenance, which is bread and butter and accounts for about 60% of our business,\u201d says Bob Sanguinetti, chief executive, Port of Aberdeen. <\/p>\n
\u201cAt the same time we\u2019re seeing a delay to the arrival of offshore wind activity at scale.\u201d <\/p>\n
A widening gap <\/strong><\/p>\n Mr Sanguinetti says this misalignment is creating a widening gap between legacy and future markets. <\/p>\n Oil and gas activity is contracting at pace, while offshore wind, hydrogen and carbon capture projects remain subject to delays in planning and consenting, infrastructure enhancements, grid connection and investment decisions.<\/p>\n For ports like Aberdeen that have invested heavily in infrastructure to support renewables, the timing mismatch is particularly acute. <\/p>\n \u201cWe have invested significantly in the energy transition through the construction of South Harbour,\u201d Mr Sanguinetti explains. <\/p>\n \u201cThat\u2019s a GB\u00a3420 million project which we think places us very firmly in the bracket for supporting a large number of offshore windfarms off the northeast coast of Scotland. <\/p>\n \u201cBut we still rely very heavily on oil and gas activity for our revenues, with very limited revenues generated through offshore wind at this stage,despite seeing around 600 vessels every year.\u201d<\/p>\n Managing the transition <\/strong><\/p>\n Mr Sanguinetti says that managing the transition is not a short-term fluctuation but a structural challenge. <\/p>\n \u201cWe\u2019ve always known that this period would be the most challenging one,\u201d Mr Sanguinetti says, \u201cas we see a downsizing of one sector before the ramping up of another, while we need to service our loan and grow the new business on which South Harbour was predicated.\u201d <\/p>\n For ports seeking to reposition themselves, Mr Sanguinetti says that the first challenge is infrastructure. <\/p>\n Offshore wind and alternative fuels place very different demands on port estates, yet requirements are not always clear when investment decisions must be made. <\/p>\n \u201cWe need to make sure that we invest in the right infrastructure,\u201d he says, \u201cbut that\u2019s difficult when you don\u2019t have a clear understanding of what the new sector demands in terms of depth, quayside length, space and access.\u201d <\/p>\n This uncertainty complicates investment decisions. \u201cYou need confidence that you\u2019re going to get a return,\u201d Mr Sanguinetti continues. <\/p>\n \u201cSome of the upfront costs are significant, and ports need more clarity and confidence in the pipeline of projects that will come not just to Aberdeen, but to ports up and down the coast.\u201d <\/p>\n Collaboration and confidence <\/strong> <\/p>\n In this uncertain environment, collaboration becomes essential. <\/p>\n This is why Mr Sanguinetti believes ports, developers and the wider supply chain must engage earlier and more closely. <\/p>\n \u201cIf there are sufficient projects for everyone, then let\u2019s collaborate,\u201d he says. <\/p>\n \u201cWe\u2019re doing that already, but perhaps we need to do it better and closer with developers and the wider supply chain.\u201d <\/p>\n The implications extend well beyond ports. <\/p>\n \u201cCompanies across the country need to make investment decisions, recruit people and ensure they have the right skills to meet offshore wind demand as it gathers momentum,\u201d he adds. <\/p>\n Skills, stability and risk <\/strong><\/p>\n A recurring theme in the conversation with Mr Sanguinetti\u2019s is the need to treat energy holistically. <\/p>\n \u201cAt the highest level we need to treat energy as a single industry, going right across from oil and gas to renewables, including decommissioning,\u201d he says. <\/p>\n He is clear that oil and gas will remain part of the mix for decades. <\/p>\n \u201cWe\u2019re going to need oil and gas for decades alongside renewables because there is no alternative and energy demand continues to grow,\u201d he explains. <\/p>\n \u201cWe either extract it ourselves in an environmentally conscious way or import it at greater cost and with far higher environmental impact.\u201d <\/p>\n This perspective is closely tied to energy security. \u201cIf we lose control over those resources, it impacts national energy security.\u201d <\/p>\n In addition Mr Sanguinetti says that a stable environment is essential for continued investment. <\/p>\n \u201cWe need a stable environment where oil and gas companies have confidence to invest,\u201d he says. <\/p>\n \u201cThat generates economic activity, creates jobs and it\u2019s those very skills that will accelerate the transition to renewable energy.