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TANKER<strong>Operator</strong><br />
MARCH 2007<br />
Features:<br />
• Cyprus – In better shape<br />
• Reaping the benefits of US listings<br />
• Seafar<br />
arers s needed: Apply y here<br />
• Making the navig<br />
vigator comfor<br />
ortable<br />
• Deepwell ell pumps essential<br />
• Ship-to-ship transf<br />
ansfer milestone<br />
www.tankeroperator.com
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combining years of experience in providing reliable and cost effective services to ship owners.<br />
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TANKER<strong>Operator</strong><br />
Vol 6 No 2<br />
Digital Ship Limited<br />
213 Marsh Wall<br />
London E14 9FJ<br />
UK<br />
www.tankeroperator.com<br />
PUBLISHER<br />
Stuart Fryer<br />
EDITOR<br />
Ian Cochran<br />
Tel: +44 (0)20 7510 4933<br />
cochran@tankeroperator.com<br />
ADVERTISING<br />
David Jeffries<br />
Tel: +44 (0)20 8674 9444<br />
djeffries@tankeroperator.com<br />
Ria Kontogeorgou<br />
(Greece-Italy-Cyprus)<br />
Tel: +44 (0)20 7510 4938<br />
ria@tankeroperator.com<br />
MARKETING<br />
Rebecca Gee<br />
Tel: +44 (0)20 7510 4946<br />
rebecca@lngjournal.com<br />
PRODUCTION<br />
Vivian Chee<br />
Tel: +44 (0)20 8995 5540<br />
chee@btconnect.com<br />
SUBSCRIPTION<br />
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Subscription hotline:<br />
Tel: +44 (0)20 7510 0015<br />
Fax: +44 (0)20 7510 2344<br />
Email:<br />
subs@tankeroperator.com<br />
Printed by The Manson Group<br />
Reynolds House, 8 Porters' Wood<br />
Valley Road Industrial Estate<br />
St Albans, Herts AL3 6PZ<br />
Contents<br />
03<br />
08<br />
10<br />
12<br />
16<br />
26<br />
Industry news<br />
Markets<br />
08 Low sulphur fuel will<br />
cause problems worldwide<br />
09 <strong>Tanker</strong> rates to tumble?<br />
Profile<br />
Epic sets its stall out for the<br />
future<br />
Focus on Cyprus<br />
Still bullish following EU entry;<br />
Registry puts its house in order<br />
Focus on the US<br />
Stock quoted tanker companies<br />
doing well; major events take<br />
place in March<br />
Ship Management<br />
The next generation of<br />
shipboard and shore staff -<br />
where will they come from?<br />
30<br />
Technology<br />
30 Cargo Monitoring - Military<br />
sensor provider makes it in<br />
the commercial world<br />
31 Navaids aids - Striving for<br />
an ergonomically designed<br />
IBS; where we are with<br />
ECDIS/ENCs<br />
36 Cargo pumps - Deepwell<br />
pumps making their mark in<br />
ice class tankers<br />
39 Ship-to-ship transfers –<br />
Leading expert expands into<br />
Europe and oversees first<br />
LNGC STS<br />
40 Fibre replaces wire mooring<br />
and towing lines<br />
Front cover photo - Superstructure of the aframax<br />
Yuri Senkevitch, an Ice Class 1A tanker. She trades<br />
to Sakhalin hence the fully enclosed bridge design<br />
developed for harsh weather conditions. The tanker is<br />
operated by Sovcomflot and managed out of Limassol<br />
by Unicom. Photo credit - Unicom.<br />
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Preparation and assessment of the required tank cleaning<br />
Tank Cleaning Advice and Recommended Tank Cleaning Procedure<br />
Delivery of well known Marine Tank Cleaning Chemicals from stocks world wide<br />
Delivery of chemical injection and special spraying equipment<br />
Supervision during the cleaning At Sea by experienced Supervisors<br />
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March 2007 • TANKER<strong>Operator</strong> 01
COMMENT<br />
How do you fund massive upgrades?<br />
I was interested to read<br />
the knee-jerk reaction to<br />
the Panama Canal<br />
authorities' transiting<br />
fee hike announced a<br />
couple of weeks ago.<br />
This falls hard on the heels of the<br />
Suez Canal Authority's<br />
announcement of a transit price<br />
rise, which is due to kick in<br />
this April.<br />
As both have announced huge<br />
upgrading plans, why did this<br />
come as such a surprise? Perhaps<br />
it was the severity of the rises<br />
that caught most shipping<br />
organisations and their members<br />
by surprise.<br />
What happens at Suez has<br />
much more affect on the tanker<br />
and gas industry than what<br />
happens at Panama. However, the<br />
Panamanians could narrow the<br />
gap after 2014 when in theory we<br />
could see almost fully laden<br />
suezmaxes and certainly<br />
aframaxes transiting down to<br />
their marks.<br />
New trade routes will<br />
undoubtedly open up, most<br />
notably from the Caribbean to the<br />
US and South America west<br />
coasts and across the Pacific,<br />
giving Chavez the opportunity of<br />
lifting much more oil cheaply to<br />
China from his Venezuelan oil<br />
fields, if he's still around by then.<br />
What seems to have got<br />
everybody's back up is that<br />
between 2007 and 2009, the rate<br />
for tankers transiting the Panama<br />
Canal will go up by 34% to $3.98<br />
per tonne from today's $2.96 per<br />
tonne. Today, the Canal is mainly<br />
used by chemical and products<br />
tankers of up to panamax<br />
dimensions. There are very few<br />
crude oil tankers in this sector,<br />
most being somewhat larger.<br />
A new Panama Canal will<br />
mean that the chemical tanker<br />
boys and girls will no longer have<br />
to rely on 32 m beam parcel<br />
tankers. In fact, the products<br />
sector had already gone aframax<br />
several years ago. However, the<br />
chemical tanker operators rely on<br />
the Panama Canal for their virtual<br />
round-the -world liner services,<br />
much the same as the<br />
containership operators used to<br />
before the advent of the so called<br />
post-panamax box ship<br />
As for the Suez Canal the<br />
percentage rise for tankers is only<br />
3.73%. Unlike Panama, tankers<br />
already account for the largest<br />
number of transits. The detractors<br />
will argue that the 2006 figures<br />
showed that the Canal recorded a<br />
record $3.8 bill revenue from the<br />
more than 680 mill tonnes of<br />
cargo that moved through the<br />
waterway. Suez is looking at<br />
accepting fully laden VLCCs,<br />
whereas at present a pipeline<br />
operates the length of the canal<br />
with terminals at each end.<br />
Of course, before we see a rush<br />
of larger tanker tonnage queuing<br />
at the entrances of the canals, the<br />
calculators will be out in the<br />
brokers and operators offices<br />
working out the latest cost of fuel<br />
oil, transit fees etc against<br />
steaming around the two capes.<br />
The Black Sea and the US east<br />
coast will always be hampered by<br />
draught restrictions of around 15<br />
m. The Turkish authorities have<br />
already banned VLCC traffic<br />
from the Bosporus and we have<br />
recently seen rising waiting times<br />
at both entrances of the narrow<br />
waterway that bisects Istanbul as<br />
the Turks struggle to cope with<br />
the shear volume of tanker traffic<br />
lifting Russian crude in aframax<br />
and suezmax hulls. Another canal<br />
boasting the largest number of<br />
transits is the Kiel Canal. This<br />
waterway has benefited from the<br />
upturn in the economies of the<br />
countries bordering the Baltic Sea<br />
and the Finnish Gulfs. However,<br />
it is restricted to vessels of up<br />
to panamax size and around<br />
10 m draught.<br />
No doubt the Panamanians will<br />
come in for a bit of stick at the<br />
forthcoming CMA and Intertanko<br />
functions to be held in the US<br />
next month. At CMA there is a<br />
session devoted to the Panama<br />
Canal where the administrators<br />
will explain their masterplan and<br />
how they are going to fund it. A<br />
