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Vagar Airport Looks to Expand Terminal Capacity Three-fold

Just about a decade after completing a critical refurbishment and extension of the runway as well as building a new passenger terminal and services building, and renovating its control tower, Vagar Airport is undergoing a new round of extensions that will possibly include a major terminal upgrade.

According to CEO Regin I. Jakobsen, significant increase in air traffic means Vagar Airport will have to dramatically expand its existing terminal capacity within the next few years. 

With several airlines signing on to join national carrier Atlantic Airways in using the airport on a regular basis—Scandinavian Airlines, Widerøe, Icelandair, and new FarCargo—it will become an increasingly more demanding task to manage air traffic at the Faroe Islands’ sole airport. 

Vagar Airport has thus initiated investments valued at 400 to 500 million dkk (54 to 67 mln. eur) to upgrade luggage handling, add new aircraft parking space, and build a large car parking facility, with extensive earthworks alone representing substantial amounts. A third gate is also being added to the existing terminal building to make more room for non-Schengen-related traffic.

“With these investments we’re addressing some but not all of the issues at hand,” Mr. Jakobsen noted. 

“Passenger throughput this year has exceeded the pre-Covid peak of 2019 and will plausibly total some 440,000 by December 31st. That in itself is normally manageable with our existing terminal capacity, even though the terminal was designed for a different time when aircraft were half the size of the ones in use today.  In cases of weather disruptions, for instance, we really come under pressure to process four planes full of passengers at the same time. In reality we hit maximum capacity already in 2019 but it just so happened at that point that we got a break because of the Covid-related restrictions that were implemented. However we’ve crossed that high point by now and according to estimates the passenger throughput will double within the next decade. In 2038—that is, in 15 years—that number will have reached one million, which is by far in excess of what can be passed through our terminal at today’s capacity.”

Government funding 

Computer renditions suggesting how the new airport terminal will look as proposed by architects SNA.

The situation, according to Mr. Jakobsen, calls for a commitment by the owner of the airport, the Faroe Islands’ national government.

“Beyond our ongoing investments we’re looking at an investment of 600 to 700 mln. dkk (80 to 94 mln. eur), which of course is too much for a company our size,” he said. “So we’re talking about expanding the terminal building to increase its capacity three-fold, all of which is urgent to stabilize the situation for the next couple of decades. Bear in mind, we’re already undertaking substantial investments independently to upgrade our luggage hall, for example, plus building a new multi-storey parking facility. Also we’re making groundwork to provide space for a new aircraft hangar.”

All things considered, including the size of the Faroe Islands, the commercial basis for any airport here is somewhat limited. 

“Our remit is to provide critical aviation infrastructure for the nation rather than to run a profit-maximizing enterprise,” Mr. Jakobsen said. 

“At the same time, just like any other business, we must return a sufficient result to remain open. Yet this company was never capitalized to undertake investments of the size we’re now being faced with to meet the demand from increasing air traffic.”

Vagar Airport was founded after the fact that an airfield had been built by the British during World War Two and subsequently run as an entity under the Danish Civil Aviation and Railway Authority. In 2007, the airport came under the control of the Faroese after which it was incorporated as a limited company owned by the Government of the Faroe Islands. Financed with means originating from a Marshall Plan fund, a series of investments completed in 2011 and 2014 saw the runway extended by 50 percent from 1,250 to 1,799 meters alongside a general upgrade of critical airport facilities.

As per Mr. Jakobsen, the airport is now once again at a junction where some government-controlled funds should be put to appropriate use.

Passengers seated in the terminal, summer 2023. Image credits: Maria Olsen.

“These developments in air traffic are in a way beyond our control—of course we can influence them, which indeed we do; but we’re under pressure to accommodate the ongoing and coming growth. Air traffic connectivity is an inherent demand nowadays, which means airport development is an ongoing business everywhere. So, as it turns out—and it really shouldn’t come as a surprise to anyone—the investments required now are sizeable and will need to be funded by the government.” 

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Vónin: A Balanced Approach to Rapid Growth

Much has changed since a group of fishermen started repairing trawls at a small, Fugla­fjørður-based net loft back in 1969, named Vónin. Those were the humble beginnings of what would eventually grow into a major international gear maker for commercial fishing and later also a leading aquaculture equipment specialist.

The business has moved forward at steady pace over the years, at times in larger steps, at times more slowly. Today operating from 20 locations spread over eight different countries to cover the entire northern hemisphere from Newfoundland to the Far East, Vónin’s workshops, offices, manufacturing halls and storage facilities can be found in the Faroe Islands, Norway, Scotland, Greenland, Denmark, Canada, Lithuania, and both Atlantic and Pacific Russia. 