\u201d <\/p>\n Without that stability, the consequences are serious. \u201cWithout it, we risk a cliff edge,\u201d Mr Sanguinetti warns. \u201cThose skills will go elsewhere, where the return is more widely recognised and they will be lost forever.\u201d <\/p>\n The role of government <\/strong> <\/p>\n Government has a critical role to play in supporting both strands of the transition and that includes tackling structural barriers. <\/p>\n \u201cWe need clarity on timelines for offshore wind, hydrogen and carbon capture,\u201d he says. \u201cWe need to understand what will be required over the next 15 to 25 years, because that makes business cases easier to write.\u201d <\/p>\n \u201cIt\u2019s not just offshore wind projects,\u201d he explains. \u201cIt\u2019s the grid, connectivity and consenting, which at the moment is too slow and too cumbersome.\u201d <\/p>\n Mr Sanguinetti believes government should enable, not replace, private investment. \u201cInnovation will be delivered by the private sector,\u201d he says, \u201cbut government needs to provide the framework to incentivise that.\u201d <\/p>\n He points to the challenge of upfront costs. \u201cSome infrastructure is too expensive for a single port or developer,\u201d he explains. \u201cGovernment could take a stake in upfront investment and recover that over the life of the asset.\u201d <\/p>\n Diversification and resilience <\/strong><\/p>\n Alongside energy, diversification is central to Aberdeen\u2019s strategy forward. <\/p>\n \u201cThe more we diversify, the more resilience we build into a business that\u2019s been around for almost 900 years,\u201d Mr Sanguinetti says. <\/p>\n \u201cSouth Harbour has also been future-proofed. We\u2019ve built a service trench along the length of the quaysides,\u201d he explains. \u201cThat allows for future delivery of hydrogen, synthetic fuels or methanol without major disruption.\u201d <\/p>\n The port has set out an ambitious environmental strategy including its intent to become the UK\u2019s first net zero port by 2040. <\/p>\n Actions already taken include switching to renewable energy, converting workboats to HVO fuel, electrifying vehicles and upgrading lighting. <\/p>\n The port has also invested in shore power. \u201cWe now have the largest operational shore power system anywhere in the UK,\u201d he says. \u201cShips can plug in and switch off their diesel generators while alongside.\u201d <\/p>\n Partnership for delivery <\/strong><\/p>\n Looking ahead, Mr Sanguinetti is clear that ports cannot deliver the transition alone. <\/p>\n \u201cWe can\u2019t do this in isolation,\u201d he says. \u201cWe need partnership with the private sector and support from government.\u201d <\/p>\n For ports that have traditionally serviced oil and gas, the challenge is not choosing between old and new, but managing the space between them he says. <\/p>\n Stability, clarity and collaboration, Mr Sanguinetti argues, will determine whether ports successfully navigate this delicate point in the energy transition.<\/p>\n","protected":false},"excerpt":{"rendered":" Ports and terminals that have traditionally serviced the oil and gas sector are entering one of the most complex periods in their modern history.\u00a0 \u00a0\u00a0<\/p>\n","protected":false},"author":8,"featured_media":6000,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46,1376,8],"tags":[670,1733,2425,667],"sponsor":[],"class_list":["post-5999","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy-technology-greenport","category-greenport-exclusive","category-projects-initiatives-greenport","tag-energy-transition","tag-offshore-renewables","tag-oil-gas","tag-port-of-aberdeen"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts\/5999","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/comments?post=5999"}],"version-history":[{"count":1,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts\/5999\/revisions"}],"predecessor-version":[{"id":6001,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts\/5999\/revisions\/6001"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/media\/6000"}],"wp:attachment":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/media?parent=5999"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/categories?post=5999"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/tags?post=5999"},{"taxonomy":"sponsor","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/sponsor?post=5999"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}