public hearing has been called by<br />
the ACP, the canal's administrator,<br />
to take place on 14th March to<br />
discuss the transit cost rises.<br />
The Panamanians will probably<br />
come to both meetings cap<br />
in hand!<br />
TO<br />
Identifying the Risk<br />
Risk assessment, or<br />
lack of it, was high on<br />
the agenda at<br />
TANKER<strong>Operator</strong>’s<br />
recent conference in<br />
Limassol.<br />
Fortunately, by and large, the<br />
tanker industry has taken in the<br />
concept of assessment, which<br />
forms an integral part of TMSA.<br />
Accidents will happen to the best<br />
of us, but the key is how you<br />
handle an incident and learn by it.<br />
Risk assessment is closely allied<br />
to safety management. In fact they<br />
could be taken as more or less the<br />
same thing. If you successfully<br />
identify and manage a risk, the<br />
odds are that you are running a<br />
relatively safe operation.<br />
As chairman Dimitris Lyras put<br />
it "Safety management is not all<br />
about hard hats and the right<br />
shoes, it is ensuring that today's<br />
tankers are safely operated." He<br />
gave the example of BP's<br />
problems in Texas as an operation<br />
having "no risk management."<br />
During the conference the<br />
speakers from two of the leading<br />
Cypriot-based shipmanagement<br />
companies gave an overview of<br />
their companies approach to<br />
safety management and<br />
identifying the risks.<br />
Such phrases as 'allocation of<br />
responsibility', 'failure to follow<br />
procedures', 'analyse all the<br />
critical data', 'refresh<br />
assessments', 'use preventive<br />
maintenance' and many more<br />
were thrown up.<br />
A leading class society<br />
introduced a risk assessment tool,<br />
whereby all the data relevant to a<br />
certain vessel is kept on a<br />
database and analysed with the<br />
'critical' items identified. The<br />
better the equipment is<br />
monitored, the better knowledge<br />
you will have of a possible<br />
failure, BV said.<br />
To a large extent it is a<br />
question of change management,<br />
that is getting shore staff and<br />
seafarers to change the way they<br />
think, therefore the way they act.<br />
An interesting comment came<br />
from the floor from a senior<br />
shipmanager, who claimed that<br />
TMSA was invented by bigness,<br />
ie the oil majors, for bigness, ie<br />
those companies that had the<br />
resources to implement it.<br />
Lyras complained that thus far,<br />
there had been no feedback from<br />
OCIMF on TMSA, although<br />
obviously individual tanker<br />
concerns were talking with their<br />
principals on a one to one basis.<br />
Despite some misgivings most<br />
people who have discussed<br />
TMSA with TANKER<strong>Operator</strong><br />
said it was a good idea and have<br />
launched themselves into it with<br />
some enthusiasm, which this<br />
writer admits, took him somewhat<br />
by surprise.<br />
We can now all look forward to<br />
InterManager's list of KPIs. TO<br />
02<br />
TANKER<strong>Operator</strong> • March 2007
INDUSTRY - NEWS<br />
Letter to the Editor<br />
Dear Sir,<br />
I have noticed that there is an<br />
increasing demand for tankers<br />
to change their summer<br />
deadweight (and increase the<br />
corresponding freeboard) in<br />
order to be allowed alongside<br />
certain berths - of course this<br />
is a complete nonsense since<br />
the only thing that changes is<br />
some paintwork on the<br />
ship's side.<br />
Regrettably this additional<br />
paintwork is often performed<br />
under far from safe conditions<br />
with sailors working over the<br />
ships side, as for accuracy,<br />
that's anyone's guess. What's<br />
even more regrettable, those<br />
requiring this change<br />
obviously just don't<br />
understand.<br />
It could be argued that<br />
changing deadweight would<br />
make a difference at a loading<br />
terminal, a sort of quasi legal<br />
restraint on the master on how<br />
much he can load, though I've<br />
seldom heard of a vessel<br />
loading more than their<br />
voyage orders dictate. In any<br />
case under most flags, the<br />
master can change the<br />
deadweight and corresponding<br />
freeboard up and down at the<br />
stroke of a pen in the Official<br />
Log Book.<br />
What is even more<br />
ridiculous is that the<br />
deadweight is not even<br />
mentioned on the new, shiny,<br />
normally 'short term' loadline<br />
certificate. I once had the<br />
pleasure of insisting to a<br />
senior class surveyor (to his<br />
absolute horror) that he<br />
amend the deadweight in the<br />
IOPP, Safcon and Safety<br />
Equipment certificates also,<br />
three of the few documents on<br />
a tanker where the deadweight<br />
is officially mentioned.<br />
So, apart from being a nice<br />
little earner for the<br />
classification societies, the<br />
exercise of changing a<br />
tanker's deadweight is, in<br />
reality completely futile.<br />
I have thought about<br />
advocating maximum<br />
displacement as more<br />
suitable restraint to put on a<br />
vessel, but I fear that<br />
concept would be lost on<br />
those most responsible for<br />
this latest craze.<br />
Yours etc,<br />
Capt. Graeme W. McNaught.<br />
MRIN, MNI.<br />
8 Kalypsous<br />
Glyfada<br />
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March 2007 • TANKER<strong>Operator</strong> 03
INDUSTRY - NEWS<br />
Checklists to curb pollution<br />
The management and<br />
control of marine<br />
pollution is steadily<br />
assuming a higher<br />
priority as governments,<br />
official bodies and<br />
politicians focus<br />
increasingly on MARPOL<br />
infringements and<br />
threaten key personnel<br />
with criminal<br />
prosecution.<br />
A checklist to help owners,<br />
operators and in particularseafarers<br />
- comply with MARPOL<br />
and prepare for Port State Control<br />
(PSC) inspections in the light of<br />
increasing threats of commercial<br />
disruption, fines and possible<br />
criminal proceedings, a booklet<br />
Marine Pollution Prevention<br />
Pocket Checklist has been<br />
published by Lloyd's Register and<br />
the UK P&I Club.<br />
LR's Alan Gavin explained that<br />
PSC rankings provided the<br />
industry with a tangible measure<br />
of the quality of the world's<br />
tonnage. PSC authorities had<br />
become increasingly effective at<br />
squeezing sub-standard operators<br />
out of the market, particularly<br />
through targeted inspection<br />
campaigns.<br />
The Paris and Tokyo MOUs<br />
and the US Coast Guard's annual<br />
reports gave the industry an<br />
effective measuring stick for<br />
gauging performance and<br />
deciding on methods of<br />
improvement.<br />
In 2005, PSC found over 220<br />
MARPOL infringements among<br />
LR classed vessels.<br />
The top 10 detention items<br />
related to oil filtering equipment<br />
(40), shipboard oil pollution<br />
emergency plan (SOPEP) (36),<br />
oil record book (27), 15 PPM<br />
(parts per million) alarm<br />
arrangements (23), retention of<br />
oil on board (22), other<br />
MARPOL Annex I (19),<br />
prevention of pollution by oil<br />
(IOPP Certificate) (18), garbage<br />
record book (17), garbage<br />
management plan (11) and oil<br />
discharge monitoring and control<br />
system (9).<br />
Gavin pointed out that LR<br />
monitored its fleet's PSC<br />
detentions to identify areas<br />
needing improvement. "Since<br />
2002, we have used this data as<br />
the basis of a comprehensive PSC<br />
benchmarking system and<br />
migrated the data to ClassDirect<br />
Live, our online class information<br />
system. This ensures surveyors<br />