“The careful selection of places of operations have played an important part in our overall business development and also reflect our strong culture of prudence,” Vónin CEO Hjalmar Petersen noted.

Last year’s gross sales for Vónin Group totaled more than 600 million dkk (81 mln. eur), out of which the Faroese market represented about 160 mln. dkk (21.5 mln. eur)—that’s almost double the sales of a decade earlier. As for the number of employees, these have more doubled over the last ten years, from 191 in 2013 to 434 in 2022. Perhaps to a casual observer today, a term like ‘business expansion’ would readily come to mind when considering Vónin’s more rapid development in the past two decades or so. On the other hand, the still measured nature of the substantial growth that has taken place tells a story of its own. 

Independence

Vónin’s headquarters at the port entrance to Fuglafjørður. Image credits: Vónin.

The core of the gear maker’s business activities was long based around the fishing fleets of the Faroe Islands and later Greenland and Canada, and through several decades the business became consolidated on that foundation. The pace of development was slowly but surely ramped up, notably with expansion through acquisitions of the net lofts of Polar Seafood and Royal Greenland, respectively, in 2002 and 2006. Then a change of ownership, in 2016, brought in Iceland’s rival Hampiðjan, making some people express their concern that Vónin’s independence as a business could be in jeopardy. Some seven years on, however, events appear to have proven naysayers wrong—even as investments at Vónin continue without much meddling from the company’s majority owners. 

Indeed, why would they meddle, given the fact that Vónin Group is financially a top-performing unit under their umbrella of related companies, most of whom are primarily focused on nets and fishing gear.

“I think the top management of the collective group has a good way of letting well-functioning units carry on their work independently within their own systems while facilitating collaboration where appropriate,” Mr. Petersen said. “They have been supportive all the way yet without getting involved financially. Many of the sister companies within Hampiðjan have kept their original name and retain their own identity, and even compete against each other for business. For us at Vónin it’s important that we feel free to do our thing in the way we deem most effective; and that, in turn, is very much a product of our constant and close collaboration with our clients and some of their key personnel, who often share a similar professional background with many of our own specialists. In essence, we remain a Faroese company, our main products are Faroese-designed; and many Faroese skippers and fishermen take part in the development of our products.” 

Innovation to value 

Vónin CEO Hjalmar Petersen. Image credits: Jens Kristian Vang.

The secret behind much of the long-standing business success of Vónin is doubtlessly linked to product and service quality. Clearly, they’re not known as the cheapest supplier around; rather their reputation is one of providing robust goods and solutions that work, backed by solid after-sales service and support.

“Good quality assurance and quality control is of course one of the fundamentals in all of this,” Mr. Petersen added. 

“So already from the outset, long before there was any need to manage QA/QC in any formal way, we’ve been very emphatic and unambiguous about consistently providing top-quality products and services. Price must always relate to value for money in a way that is fair; so if someone were to look exclusively at the price of a product or service, taking it out of context without considering the value offered, they will have a hard time understanding whether or not the price is right.”

But beyond the critical element of quality versus price, innovation in product development has become increasingly important over time, driven primarily—yet not exclusively—by efficiency considerations and the ever-present need to improve effectiveness in business, whether on the client or the supplier side. 

Meanwhile issues such as environmental and social sustainability are becoming more and more relevant in the marketplace. 

“What we’re looking at, essentially, is like an evolving cycle of considerations, all linked to the objectives and values that we put in place,” Mr. Petersen said. “It may sound like some fancy theory but in reality this is just a general summary of rules and parameters that guide business decisions and practices at all levels from top to bottom—strategic, operational, technological, economic, and above all, human. That involves taking into consideration a whole range of issues of importance for ourselves and our clients and stakeholders, including highly complex issues. So these are ongoing, dynamic processes that need to be managed or controlled to some extent—you don’t want to become too fluid, nor too rigid. As in everything else, you need to find a balanced approach to make sure things work properly, as much as possible at their optimum level. That’s quite obvious.”

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Moving at High Pace: Fuglafjørður

Fuglafjørður on the eastern coast of the island Eysturoy has played a pivotal part in the development of industry and export trade in the Faroe Islands, in particular since the establishment, back in the mid 1960s, of the Havsbrún fishmeal, marine oil, and later, feed factory. Since 2011 owned by salmon farming major Bakkafrost, the giant processing plant has developed into one of the most advanced of its kind in Europe—a unique link in what is believed to be the world’s most highly integrated aquaculture supply chain.

Over the years, a sophisticated business ecosystem has taken shape around Fugla­fjørður’s fish industry, primarily centered around pelagic fisheries and aquaculture, encompassing an array of related services and technologies.

