TRAFFIC GROWTH AND MAJOR ISSUES HIGHLIGHTED IN REPORT AND ACCOUNTS

The tremendous opportunities offered by the proposed creation of LNG terminals and the encouraging progress towards the development of a cruise port are two of the highlights of a mixed trading year covered in the latest Report and Accounts from Milford Haven Port Authority.

The 12 months to December 2002 saw the Authority itself, through its marine activities, making a healthy £1.9m profit on a turnover of £6.8m (2001 profit £245,000 on £5m turnover). Key contributors to this result were the containment of operating costs and seeing revenues improved by a 4.4% increase in traffic – some 34.5m tonnes of cargo was handled, reinforcing Milford Haven’s position as the largest port in Wales and the 5th largest in the UK.

But the Port Authority Group, which includes its commercial subsidiaries, made a pre-tax loss for the year of £506,000 (2001 profit £1.4m), a result of some poor trading performance and exceptional infrastructure repair costs – a new dry dock gate.

However, the Group and Authority balance sheets remain strong, the core shipping business continues to show growth and the future looks very promising, according to Port Authority Chief Executive, Ted Sangster.

Two companies, Petroplus and Qatargas, have applied for planning permission to construct liquefied natural gas (LNG) terminals on sites they currently own on the Haven. These facilities would receive and store liquefied gas from specialist tankers, re-gasify it and feed it into the national gas network.

“There is the possibility that the Waterway and Pembrokeshire are on the verge of a massive leap ahead into a new era of welcoming and servicing the gas industry to run alongside the existing oil refineries and storage activities,” said Mr Sangster.

“From the commercial point of view, these developments would be excellent news for the Authority and the local marine services industry. For the wider community, they would bring employment in their construction and operation, and act as a catalyst for further economic development because of the attractions of the extra energy resource.”

The year also saw the first results of a marketing campaign to attract cruise ships to call at Milford Haven, with the visit of Sea Cloud II bringing a party of 80 American golfers to play Tenby golf course.

A further four cruise ship bookings were secured during the year for 2003, and one for 2004. “We have one of the deepest natural harbours in the world set within the UK’s only coastal National Park in one of Britain’s prime visitor destinations, so targeting the international cruise market was a natural step,” said Mr Sangster.

“The interest we are now starting to generate as a new and exciting cruise destination should help to build up the local economy significantly as passengers disembark on their tours to spend money in towns, villages and attractions in Pembrokeshire and West Wales.”

The report also focuses on progress made in the year against business targets and identifies the major elements of the five year strategic plan for the Group, including the intention to improve financial rates of return across all business activities.

One source of frustration to the Port Authority during the year was the mounting difficulties of undertaking routine and necessary dredging projects in the Haven because of the increasing regulatory processes that all UK ports are now having to face, unlike many other European ports. This requires expensive and time-consuming environmental impact assessments on the effect of the work both at the site and at the sea location where the spoil is tipped.

The Annual Report also shows that in February 2002, six years after the grounding of the Sea Empress in 1996, and only days before the final deadline, Texaco – who were due to receive the ship’s ill-fated cargo – laid a $16m claim against the Port Authority for compensation for the loss of the cargo and other associated costs.

This is in addition to the earlier heralded claim for £38m made by the International Oil Pollution Compensation Fund seeking to regain the cost of the compensation it paid out as a result of the incident.

“Whilst the Authority has a very good defence against these two claims and is working hard with our lawyers and insurers in addressing them, there is however concern at the inevitable increase in management time and attention that will be required,” said Mr Sangster.

“There is also the embarrassment that the Authority’s major customer, Chevron Texaco, from whom significant dues are received for the shipping handled on the company’s behalf, should be involved in a significant legal action against the Authority.

“Whilst working hard to counter and refute these claims, it is also important to stress that the Authority gives an extremely high priority to safety and operational management. We make considerable financial and other investments in this area with the firm intention of adopting and indeed initiating best practice within the industry – as evidenced by the introduction of active escorting during the year which is outlined in the Report.”

The Annual Report also highlights the Authority’s outstanding concern that the recommendations to Government made by Lord Donaldson in his Review of Salvage and Intervention and their Command and Control about resolving a potentially damaging “Catch 22” situation have yet to be taken up.

“Lord Donaldson pointed out that if a salvor, in salvaging a stricken vessel, caused pollution, he could be prosecuted under the Water Resources Act 1991. However, if that salvor refused to undertake the salvage operation because of this risk, he could also be prosecuted under the Merchant Shipping Act 1995,” said Mr Sangster.

“To date there has been no move by the Government to take any positive action on Lord Donaldson’s recommendation to amend the Water Resources Act, and the UK coastline remains at risk in the way that he identified.”