Open seas: offshore opportunities
Norway’s SalMar has identified Shetland as a possible location for its proposed new generation of offshore fish farms. Why might SalMar be looking beyond Norway, and what could this mean for Scotland?
Currently fish and shellfish farms are located in sheltered bays and lochs, but the salmon industry is moving more and more offshore into the open sea, due to a lack of inshore site availability.
Just a few years ago, salmon farming in these exposed locations seemed unfeasible, but thanks to improved engineering, and remote monitoring and control technology, it is now possible, if not necessarily profitable.
Ole Fretheim, Head of Aquaculture Technology at Seafood Norway, says: “Aquaculture at sea represents a gigantic opportunity for Norway, not only to increase food production of sustainable proteins, but also to secure Norway’s position as a leading seafood nation in the future as well.”
The world’s first offshore fish farm, called Ocean Farm 1, began operating in 2017, run by Ocean Farming, a subsidiary of SalMar Aker Ocean, a company formed by Norwegian salmon farming heavyweight SalMar (which owned 85%) and offshore engineering company Aker. Ocean Farming was to become “SalMar Aker Ocean” and now, with its 100% acquisition by SalMar in a surprise announcement in March this year, “SalMar Ocean”.
The deal involves acquiring Aker’s 15% stake consisting of a million SalMar shares and cash worth NOK 76 million (£5.4m). Whether this means SalMar wants to accelerate the programme or mothball it, is still unclear.
When SalMar launched the venture with the industrial investment group Aker, Salmar Aker Ocean said the aim was to go worldwide with offshore salmon farming with the aim of providing the world’s most reliable and intelligent operation.
But now, SalMar said, “following extensive evaluations and discussions, the two partners, SalMar and Aker, have concluded that the technological development and opportunities for offshore/semi-offshore aquaculture, both within and outside Norway, can be more effectively managed as an integrated part of the SalMar group. The same goes for evaluating technical and regulatory frameworks across locations and production areas.”
SalMar’s Strategy Director, Runar Sivertsen, said the company would continue to develop offshore farming, but it depended on regulatory developments and the capital needed for a particular project. A statement added: “SalMar’s ambitions and plans for offshore and semi-offshore aquaculture in and outside Norway remain unchanged.”
SalMar Aker Ocean is now changing its name to SalMar Ocean. Its new Managing Director, Anders Fjellheim, said: “Through several production cycles in our facilities, we have already demonstrated and documented good results, and we have identified interesting and relevant new projects both in Norway and elsewhere.”
Frode Arntsen, CEO of SalMar, added: “Our ambitions and plans remain unchanged. Realising offshore aquaculture is one of several challenges that the industry and we at SalMar must solve to continue to grow and produce healthy salmon on the salmon’s terms. Now, we at SalMar will together lift SalMar Ocean further to realise the significant potential that lies in offshore aquaculture.”
Boom times ahead - maybe
Norway could be on the cusp of an offshore aquaculture boom – if key challenges are addressed. Analysis by Menon Economics and research organisation SINTEF found “significant potential” for increased production and value creation for offshore aquaculture, with Norway leading the way in innovation and regulation. As well as SalMar, companies like Nordlaks have invested in this field.
A scenario analysis within the report estimated that, in a year of significant activity, offshore aquaculture could generate a total value creation of NOK 13.9 billion (£1.02 billion) and support around 7,400 jobs.
The authors suggested a conducive tax framework, including the application of resource rent tax, the so-called “salmon tax”, to offshore aquaculture, could further incentivise industry growth. The “salmon tax” is a 25% tax on the value added to farmed salmon and trout during the sea phase and comes on top of Norway’s 22% tax on profits, taking the tax level to 47%.
“For the actors to be willing to take that chance, the uncertainty surrounding the development of offshore aquaculture should be reduced as much as possible,” the report states.
It goes on: “It will be important for public authorities to give clear signals to the actors that if public requirements regarding safety, environmental sustainability, coexistence, etc, are satisfied, permission to expand production will be granted.”
Last April, SalMar chairman Gustav Witzøe said the company won’t develop a fully offshore farm in Norway until the government extends its “salmon tax” to offshore developments. Offshore farms will require considerable investment and time before becoming profitable and the rationale for Witzøe’s request appeared to be that if offshore farming has a ground rent tax applied now, salmon producers can offset that expenditure against their tax bills, effectively getting a government subsidy to develop offshore.
Even though the Norwegian government has mapped out three sea zones as testbeds for offshore aquaculture, “Norskerenna sør”, “Frøyabanken nord”, and “Trænabanken”, development so far has been slow largely due to lack of official action.
Last year, the Ministry of Trade, Industry and Fisheries assessed the possible environmental impact of salmon, trout and rainbow trout aquaculture. The results will be decisive to decide whether all or parts of an area are suitable for offshore aquaculture, and which parts of the area should be advertised first.
The Norwegian government was due to announce its first fish farming “far out at sea” licences in the New Year. “This is an important and correct step by the Minister,” welcomed Ole Fretheim, Head of Aquaculture Technology at Seafood Norway, in August 2024. “Since the establishment of the Hurdals platform, the Støre-led government has had a stated goal of developing a separate licensing regime for farming at sea.”
The Hurdals platform is the agreement that set out the basis for Norway’s governing Labour-Centre Party coalition, under the premiership of Labour’s Jonas Gahr Støre.
Ole Fretheim continued: “It is therefore important that the first offshore licences are now awarded so that the aquaculture nation Norway can continue to develop its globally leading position.”