have up to date PSC information<br />
at their fingertips, providing the<br />
most detailed possible view of<br />
any ship they are about to board."<br />
The system allowed potential<br />
Alan Gavin -PSC rankings provide the industry with a tangible<br />
measure of the quality of the world's tonnage.<br />
risks to be identified. "Where a<br />
confluence of factors might not<br />
individually be cause for alarm<br />
but together represent a<br />
significant risk, we are able to<br />
warn the owner and take action.<br />
For instance, a dirty engine room<br />
with flammable material close by,<br />
an unattended machinery space<br />
and an inoperable emergency fire<br />
pump would not necessarily pose<br />
substantial risks in themselves.<br />
Occurring at the same time and in<br />
close proximity, they would<br />
amount to a significantly<br />
hazardous situation," Gavin<br />
explained.<br />
Karl Lumbers, the UK Club's<br />
loss prevention director<br />
emphasised that the Club<br />
supported the PSC system.<br />
However, lowering detentions<br />
was not just about cutting down<br />
on deficiencies but reducing<br />
environmental damage and<br />
insurance claims. "Class looks at<br />
environmental problems from a<br />
position based on rules and<br />
standards. Insurers focus on risk,"<br />
he said.<br />
Pollution accounted for 18% all<br />
UK Club claims outgoings in<br />
2005. Deficiencies with oily<br />
water separators were down from<br />
30 in 2001 to 14 in 2006.<br />
However, other MARPOL<br />
deficiencies were up from zero in<br />
2001 to 22 in 2006, an especially<br />
worrying trend as the increase in<br />
the past 12 months was<br />
considerable. Taken together,<br />
MARPOL and OWS violations<br />
were the most frequent reasons<br />
for UK Club ship detentions<br />
in 2006.<br />
"The variety of vessels<br />
involved in pollution claims in<br />
1987-2004 is perhaps surprising,"<br />
continued Lumbers. "As might be<br />
expected, tankers featured in 46%<br />
incidents (24% of Club entry). It<br />
follows that the sources of large<br />
environmental claims are also<br />
widely spread. Crude oil and fuel<br />
oil as cargo accounted for just<br />
under one quarter each, with<br />
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04<br />
TANKER<strong>Operator</strong> • March 2007
INDUSTRY - NEWS<br />
Karl Lumbers - Reducing environment damage and insurance claims.<br />
chemical, clean and dirty<br />
products, dirty ballast, bilges and<br />
smoke appearing in the analysis.<br />
However, 33% were down<br />
to bunkers.<br />
"This is highlighted by<br />
comparing the quantities spilled<br />
in 1990-94 with those in 2000-04.<br />
Pollutions of five to 1,000 tonnes<br />
have dropped dramatically from<br />
59 to 16. Those under five tonnes<br />
have only eased from 53 to 49.<br />
This illustrates how important it<br />
is to guard against the smallest<br />
spillages. The authorities can be<br />
expected to target all incidents<br />
with increasing zeal, larger fines<br />
and, possibly, imprisonment for<br />
certain onboard and shore<br />
personnel," Lumbers warned.<br />
Underlying causes of pollution<br />
incidents included failure and<br />
misuse of valves, overflows,<br />
defects in plate and pipes, hose<br />
rupture, contaminated bilges and<br />
faulty gauges.<br />
Lumbers stressed the<br />
importance of human error in<br />
causing large spills. Given their<br />
responsibilities, deck officers are<br />
most likely to commit the errors.<br />
They were at fault in 27%<br />
incidents in 1987-2004. However,<br />
taken together, crew, engineering<br />
officers, pilots and shore<br />
personnel slightly exceeded this<br />
figure. Further, 75% claims by<br />
value involved human error.<br />
He concluded: "Deficiencies<br />
discovered by Port State Control<br />
should be seen in a wider context.<br />
Oil filtering equipment<br />
shortcomings mean pollution; an<br />
inadequate shipboard oil pollution<br />
emergency plan means a reduced<br />
capability to contain spills; and<br />
problems with the oil record<br />
books lead to fines and<br />
prosecutions."<br />
In 2005, LR published a preport<br />
arrival, pocket-size PSC<br />
checklist to help owners and<br />
masters ensure that items that<br />
commonly lead to detention<br />
conform to international<br />
conventions prior to entering port.<br />
It covered the most common<br />
detention items, including fire<br />
pumps, lifeboats, oil filtering<br />
equipment, engine room<br />
cleanliness and certificates for<br />
masters and officers. More than<br />
40,000 copies have been<br />
distributed worldwide. In the<br />
future, LR plans to create a<br />
library of checklists.<br />
TO<br />
The South of England<br />
Protection and<br />
Indemnity Association<br />
(Bermuda) Limited<br />
Hamilton, Bermuda<br />
For further information regarding this<br />
alternative P&I club please contact:<br />
The South of England Services GmbH<br />
Zimex Business Aviation Center<br />
Bimenzältenstrasse 75, CH-8058<br />
Zurich Airport, Switzerland<br />
Tel +41 (0) 433 88 34 88<br />
Fax +41 (0) 433 88 34 89<br />
Email ships@soem-pandi.com<br />
Website www.sepia-pandi.com<br />
March 2007 • TANKER<strong>Operator</strong> 05
INDUSTRY - US NEWS<br />
Alaskan <strong>Tanker</strong>s’ teething troubles<br />
BP has reported a raft of<br />
problems with its new<br />
fleet of chartered US oil<br />
tankers, including cracked<br />
rudders, faulty anchors<br />
and now broken bitts.<br />
One of the bitts fell off a tanker<br />
and as a result, tests found that<br />
dozens more on three of the four<br />
ships were defective. The<br />
mooring bitts have now been<br />
replaced, a BP spokesman said.<br />
NAT expands<br />
US quoted Nordic<br />
American <strong>Tanker</strong><br />
Shipping (NAT) took<br />
delivery of the last of<br />
the three suezmax<br />
vessels last December.<br />
The 2003 built suezmax<br />
has been renamed<br />
Nordic Cosmos.<br />
The NAT fleet has increased from<br />
three to 12 suezmaxes since the<br />
autumn of 2004. All the vessels<br />
are of double hull construction.<br />
This vessel also increased the<br />
company's exposure to the spot<br />
market from 10 to 11 vessels,<br />
while the 12th vessel is employed<br />
on a long term contract. It was<br />
later announced that the<br />
suezmaxes Nordic Moon and<br />
Nordic Cosmos are joining the<br />
Stena/Sonangol pool.<br />
Herbjorn Hansson, chairman<br />
and ceo said that the average spot<br />
market rate for suezmax tankers<br />
during the last three months of<br />
2006 was $39,727 per day<br />
according to the spot assessment<br />
of the Imarex <strong>Tanker</strong> Index, which<br />
gives an indication of the level of<br />
the spot market. During the 4Q the<br />
tanker market was finely tuned<br />
with high capacity utilisation.<br />
He explained that at the end of<br />
2004, the company had four<br />
vessels - one year later - in<br />
December 2005 the company had<br />
eight vessels, and now at the turn<br />
of the year 2006/2007 the company<br />
has 12 vessels - all suezmaxes.<br />
Eleven of these vessels are<br />
trading in the spot market or on<br />
spot related terms, and one vessel<br />
A mooring bitt broke off the<br />
tanker Alaskan Navigator last<br />
September as a tug pulled it<br />
towards a jetty in Valdez, according<br />
to the US Coast Guard, the ship's<br />
operator and a Valdez-based oilindustry<br />
watchdog group.<br />
The ship's operator, Alaska<br />
<strong>Tanker</strong> of Beaverton, Oreg, used<br />
X-rays and other tests to find the<br />
other defective bitts.<br />
Other structural problems have<br />