As for the aquaculture industry’s supply chain, Fuglafjørður has a position that seems to be going from strength to strength—ranging from hatching and on-growing by Mowi, to Havsbrún’s feed production, to Vónin’s design, manufacture and repairs of cage nets and related equipment, to workboats, farming pens and hatchery systems built by KJ, to feed barges and underwater lighting by GroAqua, to seafood processing machinery by Necto, and more. Indeed, some of these firms’ recent business expansion into neighboring countries has seen Fuglafjørður-designed engineering goods gain foothold internationally. 

Much the same has long been true of the pelagic industry, with the Port of Fugla­fjørður acting as a key hub, receiving an average 20 ship calls a week from vessels of various nationalities, both fishing and merchant ones—for instance, bulk freighters transporting feed for export, fishing vessels landing their fresh catch to the Pelagos freezing plant or for industrial reduction at Havs­brún, or unloading their frozen cargo to the Bergfrost cold storage facility, trawlers getting their gear fixed or renewed at Vónin, having their processing lines repaired or maintained at PL, ships taking bunkers at the Effo Bunkers marine fuel terminal, receiving provisions from Vistir, and so forth.

Driven by expansion

“Our port has been a leader in the pelagic industry for many years and remains so,” said Dávur Juul, the mayor of Fuglafjørður. “We’ve seen quite some major developments taking place more recently to further strengthen that position, and we have major ongoing harbor extension projects.” Those extensions are meant to make room for several feed silos and additional docking space for a steady stream of bulk freighters shipping salmon feed to new clients in Scotland and elsewhere. 

Meanwhile synergies between the pelagic industry, the aquaculture industry, and supporting industries and services have been developing at accelerating pace.

“Let’s take the aquaculture industry as an example,” mayor Juul noted. “We have in our municipality a comprehensive line-up that covers primary production, design and manufacturing of equipment plus related services. So we’ve got smolt stations, fish farms, feed production, all relevant aquaculture equipment, and shipping facilities—meaning companies based out of Fuglafjørður can deliver everything required to set up and operate a fish farm whether overseas or in the Faroes.”

“Part of this has come into play lately, subsequent to Bakkafrost’s expansion into the US and the UK,” Mr. Juul added. “This has led to a sharp increase in exports of feed to overseas fish farms and has also generated international business growth for developers and suppliers of key technologies and equipment for the aquaculture industry. And it has taken place in tandem with considerable developments in business finance with investors looking at new opportunities.”

Cultural

As well as being widely known for its industry and business environment, Fuglafjørður also has a strong cultural identity. Home to several highly regarded painters, musicians and other artists, the 1,600-strong community is widely perceived as top-rated in that respect among places in the Faroe Islands. 

In early September, for example, the annual Cultural Days take place, a week or so packed with live concerts and a variety of events such as art exhibitions and festivities. 

Meanwhile high-profile concerts with the likes of Føroya Symfoniorkestur (Faroe Symphony Orchestra) occur on a regular basis at the Mentanarhúsið (House of Culture) venue, plus other events throughout the year, whether cultural, entertainment or more business oriented. 

“The awareness that Fuglafjørður has much to offer also in arts and culture is not new,” the mayor further noted. “Yet it’s only recently that many of us have realized that this has to be highlighted more properly. The Municipal Council alongside the community as a whole has gradually placed more emphasis on this aspect. Investing in a decent venue was part of that, as is encouraging more cultural events. We’re also pleased to see businesses engaging more in such events.”

Aerial view of Fuglafjørður with Kambsdalur in the foreground. Image credits: Bui Tyril.

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Fishing for Information

While the ‘Internet of Things’ has in fact been around for years in advanced industries in various countries, many people imagine that concept to only represent some fancy vision of the future of technology. They’re in for a surprise—at least as far as concerns the Faroe Islands, where the IoT is rapidly becoming part and parcel of commercial fishing.

Thus Tórshavn-based marine electronics specialists Vikmar have built a network of data-transmitting equipment installed on their client vessels. 

Effectively those vessels share on a constant, ongoing basis a variety of critical oceanic and other fishing-related data constantly recorded on the underside of the hull, on the command bridge and elsewhere on board the ships and seemlessly processed and transmitted to receivers on the other client vessels—importantly, in real time.

“We’re talking about highly relevant data for fishing vessels, such as water depths, surface and undersea temperatures, tides and currents, seawater salinity levels and more,” Vikmar managing owner Jan Hammer Egholm noted.

