The award of a near £12m contract will advance plans for significant further expansion of Lerwick Harbour's deep-water facilities for the offshore oil and gas industry, despite the recent oil price collapse.

The quay at Dales Voe South is to be extended to support subsea developments and decommissioning.

Lerwick Port Authority has commissioned the Scottish business unit of civil engineers BAM Nuttall as main contractor for the £11.95 million investment to lengthen the quay to 130 metres. Part of the Dutch construction group Royal BAM, BAM Nuttall specialises in complex marine construction, which the port authority says has a strong track record working around Scotland and on the Western and Northern Isles.

Lerwick has been servicing the offshore industry for over 50 years and is working to establish its reputation as a location for decommissioning. The port authority says the extended quay will provide deep-water, versatile berthing and heavy load capacity to take an offshore structure in a single lift, with a substantial, expanded laydown area.

Captain Calum Grains, Lerwick Port Authority Deputy Chief Executive and Harbourmaster, said: "The contract marks an important step in further developing Lerwick's role as a leading centre of offshore industry operations. Dales Voe South is another value-added expansion and reflects our confidence in future activity, including ongoing subsea projects, particularly west of Shetland, and the developing decommissioning and offshore renewable markets."

The Scottish Government and Highlands and Islands Enterprise, are providing £2.39 million in grant for the project, with Bank of Scotland supporting the port authority's investment.

Work will begin in April, with completion due in April 2016. At peak, BAM expects up to 40 people to be employed directly in the construction of the new facility, with wider benefits spreading to local suppliers and subcontractors.

BAM Nuttall's Business Unit Manager for Scotland, Dougie Grant said: 'We've been tracking the proposals for Dales Voe for over a year now and we're delighted to have been chosen by the port authority as their construction partner. We understand the positive impact this scale of investment can have locally and we look forward to engaging proactively with the Shetland community to ensure this benefit is fully realised."

Civil Engineers, Arch Henderson LLP, are responsible for design and project management of one of the largest infrastructure developments in recent years in the port authority's on-going programme.

The contract will extend the quay by around 75 metres, with a load-bearing capacity of 60 tonnes per square metre, which the authority says makes it unique in Scotland. It will have 12.5 metres water depth alongside, like the existing quay, amongst the deepest of its type in Scotland. The sheltered voe, located between oil basins east and west Shetland, has 24-hour access to the North Sea.