BP has confirmed that it plans to cut 225 jobs at its Sullom Voe oil terminal in Shetland.

The oil company said it aimed to cut its operating costs at the plant by decommissioning some of the processing capacity.

More than 500 workers are employed at the terminal which was built 21 years ago.

Community leaders are worried the scaling down operation will have a serious effect on local harbour and shipping jobs.

BP said it would ask all employees if they would consider taking voluntary redundancy.

It has traditionally provided high-earning, high-skilled jobs, so there is concern

Dr Ann Black Shetland Enterprise

The Sullom Voe plant is owned by a consortium of firms including BP Amoco and Shell.

It was built by 7,000 workers in 1981 and at its peak handled about 1.4 million barrels of oil a day, although the figure these days is closer to 600,000 barrels a day.

BP's sector of the terminal employs 300 staff and 300 contractors. It is used for processing thousands of gallons of raw fuel mined from its North Sea operations.

The company said last month it was looking to restructure the plant because of declining production in the North Sea.

It is considering decommissioning the terminal's gas plant and scrapping other oil processing equipment.

Paul Drymond, general manager of the terminal, said the review aimed to ensure the facility remained competitive.

He said: "The current size and scale of the organisation and the facilities are mismatched to the volumes of hydrocarbons we are now processing."

BP's review means:

• a quarter of the 300 jobs at the site will be lost by 2003

• plans to halve the 300 contractors employed at Sullom Voe

• BP hopes the site will remain competitive beyond 2015.

Dr Ann Black, deputy chief executive of Shetland Enterprise, said: "Oil is the third largest industry in the Shetland economy and is worth about �45m.

She pledged that public bodies would make every effort to retrain any workers made redundant at Sullom Voe.

Allan Wishart, chief executive of Lerwick Port Authority, said change was inevitable but he believed it was not all bad news.

'Serious blow'

"There is no doubt that there is over-capacity at the terminal," he said.

"The terminal will then have to adapt and change itself so it is more appropriate for the projected through-flow of oil in the future."

Mr Wishart said the terminal had "many plus points" like geographical location and good local business links and should survive if BP got its restructuring plans right.

Shetland MSP Tavish Scott said the job cuts were "a serious blow" to the economy already facing problems over the fishing industry.

He said the oil companies who owned the terminal had "an obligation" to help employees retrain and create new jobs.