Saving effort, time and money while increasing efficiencies and improving productivity is indeed a promising and compelling value proposition for many. In other words, for commercial fishing boats to affordably stay up to speed on key items of operationally relevant information, the utility of Vikmar’s data-sharing arrangement can hardly be overstated. Here the power of the IoT comes to the fore through a fully automated and perpetual process of peer-to-peer sharing that delivers fresh data twenty-four hours a day, seven days a week. 

Mapping details

Since its founding in 2001, Vikmar has placed heavy emphasis on improving internet connectivity at sea, so much so that its Viknet satellite services have paved the way to allow Faroese fishermen to hear Faroese radio and view Faroese television without using internet bandwidth.  Vikmar also made it possible to use Faroese-registered telephones at sea, allowing crew members to phone anyone at standard landline rates; later it also became possible for them to use their own GSM phones at sea. Technologies utilized by Vikmar to offer services, some of which can be found at Fishin.fo, include combinations of sonar, satellite communications, various sensors, and IP communication systems.

“We decided early on to lay the foundation for a truly viable solution that would bring substantial savings for our clients,” Mr. Egholm said. “The idea is based on all vessels sharing updated marine data on a perpetual basis. Mind you, these are live data delivered in real time, which is very different from subscribing to some service that will provide you with data updated perhaps once every 24 hours. All fishermen know that weather conditions, currents and temperatures can change with very short notice. Being aware of those changes can be crucial for the success of fishing in any location at sea. After all, you want to avoid wasting resources by steaming to some area only to find out that conditions there have changed a couple of hours ago and won’t be favorable for the next couple of days or even weeks.”

Meanwhile today’s wide access to marine electronics means that even smaller boats used mainly for inshore fishing, and most leisure boats as well, are equipped with advanced communication, navigation and fish finder technology. 

“Practically every vessel registered in the Faroes has modern electronics installed, including GPS, sonar and chartplotters,” Mr. Egholm added. “Using standard equipment, any of these boats can, for example, map out the ocean floor topography and features.” 

As for the nature of the seabed around the Faroe Islands, including along the shorelines, having a decent knowledge and understanding of it can be a matter of life and death. Traditionally, every inshore fisherman worth his salt would be acutely aware of anything of significance—for one, the success of the fishing, and two, safety from potentially life-threathening dangers related to weather, waves, currents and skerries. Such skills, however, are hard to find nowadays, as modern technology has made it convenient to get instant access to essentially all basic information of relevance for a fishing trip. That presupposes, however, that such information is current—something which, unfortunately, cannot always be taken for granted. For example, sea maps are not always updated with the latest information.

“Having access to accurate and updated sea maps should be considered fundamentally critical for every vessel from a safety point of view,” Mr. Egholm said. “After all, parts of the coastal waters around the Faroe Islands can be extremely dangerours under the wrong conditions.” 

To demonstrate some of their products in real life situations, the Vikmar eXplorer comes in handy. Packed with marine electronics, the boat is frequently taken for trips with prospective clients who are shown in detail how some of the equipment works, whether for small boats or large ships. 

“We also use the boat for testing and developing equipment in liaison with suppliers we represent. One example is the SeapiX multi­beam sonar, which maps fish schools as well as bottom topography and also reads the seabed hardness signature—highly important for sustainable fishing.”

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Economic Outlook: A Sobering Turn of Events

Amid deafening silence from officials and public authorities, leading exporters of fish appear to be holding their breath as trade relations with the Russian Federation, notably, have been thrown into disarray within a remarkably short span of time. Adding to a palpable sense of insecurity that has already been brewing over global developments in the last few years, recurring unrest in the labor market and lingering divisions over fisheries and aquaculture policies combine to further complicate matters.

Indeed money was plenty for about a decade of high growth and large profits, especially in fish farming and pelagic fisheries, following an agreement made in 2014 with Russia on exports of Faroese farmed salmon and wild caught mackerel and herring to the Russian market. 

This took place against the backdrop of a trade dispute between the Faroes and the European Union alongside Norway over fishing rights, with the EU including Denmark and the United Kingdom plus Norway imposing a blockade of Faroese fish exports, banning Faroese fishing vessels to enter their ports. 

For the Faroese that measure was widely viewed as a shocking stab in the back by countries otherwise considered friendly—these ‘friends’ seemed ready to wreck the Faroese economy and starve the nation into submission over a fish quota disagreement, knowing that the Faroese economy is vastly dependent on exports of fish.

