Mr Rennilson recommends the yard be for multi use

The sale of Nigg can not go ahead until a dispute over the lease of a strip of land is resolved.

There have been concerns the site will deteriorate to a state beyond saving.

Highland Council planning boss John Rennilson said the authority should look at the possibility of pursuing a compulsory purchase order next year.

In a report to Wednesday's planning, environment and development committee, Mr Rennilson said it would be inappropriate to begin the process of trying to use statutory powers now.

KBR wishes to dispose of both their site and their lease of the Wakelyn Trust land at Nigg but not at any price John Rennilson Planning director Effort to wake a sleeping giant

He said the council should continue its dialogue with the parties involved with the yard, including US engineering giant KBR, prospective new owners DSM and the Wakelyn Trust.

However, Mr Rennilson said preparations should begin for the possibility of the serving of an order at some stage in the early part of 2008.

KBR holds the long-term lease for the southern part from the trust.

In his report, Mr Rennilson said: "KBR wishes to dispose of both their site and their lease of the Wakelyn Trust land at Nigg but not at any price.

"The current sticking point appears to be the price that KBR are prepared to pay to the trust for releasing them from their liability to restore the land to foreshore once activities have ceased on the site.

"There are differing interpretations of the terms of the lease and of the value that could be attached to the release of this clause."

Highly paid

The yard was built during the 1970s to service the construction and repair of North Sea oil and gas rigs and platforms.

It is a sprawling 238 acres (96.14 hectares) site of warehouses, a dry dock and quayside.