Waiting for a government green light
With no announcements by March, we asked the Norwegian Ministry of Trade, Industry and Fisheries when the licences are due to be awarded, but it did not respond by the time we went to press.
Meanwhile, following years of planning and collaboration with government agencies, the Ministry has released a proposal for new regulations aimed at expanding offshore aquaculture.
It seeks to address the technical, logistical, and safety challenges of operating in harsher sea conditions, such as stronger waves, currents, and winds. The regulations are designed to provide predictability for investors, improve safety for workers in remote locations, and ensure the well-being of both fish and the environment.
The Scottish Government is also keen to explore offshore potential. Its Vision for Sustainable Aquaculture vows to encourage offshore development, defined as between three and 12 nautical miles off Scotland’s coast.
This year SalMar has been sounding out community groups in Shetland over a possible “exposed” fish farm, reported Shetland News in March, partly because development of an offshore sector in Norway appears to have stalled in the face of regulatory and tax issues, while Scotland is seen as more open to the idea.
SalMar Aker Ocean (as it was then) gave a presentation to Yell Community Council on January 25. The minutes, from the meeting in Mid Yell School that night, record that its Manager of Sites and Regulatory, Kjersti Bruserud, and its Chief Operating Officer Anders Fjellheim spoke about “…a potential exposed aquaculture east of Shetland. They introduced SalMar Aker Ocean, Ocean Farm concept and operation, Ocean Farm potential at Shetland.”
Trine Sæther Romuld, who was Chief Financial Officer at SalMar Aker Ocean (she has since announced her decision to step down following the takeover by SalMar), told Shetland News that the potential area has not been narrowed down yet. Romuld said SalMar Aker Ocean has been exploring “international opportunities”, with the north-east of Scotland being one region in the company’s sights.
“The entire eastern side of Shetland is considered prosperous for exposed aquaculture, ie further offshore than traditional aquaculture,” she said. “We have a good dialogue with the relevant authorities and we are in the early phase of community engagement.”
Romuld said SalMar Aker Ocean has experience in producing salmon in exposed areas in Norway, with “very strong biological results”. This is “by using technology able to operate in [a] harsher environment but at the same time on the terms of the salmon”. Romuld added: “Our ambition is to bring this experience and expertise also to other regions.”
Fishing friction
Local fishermen, however, are not happy with the idea of a large structure out at sea, telling the paper that it could be another element of spatial squeeze alongside offshore wind farms.
Shetland Fishermen’s Association Executive Officer Sheila Keith said SalMar Aker Ocean presented its ideas to the association in mid-January, and it had been advised that the Scottish Government was interested in its offshore developments.
Keith added that, from the association’s point of view, offshore salmon farming potentially “creates the worst of both worlds” for the fishing industry. She said there would still need to be “nursery sites” located inshore to grow salmon before they can go offshore.
“From a fishing point of view, we’ll be squeezed inshore and offshore,” she said. “What’s the next thing? We’ve got offshore wind, we’ve cables, we’ve got environmental protection measures.
“We really need to do the best we can to ensure that we can all be good neighbours in an environment where ultimately the profits of the fishing industry stays here and doesn’t go outside like salmon farming.”
The Scottish Fishermen’s Federation (SFF) echoed the concerns of the Shetland Fishermen’s Association.
SFF’s Chief Executive Elspeth Macdonald said: “Scotland’s fishing industry, including in Shetland, is facing an unprecedented ‘spatial squeeze’ where our sector is facing progressive and long-term loss of long-established and productive fishing grounds through the expansion of other sectors such as aquaculture and offshore wind farm developments, and through government policies on issues such as nature conservation.
“SFF expressed its opposition to the Scottish Government’s recent proposals on extending marine planning zones out to 12 nautical miles because this will lead to further spatial conflict between commercial fishing and aquaculture, and because salmon farm developments further offshore may also lead to increased safety risks.
“Fishermen already experience problems with entanglement with ropes and other equipment that has become detached from fish farms and we do not want this problem to extend further offshore, where the risk of damage to aquaculture infrastructure will be greater due to harsher weather.
“Furthermore, intensive fish farms may create pollution risks that could impact on important wild fish and shellfish stocks within the 12 nm zone, and we are also concerned that the development of fish farms further offshore may create connectivity that could spread disease and invasive non-native species.
“We recognise that aquaculture creates important economic activity around Scotland’s coast and islands, and is an important part of both Scotland and the UK’s export trade, but SFF does not support the expansion of aquaculture out to 12 nautical miles, as we believe that this will have a range of impacts on our sector that have not been properly considered or addressed.”
Innovation welcomed
The Scottish Government, when asked if it was interested in SalMar Aker Ocean’s offshore salmon developments in Norway, responded: “Innovations in technology mean that farms can now be located in more exposed locations and siting farms in higher energy waters has the potential to reduce environmental interactions and to support fish health and welfare.
“We are aware that there is growing interest from the aquaculture sector in developing farms further from the shore in more exposed locations, with a number of aquaculture businesses having approached us in recent years regarding the regulatory processes for consenting farms located between three to 12 nautical miles.
“Work is currently underway to clarify the consenting process for aquaculture developments between three and 12 nautical miles, including our recent consultation on fish farm planning controls.”
The next steps in offshore fish farming will depend, therefore, on how quickly the governments in both Norway and Scotland can move to update regulations and the tax system – and, crucially, on the big salmon farmers’ appetite for risk.
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