The entire episode called for a tough balancing act, which was indeed delivered by then Prime Minister Kaj Leo Holm Johannesen. The EU was already involved in a sanctions war with Russia over the status of Crimea, however the Faroes is not a member of the EU yet a member of the Kingdom of Denmark. So Mr. Johannesen played the Russian card—after a surprise meeting with authorities in Moscow, market access for Faroese fish was a done deal, much to the chagrin of envious people in the EU. On the other end as chief Faroese negotiator on fishing rights vis a vis the EU and Norway, then Fisheries Minister Jacob Vestergaard succeeded in holding a steady line without conceding. That combination saved the Faroese economy from the brink. Instead, what followed was a decade of flourishing fish trade that saw profits soar for exporters in the less than 55,000-population strong island nation. 

Now, how the Faroese on a societal level managed to govern with such growing revenues coming their way, is quite another issue—one that refuses to go away these days.

Sobering news

Meanwhile, in a likely hammer blow to Faroese exporters of mackerel and herring, it was reported in late October 2023 that fisheries authorities in Moscow have proposed banning import of fish products from the Faroe Islands to Russia. “The Federal Fisheries Agency has submitted to the Russian government a proposal to introduce a ban on the import of fish products from the Faroe Islands (autonomous territory of the Kingdom of Denmark) as a response to protective actions against Russian fishing enterprises,” the agency stated. 

The retaliatory move, likely to be signed into force within a short period of time, comes some three months after the Faroese government implemented severe restrictions on Russian fishing vessels that were using Faroese fishing ports under the long standing bilateral fisheries treaty between the Faroe Islands and Russia. The agreement gives Russian vessels access to fish blue whiting and other pelagic species in Faroese waters while in return giving Faroese vessels access to catch cod, haddock and a few other species in the Russian sector of the Barents Sea.

As if the looming Russian ban on imports of Faroese fish wasn’t bad enough, the upcoming negotiations over the annual extension of the fisheries agreement between the two countries could be in jeopardy, too. For one thing, the Faroese government seems to be ambiguous in its policy aims with no clear signal forthcoming as to what exactly they want to achieve, other than making political statements to the effect of wagging the proverbial finger at Russia for the invasion of Ukraine.

At the same time, as it happens, the Faroese fishing companies active in the Barents Sea have just taken delivery of three brand new, state-of-the-art freezer trawlers at a total price of around 1.2 billion dkk (160 million eur), all based on the century-old Faroese tradition of fishing in the Arctic as reaffirmed formally on a regular basis with the Russians since 1977 without interruption.

So with the Barents Sea business all of a sudden looking uncertain while at the same time the door to the Russian market for Faroese fish about to be slammed, no wonder people are starting to worry over the economic outlook.

Along with the now lost port business and provision of related services to Russian vessels, the Barents Sea fishing was estimated to generate an annual 1.2B dkk (160M eur) for the Faroe Islands, about two-thirds of it associated with the fishing business itself and the remaining one-third to port services. 

The annual value of Faroese fish exports to Russia totaled well over 2B dkk (268M eur) over a few years yet shrank considerably as massive trade sanctions came into play in 2022. Having picked up somewhat as trade partners found alternative ways of transferring payments, projections for 2023 had set this year’s value to about 1.3B dkk (174M eur); however that figure will likely decrease in the face of an import ban, should it be made effective immediately.

Not that there are no other markets for Faroese fish. Salmon farmers, however having seen exports decrease more recently, have gained strong footholds in China and the U.S., whereas whitefish such as cod, traditionally exported to the UK and the EU, is facing problems with plunging market prices.

Said Pól Huus Sólstein, managing director of Klaksvík-based North Pelagic, a major exporter: “As for mackerel and herring, other markets pay considerably less than the Russians do, and with the large quantities involved, the already lower prices paid in alternative markets such as Poland, Ukraine, Egypt or Nigeria would likely crash if those markets were to be flooded with higher volumes of supply.” 

Structural deficit

So over a 10-year period of unprecedented affluence, how well have the Faroese been able to govern? According to Hans Kári Vang, an economist with Komm­unu­felagið (the Association of Faroese Municipal Councils), the level of public spending has risen beyond manageable levels, especially on the part of the national government and to an extent also on the part of municipalities.

“The positive economic trend for the past ten years appears to be changing now,” Mr. Vang stated in a recent presentation to Council members. “The economic situation of today is quite dangerous, as the situation is generally misinterpreted, which leads to wrong decisions being made. Our socioeconomic structure has become outdated and needs to be changed.”

Mr. Vang went on to demonstrate the growing revenues received by the government via capital gains tax, company tax, fees on commercial fishing, and fees on fish farming. Capital gains and company taxes on business amounted to 224M dkk (30M eur) in 2010, rising with the introduction of fees on fishing and aquaculture to a combined 431M dkk (58M eur) in 2011, then continuing to rise until reaching an estimate total of 1.8B dkk (241M eur) this year (2023), to be followed by an expected decrease.

