Oil major BP has postponed construction of its £500million gas sweetening plant for up to five months.
The company said the decision was triggered by the low oil price over the past six months.
Earlier this year the company announced job losses from its North Sea operations as it looks to streamline its operations.
The gas sweetening plant, which was granted permission in June last year, will resume in early 2016.
It will remove hydrogen sulphide from “sour” gas piped in by Total from the West of Shetland to their gas plant next door.
BP said work to clear the 16 hectare site adjacent to the existing oil terminal, which was originally scheduled to begin in January, would start later this month.
However Petrofac will not start bringing in the 500 workers to build the actual plant until early next year with a target to start operating in late 2017.
A BP spokeswoman said the company was examining all its capital projects after the price of oil crashed from over $100/barrel to less than $50, though it has subsequently risen to just above $60.
She said:”Maximising the economic recovery of gas and oil from west of Shetland remains a priority.
“We continue to design and schedule work for an onshore gas sweetening plant on the existing Sullom Voe Terminal site in order to sustain oil production for west and east of Shetland and a secure long-term, reliable SVT operation.
“Given the external climate however, it is prudent to review the project costs and timescales and we have chosen to defer procurement and site preparation by 4-5 months. This will also allow the project to reset to better weather windows providing a better basis on which to proceed.”
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