Ports steer their way through the crisis

As Richard Ballantyne, chief executive of the British Ports Association notes, as soon as the price per barrel of oil crashed, many oil companies involved in North Sea production scaled back their activities. However, he points out that it wasn’t all bad for some ports.

“Although it’s been a very unsettling time, some ports involved in oil and gas servicing activities have done reasonably well and managed through crisis,” he comments.

Oil companies looked on the huge drop in demand as an opportunity to bring offshore rigs back into port for servicing and supply. Others, meanwhile, decided to lay up their rigs in deep-water ports like Cromarty Firth and Dundee. Similarly, many of the industry’s supply ships were forced to lay up in harbours around Scotland, which generated some revenues for ports. While the ports would have much preferred to see their revenues coming from an active oil and gas sector, the lay-up revenues have been useful.

This has been particularly true, Ballantyne points out, where the slowdown in other industries, such as construction and the motor trade, have impacted the flow of goods through ports.

One area where demand has grown significantly has been in the need for storage facilities for oil. Production is still going on, albeit at a lower level, and the oil companies have found their own storage capacities hitting their maximum level.
Landside facilities near ports quickly filled up and storage in ships tied up at the quayside became common.

“As a result, we have seen oil tankers parked up in harbours, used as mobile storage facilities, but quite how sustainable this is remains to be seen,” he says.

Naturally, the sector has looked to the government for help. However, Ballantyne says there has been concern in some parts of the industry that government attention has been taken up with other sectors, particularly the airlines, which have been more obvious difficulties. “There has not been a specific government tool to support ports,” he notes, although he concedes that “like other sectors some ports have had to use the furloughing scheme”.

By way of contrast with oil and gas, many ports have seen activity in the renewables sector continue much as normal.

“Revenues from port activities connected to offshore wind generation have held up pretty well and electricity demand has continued,” Ballantyne says.

A significant amount of construction activity in both onshore and offshore wind-power generation has continued through the pandemic, and that has helped ports.

The pandemic to one side, the energy sector as a whole is keeping one eye on what Brexit could mean for the UK’s economy as a whole, and for energy demand in particular. Ballantyne comments: “Time will tell what the wider implications of this will be for the economy.”