is on long term fixed charter. "We<br />
believe that we have effectively<br />
managed our growth and have<br />
expanded the company's earnings<br />
and dividend potential<br />
considerably", Hansson said.<br />
"It is becoming increasingly<br />
clear that single hull tankers are<br />
in a precarious position. There are<br />
mandatory rules that provide for a<br />
phase out of these vessels by the<br />
end of 2010 at the latest. Single<br />
hull vessels are facing challenges<br />
in today's market as customers<br />
prioritise double hull vessels.<br />
Some major oil companies have a<br />
policy to charter double hull<br />
tankers only. All our vessels have<br />
double hulls", he explained.<br />
Going forward, the market will<br />
to a large extent depend on the<br />
development of the world economy.<br />
He said that NAT wishes to<br />
continue to build on a predictable,<br />
transparent and simple strategic<br />
platform, consisting of the<br />
following main elements:<br />
• Profitable expansion of<br />
the fleet.<br />
• Operation of a modern,<br />
homogeneous fleet.<br />
• Distribution of available cash<br />
flow to shareholders.<br />
• A strong balance sheet.<br />
• Ensure exposure to spot<br />
market rates which<br />
historically have been above<br />
timecharter rates.<br />
• A low cash break-even of<br />
approximately $9,500 per day<br />
per ship.<br />
• Focus on low general and<br />
administrative costs.<br />
cursed the fleet of NASSCO-built<br />
193,000 dwt $250 mill doublehull<br />
tankers, which started to lift<br />
Alaskan North Slope crude oil to<br />
US West Coast refineries in the<br />
summer of 2004.<br />
In spring 2005, cracks were<br />
discovered in the rudders of two<br />
of the ships - Alaskan Frontier<br />
and Alaskan Navigator. And in<br />
December, 16-tonne anchors<br />
broke off the same two the ships<br />
OSG increases orders<br />
Overseas Shipholding<br />
Group (OSG) has signed<br />
an agreement in principle<br />
with Aker Philadelphia<br />
Shipyard, a subsidiary of<br />
Aker American Shipping,<br />
to construct up to six<br />
additional Veteran Class<br />
MT-46 Jones Act Product<br />
<strong>Tanker</strong>s (three firm<br />
orders, plus three<br />
options).<br />
Once transferred to another Aker<br />
subsidiary, American Shipping<br />
Corporation, OSG will bareboat<br />
charter the vessels initially for 10<br />
to 15 years. The agreement in<br />
principle is subject to, among<br />
other conditions, approval by the<br />
boards of directors of OSG and<br />
Aker American Shipping,<br />
preparation and agreement of<br />
final documentation and relevant<br />
government approvals.<br />
OSG also said that a<br />
timecharter agreement has been<br />
signed between OSG and BP for<br />
one more of the 46,000 dwt Jones<br />
Act product tankers being built at<br />
Aker Philadelphia. Of the original<br />
10-ship order announced in April<br />
2005, the BP charter brings the<br />
number of vessels OSG has<br />
chartered out to nine. The first<br />
ship, the Overseas Houston, was<br />
scheduled to be delivered to<br />
Shell during the week of<br />
February 26, 2007.<br />
The nine ships are chartered to<br />
Tesoro (four), BP (three) while<br />
two have been taken by Shell.<br />
OSG said that future Gulf of<br />
Mexico tanker shuttle<br />
as they transited the Gulf of<br />
Alaska in a laden condition.<br />
In addition, the anchors of<br />
sister ships Alaskan Legend and<br />
Alaskan Explorer were inspected<br />
and have since been replaced<br />
with temporary anchors, with<br />
those vessels 'operating under<br />
restrictions outlined by the<br />
USCG'. Each of the anchors<br />
inspected were "showing signs of<br />
metal fatigue", the USCG said.<br />
opportunities and the Military<br />
Sealift Command replacement<br />
programme could lead to further<br />
orders of Jones Act tonnage.<br />
Late last year, OSG<br />
strengthened its position with the<br />
$455 mill purchase of primarily<br />
'blue water' operator Maritrans.<br />
Maritrans has been renamed<br />
OSG America, following the<br />
transaction. As a result, OSG's US<br />
flag fleet now totals 35 operating<br />
and newbuild vessels that includes<br />
handysize product carriers, a car<br />
carrier, drybulk carriers and<br />
articulated tug barges.<br />
Concurrently with the delivery<br />
of the Overseas Houston Aker<br />
American Shipping has closed a<br />
senior secured credit facility of<br />
$770 mill with Fortis as Agent,<br />
financing its long term ownership<br />
of the first 10 vessels.<br />
This facility secures the<br />
permanent financing for the first<br />
10 product tankers and provides<br />
for an advance of $80 mill per<br />
vessel. The facility refinances the<br />
$350 mill facility currently in place<br />
for the first five product tankers<br />
that provided for an advance of<br />
$70 mill per vessel. Akasa has also<br />
entered into interest rate swaps,<br />
which secure the interest rate of<br />
the new credit facility.<br />
• Meanwhile, US Shipping<br />
Partners has ordered nine 49,000<br />
dwt Jones Act products tankers<br />
from NASSCO for $1 bill.<br />
Deliveries will begin in 2009.<br />
There are also options for five<br />
more. BP has taken the first one<br />
on long term charter.<br />
06<br />
TANKER<strong>Operator</strong> • March 2007
A more technologically advanced tug was needed in<br />
North Puget Sound. Check out Crowley’s Response.<br />
“Our Markey tow winch was built just for the Response.<br />
In full power mode, it can still winch in a line against a<br />
250-ton resistance. There’s nothing else out there like it.”<br />
~ Ron Rubright • Chief Engineer of the Response<br />
To meet the challenges of oil tanker escort and assist work<br />
in the rough waters of North Puget Sound, Crowley created<br />
a tug like no other. We took the basic technology of our<br />
Harbor Class tugs and modified it to create a vessel specially<br />
designed for the task at hand: the Response. Its two<br />
powerful CAT engines, together with enormous 5-blade Voith<br />
Schneider propulsion units, generate up to 155 tons of<br />
indirect force at 12 knots. Its huge skeg is forward and the<br />
cycloidal units are in back, focusing its immense power<br />
where it’s needed most. And its 10" amsteel blue tow line is<br />
rated at one million pounds, which is strong enough to keep<br />
even the biggest tankers in place. The bottom line? The<br />
Response performs the fastest, most efficient assists and<br />
escorts on North Puget Sound.<br />
There’s one more necessary element: an exceptional crew.<br />
Take Ron Rubright. The Response’s chief engineer joined<br />
Crowley 26 years ago, so it’s safe to say he knows his way<br />
around a Crowley tug. Rubright also participates in extensive<br />
training courses on CAT engine technology. Plus, he<br />
and the rest of the crew take part in rigorous on-board and<br />
shoreside training sessions and safety drills.<br />
Need more information about our services in the<br />
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© Crowley Maritime Corporation, 2006 CROWLEY is a registered trademark of Crowley Maritime Corporation
INDUSTRY – FUELS AND LUBES<br />
Fuels pricing policy<br />
and risks*<br />
Due to anticipated<br />
shortage and price<br />
increase of low<br />
sulphur residual fuels<br />
in SECAs (Sulphur Emission<br />
Control Areas), some signs have<br />
already appeared in favour of the<br />
generalisation of distilled fuels (ie<br />
gas oils, diesel oils), the prices of<br />
which are much higher than the<br />
residual fuels used today. On the<br />
other hand, INTERTANKO has<br />