From 2015 to 2022, public expenditure rose from 2.073B dkk (278M eur) to 2.917B dkk (391M eur) at the national-government level and from 1.164B dkk (156M eur) to 1.680B dkk (225M eur) at the municipal level.

“There is in general an artificially stimulated, too high demand caused by excess public expenditure,” Mr. Vang added, citing contributing factors such as raised salaries related to Covid measures, the cost of fuel, raised salaries resulting from government executive orders, shortened workweek and more.

“Much of the growth in economic activity in recent years has been initiated by the national government and is being maintained jointly by the national and the local treasuries,” he said. “Now the proverbial fuel tank is getting empty. The national government has a large structural deficit and a very low level of sustainability, which means we’re going to see large tax increases and a cut down on expenditures. The municipal councils don’t have a structural deficit but seriously challenged sustainability in the coming years. The socioeconomic structure has to change for revenues and expenditures to become mutually coherent.”

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Export Value of Salmon, Whitefish Plunges Amid Fish Feed Bonanza

During the first seven months of 2023, the Faroes exported fish products worth 6.6 billion DKK (885 million EUR), more than a 6-percent increase on the corresponding period last year, which saw a total export value of 6.2 bln. DKK (832 mln. EUR).

According to Statistics Faroe Islands, the largest growth was registered in categories ‘Mink Feed and Other Fish Produce’ i.e. primarily fish feed, and ‘Other Fish’ i.e. mostly fishmeal and marine oil. 

Thus exports of fish feed, fishmeal and marine oil increased by 882 mln. DKK (118.3 mln. EUR) or a whopping 76 percent. During the same period, meanwhile, the export value of farmed salmon nose-dived by eight percent or 255 mln. DKK (34.2 mln. EUR) with the quantity decreasing by as much as one-fifth, down to 7,283 tonnes.

The dramatic rise in the exports of fish feed is largely attributed to salmon farmer Bakkafrost’s overseas expansion in the United Kingdom, providing a new opportunity for their subsidiary feed, fishmeal and marine oil processing plant Havsbrún at Fuglafjørður, to offer their products to the aquaculture industry, notably since the salmon major’s 2019 acquisition of The Scottish Salmon Company.

The export value of cod, haddock and saithe likewise decreased year-on-year by 175 mln. DKK during the first seven months of 2023, with cod plunging one-fifth, haddock just about stable, and saith going down by 15 percent. In absolute numbers, the export value of cod totaled 580 mln. DKK (77.8 mln. EUR) during the period, with saithe making 186 mln. DKK (24.9 mln. EUR), and haddock bringing in 132 mln. DKK (17.7 EUR).

Pelagos Acquires PP Faroe Pelagic Factory in Kollafjørður to Become Faroe Islands’ Largest Operator of Freezing Plants

The shareholders of PP Faroe Pelagic, Kollafjørður, have signed a Letter of Intent with Pelagos, Fuglafjørður, on the transfer of the ownership of PP Faroe Pelagic, the two parties announced in a joint statement.

“Subject to the fulfillment by both parties of relevant conditions outlined in the Letter of Intent, PP Faroe Pelagic and Pelagos have agreed in principle on the ownership transfer to take place in full by December 1st, 2023,” the statement, dated on August 19th, read. 

The deal will not affect the indirect holdings of Parlevliet & van der Plas, Netherlands, in fishing companies Næraberg, JFK and Kósin, we’re told.

“Both parties,” likewise, “have agreed that the acquisition will entail no operational disruption for PP Faroe Pelagic and that all workers currently employed there will be given the opportunity to continue in their jobs at the same place under the new employer.” 

The deal will make Pelagos the leading owner-operator of freezing plants for pelagic fish in the Faroe Islands, with one such facility in Fuglafjørður and one in Kollafjørður.

PP Faroe Pelagic entered the Faroe Islands’ onshore pelagic processing business when the company, in 2009, took over the failing freezing plant known as Kollafjord Pelagic. With extensive experience in building and operating similar freezing plants in other countries, PP Faroe Pelagic successfully brought to bear its market-leading specialist knowledge. The company demonstrated the technical and economic viability of commercial processing of pelagic fish for human consumption on land in the Faroe Islands, effectively paving the way for the two other similar processing plants that were later built in the country. 

The Pelagos freezing plant opened for business in 2014. Its shareholders are Havsbrún, Framherji, Palli hjá Mariannu, and á Enni. 

PP Faroe Pelagic is indirectly owned by Parlevliet & van der Plas, Netherlands.

