The Sullom Voe terminal, in Shetland, is to be at the heart of a cost-cutting drive by oil giant BP.

BBC Scotland has obtained a leaked report which reveals the oil giant wants to halve its costs and decommission some of its processing capacity at the site.

More than 500 workers are emploed at the terminal but the overhaul effect on jobs is not yet known.

Future business may come from the west of Shetland

Sullom Voe plant is used for processing thousands of gallons of raw fuel mined from BP's North Sea operations.

The firm, which part-owns the site as one of a consortium of firms and is its biggest employer, would not elaborate on any restructuring but confirmed there had been talks between company management and employees on proposals.

But a spokesman insisted no decisions had yet been taken and could not say what impact the changes would have on jobs and activity at the site.

He said: "There needs to be restructuring of the terminal because of the declining production in the North Sea.

There needs to be restructuring of the terminal because of the declining production in the North Sea

A spokesman for BP

"There have got to be changes, but what exactly those changes are have still not been decided."

BP said its sector of the huge terminal, which employs 300 staff and more than 250 contractors, needs to become more competitive.

That drive for greater competitiveness means BP is looking at decommissioning the existing gas plant and building a smaller one at the site.

However, the oil industry in Shetland will still be hoping that new discoveries to the west of the islands could lead to a rekindling of the boom time of the 1980s.

Global competitiveness

At its peak, Sullom Voe, built 21 years ago, was handling about 1.4m barrels of oil a day, although the figure these days is closer to 600,000 barrels a day.

It was built by 7,000 workers, making it the world's largest construction project at the time.

Any changes at the terminal, owned by a consortium including BP Amoco and Shell, will be viewed with concern by islanders because oil makes a significant contribution to the local economy.

Meanwhile, in Aberdeen oil services group Weatherford International said it was looking to shed up to 200 jobs to maintain its global competitiveness.

Another company - the Rolls Wood Group is making 60 staff redundant, as part of restructuring following a major fire at the company's repair facility in Aberdeen two weeks ago.