proposed to IMO that the industry<br />
should adopt a worldwide low<br />
sulphur regime.<br />
By narrowing the worldwide<br />
bunker consumption to just one<br />
type of fuel, starting with a higher<br />
price level than residual fuels<br />
used today, refineries and fuel<br />
suppliers will have a free hand to<br />
manipulate prices at their<br />
discretion. However, this may<br />
have an immediate knock-on<br />
effect of an increased cost of<br />
transported goods, and eventually<br />
to a huge growth in the economy,<br />
swallowing dragon inflation,<br />
which could trigger a 3rd<br />
worldwide war, if prudent people<br />
stay apathetic. Therefore, such a<br />
unilateral proposal for the use of<br />
only one type of fuel should not<br />
be accepted and totally rejected.<br />
We must not lose sight of the<br />
enormous burden put on the<br />
environment by the excessive<br />
emissions of CO2 in order to<br />
produce the 150 mill tonnes of<br />
low sulphur fuel, we estimate to<br />
be demanded annually by 2010,<br />
through the distillation of residual<br />
fuels, when the SECA areas are<br />
extended to the Mediterranean,<br />
North America and Canada, as<br />
anticipated.<br />
In a worldwide extension of<br />
SECA areas, which we trust will<br />
occur by 2012, the major<br />
environmental problem from CO2<br />
Industry usually reacts with<br />
general measures when its<br />
free pricing policy is at stake.<br />
in desulphurising residual fuels<br />
can be commonly recognised.<br />
Residual fuels<br />
Most of the marine diesels are<br />
basically designed to burn residual<br />
fuels with a high sulphur content.<br />
Using low sulphur distilled fuels<br />
on these engines causes a complex<br />
problem to their lubrication with<br />
unforeseen wear, maintenance and<br />
repair costs.<br />
Ships deciding to use both high<br />
sulphur and alternatively low<br />
sulphur fuels in SECA areas,<br />
must also use two different types<br />
of Lubricating oils, that is TBN<br />
70 and TBN 40. This will require<br />
avid attention by ships' engineers.<br />
It will also be risky to try to use<br />
TBN 70 at a reduced supply rate<br />
with low sulphur fuels, as some<br />
manufacturers have suggested.<br />
This is where the unforeseen<br />
wear problems may occur, as it<br />
will be impossible for the<br />
engineers to check and control the<br />
lubricant's film inside the cylinders<br />
while the engine is running.<br />
Comply simply and<br />
economically<br />
The Canadian exhaust gas<br />
cleaning system EcoSilencer, not<br />
only ensures a superior protection<br />
system for the environment than<br />
by using distilled fuels, but also<br />
allows the continued operation of<br />
vessels' engines and boilers with<br />
today's high sulphur residual fuels<br />
and lubricants for the whole life<br />
of a ship without a problem. The<br />
equipment's operation is simple<br />
and requires little or no<br />
maintenance at all.<br />
EcoSilencer is manufactured in<br />
austenitic stainless steel and<br />
cleans ships' exhaust gases of<br />
sulphur oxides, soot, carbon<br />
oxides, part nitrogen oxides,<br />
particulate matter, including<br />
nickel, vanadium, copper, lead,<br />
The exhaust gas scrubbing<br />
system ecosilencer<br />
manufactured in Canada.<br />
zinc, phosphor, calcium, sodium,<br />
total hydrocarbons and other<br />
harmful combustion compounds,<br />
through a proven seawater<br />
scrubbing process and other<br />
patented equipment by MES<br />
of Canada.<br />
The system's centrifugally<br />
collected sludge (ecoSilencer<br />
does not use filters or chemicals)<br />
of about 100 -600 kilos per week<br />
depending on the size of the<br />
engines, is easily collected by<br />
shore receiving stations together<br />
with other oily wastes from the<br />
ship. The water returned to the<br />
sea from the scrubbers complies<br />
with US EPA criteria.<br />
European directives<br />
The previous version of European<br />
Directive 1999/32 was unclear<br />
because it was defining all marine<br />
distilled fuels, as mgo without<br />
making any distinction between<br />
the various grades of marine<br />
diesel oils and mgo. From July<br />
2000 when it entered force, ships<br />
were only allowed to use these<br />
marine distilled fuels with a<br />
maximum Sulphur content of<br />
0.2% between European ports.<br />
The revised European Directive<br />
2005/33, makes a distinction<br />
between mdo and mgo. According<br />
to the latest directive, the<br />
maximum sulphur mgo content<br />
will remain at 0.2% until January<br />
2008, whereupon it will fall to<br />
0.1%. The limit for mdo was<br />
raised from 0.2% to 1.5%, which<br />
enables vessels to use this fuel.<br />
This means that European<br />
members should ensure that mdo<br />
is not available on the market in<br />
their territory if the sulphur<br />
content exceeds 1.5% by mass.<br />
Although 1.5% sulphur mdo can<br />
be used to supplement cases where<br />
low sulphur residual fuel is not<br />
08<br />
TANKER<strong>Operator</strong> • March 2007
INDUSTRY – MARKETS<br />
available, the resulting lubrication<br />
and wear problems to main<br />
engines should not be forgotten.<br />
European Involvement<br />
The involvement of a European<br />
committee on marine<br />
environmental issues is<br />
appreciated, but when it comes to<br />
duplication of decisions by the<br />
IMO, it creates<br />
misunderstandings and confusion<br />
in the marine industry. For<br />
example, the different SECA<br />
implementation dates.<br />
IMO is managing<br />
environmental issues very well<br />
and the best that the European<br />
committee on marine matters<br />
would do is to harmonise its<br />
efforts and decisions with those<br />
from the IMO. We must not lose<br />
sight of the facts that we are<br />
striving for a safe environment,<br />
but that we also need a simplified<br />
understanding of the rules and<br />
economical transport of goods.<br />
The so called 'free world'<br />
would also appreciate the same<br />
happening from the US<br />
Environmental Protection<br />
Agency (EPA), as well as from<br />
similar organisations.<br />
We all live on a single planet<br />
and the better we can do with<br />
respect of environment<br />
preservation is to exercise our<br />
efforts to harmonise our decisions<br />
and actions on a worldwide scale,<br />
irrespective of political, religious<br />
or economical differences or<br />
interests.<br />
For achieving this goal our<br />
considered opinion is to "let IMO<br />
lead the way".<br />
*This is the second of two<br />
articles written by George<br />
Kaminis of Kamenco. The<br />
first article appeared on<br />
page 28 of the January/<br />
February edition of<br />
TANKER<strong>Operator</strong>.<br />
Oversupply leading to a downturn?<br />
This year, overall marine<br />
transport of oil is<br />
expected to be<br />
essentially unchanged<br />
from last year. However<br />
in the years following,<br />
rates are expected to<br />
decline until 2010-2011<br />
when they are expected<br />
to firm again.<br />
The decline will be as a result of<br />
a general slowing of the global<br />
economy, which will temporise<br />
overall oil demand, having a<br />
knock-on effect on transportation<br />
demand said McQuilling<br />
Services in its recently published<br />
report <strong>Tanker</strong> Market Outlook<br />
2007-2011.<br />
This report is produced biannually<br />
and looks at five major<br />
tanker types and trades. The<br />
analysts have expressed their<br />
forecasts in timecharter equivalent<br />
terms, which have been calculated<br />
by estimating spot rates on 10<br />