Faroese Communities, Businesses Feel Pinch from Port Closure for Russian Fishing Vessels

Tiny Faroe Islands have at last caved in to shoot themselves in the proverbial foot by joining the band wagon of economic sanctions against Russia following the giant country’s invasion of Ukraine in 2022.

After months of back and forth over the socioeconomic danger of embarking on an exercise in potential self-hurt, the Faroese Government a month ago announced a measure of significant port closures to reduce the activities of Russian fishing vessels in the island nation.

“The Government of the Faroe Islands has imposed further restrictive measures against Russia by considerably limiting port access for Russian fishing vessels,” the Prime Minister’s Office stated, calling the Russian Federation’s so-called special military operation an “illegal attack on Ukraine” with some largely symbolic responsive measures initiated in June 2022. 

“These measures have been amended with executive order number 89 of 6 July 2023, entering into force on 12 July 2023,” the Government stated on July 7th. 

Under this executive order, harsh restrictions imposed on Russian fishing vessels, controversially, make their operations in Faroese ports impossible for all intents and purposes. 

“Since 5 July 2022, [merchant] vessels registered under the Russian flag have not been provided access to Faroese ports,” the Government statement added. “During this period, fishing vessels have been exempted from Faroese restrictive measures. With the new measures only Russian fishing vessels exclusively conducting fisheries under the bilateral agreement between the Faroe Islands and Russia will be allowed to enter Faroese ports. These Russian fishing vessels may continue to conduct crew change, bunkering, provisioning, landing and transshipment.”

A main argument cited in the Faroes for abstaining from implementing sanctions on fishing vessels, is the fact that the United Nations Secretary General has unambiguously advised against sanctioning food to avoid causing food scarcity anywhere in the world.  As it turns out, however, that argument has now been overruled essentially without explanation.

Shortly after the public announcement of these new anti-Russian measures, Russian vessels vanished out of sight, perhaps unexpectedly for those who somewhat naively may have imagined that the vessels would continue to call at the ports despite the virtual blanket ban—after all, these are generally vessels with mixed holds and it would be all but impossible for them to separate their fish caught in Faroese waters from fish caught in international waters nearby. 

Their sudden disappearance has caused a stir in places where Russian vessels were most commonly seen, most notably Runavík, Fuglafjørður, and Klaksvík, and to an extent Tórshavn as well.

“It looks eerie to me seeing the Port of Runavík completely void of ships,” said Magnus Rasmussen, a member of the Løgting. “Not a single vessel in sight along the extensive quayside of Runavík, this demonstrates very tangibly how the consequences of the current policies affect us in the Skálafjørður region. This is a hammer blow to this area, inasmuch as port related business has generated substantial amounts to, amongst others, service providers and the municipal council’s treasury.”

Jógvan á Lakjuni, director of the Port of Klaksvík, confirmed the dim impression conveyed by others. “This is not looking good,” he noted. “Quite a few providers are losing business.”

Fuglafjørður, the main place to go for bunkering plus other essential services, is loosing substantial amounts as well. As for Tórshavn, with a more diversified port business, the revenue loss will be relatively less severe. And yet the problem could potentially spiral to affect the two factory trawlers registered there. 

Already, the likes of Faroe Agency, a port agency squarely focused on serving Russian vessels, can be expected to go out of business in short order—an otherwise reputable, profitable business with ten employees now redundant and three workboats idle.

Combined, the port business and provision of related services to Russian vessels alongside the Barents Sea fishing business is estimated to generate an annual 1.2 billion DKK (161 million EUR) for the Faroe Islands—a large chunk of the economy of a merely 54,000-strong population. Of that turnover, the port business and related services represents an estimate one-third with fishing representing the remaining two-thirds.

Short memory

According to industry representatives, the new executive order to close Faroese ports to Russian fishing vessels carries the risk of becoming highly self-defeating. A microstate dependent on seafood exports, the Faroes has a large portion of its distant-water cod and haddock fisheries taking place in Russian waters in the Barents Sea under a bilateral fishery treaty that has been in force uninterupted for about 47 years. 

That treaty could now be in jeopardy, as since its inception the provision of services to Russian vessels in the Faroes has been integral to it. 

The Faroese government, meanwhile, has argued that it has not decided to withdraw from the fisheries agreement with Russia, suggesting that the treaty is still on track for routine negotiations for the regular one-year extension in due course, that is later in the autumn. Indeed, all the political parties forming the current government coalition, unanimously, prior to the recent general election publicly made a point of intending to maintain the fisheries cooperation with Russia. 