major tanker trades using a round<br />
trip voyage scenario and assuming<br />
future voyage costs, such as port<br />
and canal expenses, will be taken<br />
care of in future increases in the<br />
WS100 tariff rate. A bunker price<br />
of $320 per tonne was used in the<br />
calculation.<br />
Taking VLCCs as a starting base,<br />
this sector should see 5% growth<br />
this year over 2006. This is due<br />
mainly to the stunted demand last<br />
year bought about by the lingering<br />
effects of hurricanes Katrina and<br />
Rita and an excessively large<br />
refinery maintenance programme in<br />
the west.<br />
Suezmax demand is expected<br />
to increase by just 2%, boosted<br />
by incremental light sweet<br />
Atlantic basin crude demand, due<br />
to another deep refinery<br />
maintenance cycle in the US.<br />
However, dirty aframaxes and<br />
panamaxes are forecast to decline<br />
this year, driven by trade changes,<br />
while clean products trades are<br />
expected to be flat.<br />
McQuilling said that its clean<br />
products forecast for this year is<br />
on the conservative side and<br />
demand may be greater,<br />
especially in the medium range<br />
sector, where increased arbitrage<br />
trading could influence the<br />
forecast. Basically, the clean<br />
sectors are expected to<br />
outperform the dirty sectors in the<br />
short term.<br />
Even with demand growth in<br />
certain sectors, there exists a<br />
growing tonnage supply overhang,<br />
which will become more and more<br />
difficult to overcome as<br />
newbuilding orders continue.<br />
This tonnage supply picture is<br />
completely different from the one<br />
only six months ago as an<br />
ordering spree encouraged by<br />
TCE Revenues Forecast by Trade ($ 000/day)<br />
Vessel/trade 2007 2008 2009 2010 2011<br />
VLCC 280,000 Ras Tanura/LOOP 41.9 36.4 26 31 41.9<br />
Suezmax 130,000 Bonny/Philadelphia 40.3 32.4 21.9 24.5 35<br />
Aframax 70,000 Jose Terminal/Texas 35 33.4 28.7 30.3 31.9<br />
MR 38,000 CPP Aruba/New York 22.1 22.1 20.4 23.8 28.9<br />
Source: McQuilling<br />
continued investment<br />
attractiveness in the tanker sector,<br />
coupled with newly disclosed<br />
orders for relatively prompt<br />
delivery and increased Chinese<br />
shipyard participation, has<br />
dramatically changed tonnage<br />
supply expectations in the 2007-<br />
2011 time frame, McQuilling said.<br />
Today asset prices are double<br />
what they were in 2002.<br />
Forecasted freight rates contained<br />
in the report, however, generate<br />
less free cash flow than in<br />
previous six monthly reports.<br />
This may lead to a slackening of<br />
the ordering spree seen recently<br />
and as a result shipyard prices<br />
may fall this year.<br />
Significant uncertainty still<br />
surrounds the IMO 13-G induced<br />
tonnage reduction in 2010. A<br />
rebounding world economy may<br />
increase oil demand and<br />
corresponding oil transport<br />
demand to absorb the additional<br />
tonnage on order. However,<br />
should events conspire to limit<br />
demand growth and allow an exit<br />
scenario closer to a lenient single<br />
hull phase out assumption where<br />
older tankers survive for a few<br />
more years, the pressure on rates<br />
will be substantial.<br />
In conclusion, the report states<br />
that a downward trend is forecast<br />
through 2009, due primarily to<br />
oversupply of tonnage with<br />
increases seen in 2010-2011,<br />
also on the back of supply<br />
TO<br />
considerations.<br />
March 2007 • TANKER<strong>Operator</strong> 09
INDUSTRY - PROFILE<br />
An Epic voyage<br />
On 1st February, the Epic Shipping Group successfully completed a planned corporate<br />
name change of two of its businesses. As a result, Eastern Product Carriers became<br />
Epic Product Carriers and those offices formerly under the ICSM banner became<br />
Epic Ship Management.<br />
The name Epic first<br />
appeared in 2004<br />
when the large<br />
handysize bulker<br />
concern Pacific Basin was<br />
launched on the Hong Kong stock<br />
exchange. Epic was set up to<br />
handle the non-bulk carrier sector<br />
of the business and since then<br />
Epic Ship Management has<br />
grown to control around 50<br />
vessels, including VLCCs,<br />
products tankers and LPG<br />
carriers, among others.<br />
Nigel D Cleave<br />
Epic has management bases in<br />
Singapore, Hamburg, Limassol<br />
and an operation in Liverpool<br />
through a joint venture. Epic also<br />
has a crewing agency in the<br />
Philippines - Epic Maritime<br />
Personnel. The German office<br />
was set up to tap into the KG<br />
finance system.<br />
Former Dobson Fleet<br />
Management guru Nigel D<br />
Cleave has taken over the mantle<br />
of Epic Ship Management's chief<br />
executive officer. He said at the<br />
time: "The name change for<br />
ICSM had been accomplished on<br />
time and neatly brought its<br />
offices under the Epic umbrella,<br />
in line with the re-branding of<br />
Epic Ship Management."<br />
Speaking to TANKER<strong>Operator</strong><br />
in Cyprus recently, Cleave said<br />
that Epic Ship Management had<br />
highly experienced in-house<br />
expertise in the fields of crude oil<br />
tankers, product tankers, chemical<br />
tankers and gas carriers. As well<br />
as the more specialised tanker<br />
contracts, today Epic also<br />
manages bulk carriers, car<br />
carriers and ro-paxes. Cleave<br />
explained that he is looking to<br />
expand Epic's portfolio of vessels<br />
under management across the<br />
board, not only in specialised<br />
tonnage, such as gas carriers, but<br />
also in more standard type<br />
vessels. "All options are open for<br />
the future," he said.<br />
Training is on everybody's lips<br />
today and to cope with the<br />
increasing demands, Epic has its<br />
own in-house training capability.<br />
Cleave also described Epic's<br />
management fees as "...being inline<br />
with the market." He said<br />
that Epic's motto was 'When<br />
safety, teamwork and the personal<br />
touch counts,' explaining that<br />
safety was absolute paramount,<br />
team work between client, crew<br />
and others crucial and in<br />
providing that extra special<br />
personal attention to a client, this<br />
set them somewhat apart from<br />
other players, he claimed.<br />
Cleave will remain in Limassol,<br />
having overall responsibility for<br />
the worldwide activities of Epic<br />
Ship Management, where he has<br />
been active for 16 years. While its<br />
Singapore base was the perfect<br />
location for its Far Eastern<br />
clientele, he said the advantages<br />
for third party shipmanagers and<br />
other companies wishing to make<br />
Cyprus their home were threefold:<br />
The LPG carrier Minorca was delivered from Kanrei in January.<br />
She is currently managed from Singapore.<br />
1) Time zone advantages from<br />
both an eastern and western<br />
perspective.<br />
2) A good business structure and<br />
experienced local support<br />
staff in place.<br />
3) Excellent communications.<br />
The joint venture mentioned<br />
earlier is Meridian Marine<br />
Management, between Epic and<br />
Liverpool-based Bibby Line.<br />
Meridian primarily concentrates<br />
on the offshore sector and in short<br />
sea transportation, managing jackup<br />
rigs, dive support vessels,<br />
accommodation units, a floating<br />
storage unit (FSU), as well as<br />
tankers, ro-paxes and ro-ro ferries.<br />
Another string to Epic's bow<br />
came in the form of a contract to<br />
supervise the newbuilding of six<br />
3,000-5,000 cu m capacity LPG<br />
carriers. Epic Ship Management<br />
has oil majors' approval for<br />