Yet today there is palpable uneasiness over the treaty’s future, perhaps for good reason. Three top-notch new trawlers at 350 to 420 million DKK (47 to 56 mln. EUR) a piece have been built for Faroese fishing companies within the last year or so, with the newest still to be delivered. Without access to Russian waters, these vessels, along with a couple of older ones, would essentially lose their commercial basis with the risk of putting a total of about 200 crew on the Barents Sea trawler fleet out of work.

“Our prospects would look bleak without access to Russian waters in the Barents Sea,” said Kaj Johannessen, CEO of Havborg, owner-operator of newly delivered trawler Emerald. 

Explaining the linkage between the Faroe Islands’ Barents Sea fishing industry and the now elusive port services and related offerings for the Russians, Karl-Erik Reynheim, CEO of Faroe Agency, in a widely publicized article of October 2022 warned: “All trade relations are about give and take. Although for the time being some people seem to have a hard time understanding this, the business activities of Russian vessels in Faroese waters and ports and the fishing operations of Faroese factory trawlers in the Barents Sea are inseparately  connected. Our services and provisions to the Russian vessels are essential for their fisheries in our waters and associated shipments of fish products. If we were to close this, it would no longer be viable for Russian vessels to fish and make transshipments in our waters; their incentive for retaining a pelagic fish quota in the Faroes would of course disappear as well, which at the same time would mean that the Faroese catch quota for whitefish in the Russian sector of the Barents Sea would be lost, too.”

Meanwhile, in a sign that the government coalition may not be on politically firm ground on this issue, Sigrid J. Dalsgaard, a prominent member of the Republican Party, on August 8th publicly asked for clarification as for when the anti-Russian measures can be expected to be lifted.

As sloganeering slowly gives way to economic reality, the Faroese are set to find themselves confronted with a rather bitter realization: that big talk is cheap and so-called allies and friends, once they’re needed for help and support, will perhaps not be as readily available as imagined. When push comes to shove, as recent history suggests, they may have no qualms sanctioning the Faroese to hell should they not behave as told, whether on disputed fishing rights, the killing of whales or anything else running afoul with certain crowds. As late as only a decade ago, the Russians literally saved the Faroese economically by providing much-needed market access amid severe boycotts imposed on the islands by the EU including even the Danes, and the Brits as well as the Norwegians, all of whom closed off their ports to Faroese fishing vessels over a catch quota dispute. Sadly, the Faroese appear to have a rather short memory.

The Emerald Arrives: Havborg’s New Magnificent Trawler—video

 

Fishing company Havborg’s magnificent new factory trawler Emerald arrived in her home port of Tórshavn on July 13th, greeted by a sizeable group of people gathered at the East Harbour to welcome the latest addition the Faroe Islands’ fleet of commercial fishing vessels.

Built in Turkey, the versatile trawler is equipped with processing plants for both shrimp and groundfish as well as fishmeal and fish oil. Part of a new generation of freezer trawlers for the Faroese, the Emerald is a top-notch fishing vessel in every respect with all the latest in technology, hardly matched by any of its kind.

“We set out to build a shrimper and then installed a cod filleting line as well and then by the way also a fishmeal plant,” said Havborg CEO Kaj Johannessen. “Because you need options, as fishing is a very unpredictable business rife with uncertainties.”

The Emerald joins the 30-year old factory trawler Enniberg in the fishing enterprise founded and owned by famous former skipper Mortan Johannessen, Kaj Johannessen’s father.

Designed to work in distant waters such as the Barents Sea, the 87.50 meter long Emerald with a 18m beam is currently the largest fishing vessel of the Faroes. On shrimp there will be a crew of 20 whereas on cod the crew will be 34-strong, we’re told. The Emerald has accommodation on board for up to 40 crew members.

Designed for triple-rig trawling, the trawler has the option of upgrading to quad-rigging.

The Emerald has a 2,250 cubic meter fishroom and a hold capacity of 1,000 tonnes of frozen production.

 

JT Electric Rebrands to GroAqua

Faroese aquatech supplier JT Electric and its overseas subsidiary Sterner AquaTech UK have rebranded to GroAqua, the company announced. “The rebranding combines the strengths from both companies to provide sustainable technology solutions to the aquaculture industry,” a statement from the rebranded company read. 

“The people and the products remain the same, with decades of experience in the harsh North Atlantic, but the new brand signifies a commitment to facilitating sustainable fish growth,” we’re told.

“Our strategy is to be one of the leading suppliers of fish growth solutions to the aquaculture industry,” CEO Suni Justinussen was quoted as saying, adding that “the rebranding signifies our strong commitment to support fish farmers in their growth.”

GroAqua specializes in “facilitating sustainable fish growth with a range of technical solutions to remotely monitor and control the feeding and breeding process—both in seawater and freshwater.”