tanker and gas carrier technical<br />
management.<br />
The latest newbuilding delivery<br />
is the LPG carrier Minorca. She<br />
was a product of Kanrei<br />
Shipbuilding and was formerly<br />
handed over on 15 January this<br />
year. The ship is managed out of<br />
Epic's Singapore office where the<br />
vessel's commercial and technical<br />
operation, plus crew management<br />
are also handled.<br />
Apart from the Minorca, the<br />
Singapore office currently<br />
manages a fleet of LPG carriers.<br />
In Singapore, the chartering,<br />
operations and technical<br />
management are all handled from<br />
the same office, which is claimed<br />
to make communications between<br />
the various departments<br />
beneficial to the ships' operations.<br />
As for the products tankers,<br />
these focus on the handysize<br />
sector, which are trading clean<br />
products in the Asian market.<br />
VLCCs add to Epic Ship<br />
Management's portfolio, making<br />
it a truly all-round serious tanker<br />
manager, Cleave said.<br />
TO<br />
10<br />
TANKER<strong>Operator</strong> • March 2007
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INDUSTRY - CYPRUS REPORT<br />
Flag is now part of<br />
the Establishment<br />
Indeed, the register has gone<br />
through a radical<br />
transformation since the<br />
days when a ship flying the<br />
Cyprus flag was jumped upon<br />
almost immediately by port state<br />
control inspectors.<br />
By agreeing to join the EU, the<br />
Cyprus registry had to get its act<br />
together in no small way. This<br />
has been duly achieved,<br />
culminating in the flag being<br />
taken off the 'Black List' and<br />
'Grey List' and finally being<br />
promoted to the Paris and Tokyo<br />
MOU's 'White List' of virtually<br />
blue chip flag regimes last year.<br />
It is now a fully paid up<br />
member of the Paris MOU and<br />
has been publicly acknowledged<br />
by the seafarer organisation ITF<br />
as having put its house in order.<br />
Another plus point was that the<br />
register became only the second<br />
flag state to submit to the<br />
voluntary IMO audit, following<br />
Denmark.<br />
"It was an extremely useful<br />
exercise", Captain Andreas<br />
Constantinou, Cyprus Ships'<br />
senior surveyor told<br />
TANKER<strong>Operator</strong>. He explained<br />
that the audit was carried out by<br />
high ranking officials of IMO<br />
member states’ Japan, US and<br />
Denmark maritime<br />
administrations, while the<br />
European Maritime Safety Agency<br />
(EMSA) acted as an observer.<br />
He explained that at first you<br />
must prepare yourself for such an<br />
audit. "If things are not in order,<br />
then you have to put them in order<br />
and iron out the discrepancies and<br />
take in the observations and<br />
recommendations for<br />
improvement", he explained.<br />
Painful experience<br />
The revolution has come at a<br />
cost, as several owners and<br />
There has been considerable upheaval<br />
in the Cyprus flag since the country<br />
entered the EU on 1st May 2004.<br />
managers and their vessels were<br />
either thrown out or opted to<br />
leave for a less stringent regime.<br />
For example, single hull tankers<br />
were no longer acceptable under<br />
EU membership, which hit a few<br />
people hard. As a result of the<br />
accession to the EU, the registry<br />
had to upgrade and expand its<br />
human resources to cope with the<br />
raft of new legislation that came<br />
with it. Constantinou said that for<br />
Cyprus being an island rich in<br />
shipping expertise, this was not a<br />
problem. For example, as part of<br />
the enhancements needed for<br />
becoming an EU member, the<br />
number of in-house surveyors<br />
was increased from 49 to 60 and<br />
the number of inspectors was<br />
increased to 62 from 43. There<br />
were also increases in the<br />
numbers of officers and<br />
clerks/assistants.<br />
Another major problem facing<br />
Cyprus shipping in general,<br />
including the registry, is the<br />
Turkish embargo on any Cypriot<br />
flag or controlled vessel calling at<br />
any Turkish port. The one<br />
exception is transiting the<br />
Bosporus, which is still an<br />
international waterway as laid<br />
down by the Montreux Treaty of<br />
1936. The boycott has finally<br />
been called illegal by the EU,<br />
which has led to sanctions, which<br />
were finally endorsed on 15th<br />
December last year.<br />
Tonnage stabilised<br />
At the time of joining, the registry<br />
had lost almost 10 mill gt of ships.<br />
However, the situation has now<br />
stabilised and as at 31st December<br />
last year, the register had 1,845<br />
vessels of 22 mill gt, compared<br />
with 2,031 ships of 24.2 mill gt on<br />
31st December 2003.<br />
The 2006 figure includes 113 oil<br />
tankers of 3.533 mill gt, 12<br />
chemical tankers of 193,700 gt,<br />
four liquefied gas carriers of 14,000<br />
gt and five obos of 136,000 gt.<br />
In world terms, the current<br />
tonnage entered puts Cyprus in<br />
10th place in the world's fleet.<br />
Unlike other flag states, such as<br />
Liberia, Panama and the Marshall<br />
Islands, Cyprus does not have a<br />
marketing department or arm. It<br />
now operates as virtually a notfor-profit<br />
organisation, a situation<br />
it can afford given the other<br />
maritime interests on the island,<br />
which tend to pull together as a<br />
maritime cluster.<br />
At present, maritime related<br />
activities account for about 4% of<br />
Cyprus' GDP, the majority of<br />
which comes from the huge<br />
shipmanagement concerns that are<br />
spread across Limassol and<br />
beyond. The registry itself brings<br />
in around Cyp£6 mill per year out<br />
of the maritime industry's Cyp£650<br />
mill per year. Cyprus is due to join<br />
the Euro on 1st January next year.<br />
Constantinou described the flag<br />
state's revenue as roughly being<br />
equal to its expenditure.<br />
He said Cyprus was the only<br />
Prisco Singapore's aframax Sakhalin Island is one of the new breed of vessels flying the Cyprus flag.<br />
state where shipping had gone<br />
from virtually zero in an 'open<br />
register' to create a whole new<br />
industry. For example, the<br />
registry had just two ships<br />
totalling 96 gt in 1963, but<br />
reached a peak of 2,799 vessels<br />
in 1997 in terms of numbers<br />
and 28.37 mill gt in 2000 in<br />
tonnage terms.<br />
TO<br />
12<br />
TANKER<strong>Operator</strong> • March 2007
INDUSTRY - CYPRUS REPORT<br />
Limassol’s ice experts<br />
Not surprisingly for a shipmanagement company having Russian principals, Limassolbased<br />
Unicom Management Services is heavily involved in ice class tankers.<br />
Sovcomflot's<br />
shipmanagement arm<br />
currently handles<br />
around 15 ice class<br />
tankers. Currently a further 11<br />
newbuildings are either under<br />
construction, or on order. One of<br />
the main reasons for this<br />
investment in ice class tankers is<br />
that loading terminals located in<br />
environmentally challenging<br />
positions, such as Primorsk, are<br />
ramping up their operations<br />
enabling an ever greater volume<br />
of tonnage to be handled all<br />
year round.<br />
Unicom will also manage five<br />
70,000 dwt newbuilding tankers,<br />
which are specifically being built<br />
for operation in Arctic waters<br />
where extreme weather conditions<br />
can be encountered. The vessels<br />
are under construction at Samsung<br />
and Admiralty shipyard St<br />
Petersburg and will be delivered<br />
2007 - 2009.<br />
The main areas of expansion<br />
for ice class tanker traffic are the<br />
Baltic, White Sea, Kara Sea,<br />
Barents Sea, plus the newly<br />
developed terminal at De Kastri<br />
off Sakhalin Island. On average<br />
tanker traffic will have to<br />
contend with temperatures as<br />
14<br />
low as - 15 ° C in the Baltic and<br />
a massive - 35 ° C in the Arctic.<br />
Speaking at TANKER<strong>Operator</strong>'s<br />
Ice Class <strong>Tanker</strong> Conference in<br />
Hamburg recently, David Sharp,<br />
Unicom's marine and safety<br />
manager said that to operate in<br />
severe weather conditions, the<br />
right ships, people and regulations<br />
are needed. Unicom is working<br />
closely with Russian, international<br />
research institutes and industry<br />
groups developing best practice<br />
guidelines and training<br />
programmes for both ship and<br />
shore staff. He gave a list of<br />
hazards to look out for, which<br />
included:<br />
1) Strong growth in tanker<br />
traffic.<br />
2) Rescue operations in ice<br />
conditions.<br />
3) Ship manoeuvring capability<br />
in ice.<br />
4) Combating oil spills in ice<br />
and cold conditions.<br />
5) Untrained crew not used to<br />
winter conditions.<br />
6) Stoppages in icebreaking<br />
operations.<br />
7) Navigational errors in ice<br />
conditions.<br />
8) Lack of traffic separation<br />
zones.<br />
Special training and equipment are needed to cope with conditions<br />
such as these.<br />
David Sharp - Right ships, people and regulations needed.<br />
9) Quickly changing ice<br />
conditions.<br />
10) Icing of equipment, deck,<br />
tanks etc.<br />
Explaining further, he said that<br />
the icebreaking fleet were<br />
normally only about 22 m wide<br />
compared with a large tanker of<br />
twice the beam, resulting in a<br />
too narrow path being cut<br />
through the ice for today's large<br />
beamy vessels.<br />
High definition radar is also an<br />
asset when navigating in ice,<br />
effective use being another<br />
training issue, which again comes<br />
back to training the right people,<br />
Sharp said. Another example is<br />
the forecastle anchor and mooring<br />
equipment, which need heating in<br />
low temperatures. Arrangements<br />
are required for sea chests,<br />
steering gear, emergency<br />
generator and the deck machinery<br />
hydraulics, which cannot be water<br />
cooled for fear of icing and they<br />
all need to be accessible in<br />
conditions where temperatures<br />
can go down to - 35 ° C. The<br />
loading equipment, manifold,<br />
cargo control equipment will also<br />
need heating arrangements.<br />
The ballast tank vents will<br />
need steam heating, while the<br />
ballast water exchange becomes<br />
a problem as does the fire<br />
fighting equipment.<br />
There are also lifeboat and raft<br />
limitations in extreme<br />
temperatures and ice conditions.<br />
The liferafts need to be of a<br />
special design while the ships'<br />
ladders need to be ice free. "How<br />
do you clean up an oil spill? How<br />
do you get the oil off the ice?" he<br />
queried. <strong>Operator</strong>s of Russia's<br />
Arctic and Far East oil and gas<br />
projects are paying particular<br />
attention to environmental issues.<br />
Unicom undertakes its seafarer<br />
training in St Petersburg and<br />
Nakhodka and when sourcing<br />
potential crew, Russian seafarers<br />
come high up the list. Sharp also<br />
warned, "We must reward people<br />
for going to sea in such<br />
conditions."<br />
Unicom celebrated its 15th<br />
anniversary during March of last<br />
year and now has a total of 62<br />
ships in its managed portfolio,<br />
plus another 15 on order. TO<br />
TANKER<strong>Operator</strong> • March 2007
INDUSTRY - CYPRUS REPORT<br />
Limassol offers full<br />
service possibilities<br />
Being a medium size port with a sheltered deepwater anchorage and strategically<br />
located in the eastern Mediterranean, Limassol boasts three bunker suppliers -<br />
Ajax Offshore Bunkering Services, BP and Island Oil.<br />
Island Oil was formed in<br />
1992 and over the<br />
intervening years, has<br />
diversified into cargo<br />
trading, ships agency, maritime<br />
software and the domestic supply<br />
of energy.<br />
Physical bunker supplies are<br />
carried out by a fleet of three<br />
bunkering tankers and two 3,300<br />
dwt supply tankers, which bring<br />
the product from refineries in<br />
Israel. Due to Cyprus' entry in the<br />
EU, Island Oil's subsidiary<br />
Petronav Shipmanagement, which<br />
manages the vessels, had to look<br />
for double hull tankers.<br />
This has obvious increased the<br />
management company's costs, both<br />
in day-to-day operations and with<br />
maintenance. Petronav managing<br />
director Chrysostomos<br />
Papavassiliou told<br />
TANKER<strong>Operator</strong> that paying $9-<br />
$12 mill for a newbuilding was not<br />
an option, but that the company<br />
had looked to the secondhand<br />
market to replace tonnage and had<br />
carried out a conversion of a single<br />
hull tanker into a double<br />
hull/double bottom vessel.<br />
The tankers are crewed by<br />
Ukrainian and Romanian<br />
seafarers. There are only two<br />
Cypriot seafarers employed on the<br />
tankers as like everywhere else,<br />
persuading local people to go to<br />
sea is a major problem, something<br />
that Cymepa is trying to address<br />
by visiting local schools on the<br />
island in co-operation with the<br />
local shipping fraternity.<br />
A major problem for the local<br />
suppliers is that Cyprus is right<br />
on the edge of the EU range,<br />
meaning that just 50 miles away,<br />
a supplier does not have the<br />
burden of complying with the<br />
new regulations, therefore can<br />
offer product at a better margin.<br />
Compared with other supply<br />
centres, Limassol is a small<br />
market, which was badly hit last<br />
year by the Israel/Lebanon<br />
situation. Some ports in the near<br />
East virtually ceased offering<br />
bunkering facilities. Other<br />
Cypriot ports are also supplied by<br />
Seatankers changes roll<br />
John Fredriksen’s former<br />
shipmanagement arm<br />
Seatankers Management<br />
is now an investment<br />
vehicle, looking after the<br />
group's interests from<br />
its offices in Limassol.<br />
The office looks after six<br />
aframaxes that have been assigned<br />
to third party shipmanagement<br />
concern Thome of Singapore,<br />
while the commercial<br />
management, such as post-fixture<br />
work, is handled by V Ships (UK).<br />
Seatankers has become the<br />
private investment arm of<br />
Fredriksen's huge empire and<br />
takes care of private placements<br />
worldwide.<br />
Director Dimitris Hannas<br />
explained that Cyprus is a good<br />
place to do business having a<br />
sympathetic tax regime, which<br />
only charges 10% tax on<br />
dividends, good communications,<br />
lawyers and accountants.<br />
TO<br />
tanker from Limassol, such as<br />
Larnaca, Vassiliko and Moni.<br />
Papavassiliou claimed that a<br />
refuelling tanker could be ready<br />
virtually on a ship's arrival and<br />
that there was no problem with<br />
quality or quantity. Most grades<br />
of bunkers are offered with IFO<br />
from 30-380 cSt, MDO and<br />
Gasoil with a maximum sulphur<br />
content of 0.2%. Low sulphur<br />
fuel should be available by April<br />
or May from an Israeli refinery,<br />
which is the nearest outlet to<br />
Cyprus, being around 15 hours<br />
sailing time away.<br />
All the small tankers fly the<br />
Cyprus flag and are classed by<br />
IACS member societies. Island Oil<br />
has offices in Piraeus and Odessa<br />
from where a terminal is operated<br />
in Nicolaieff on a joint venture<br />
basis. This terminal handles low<br />
sulphur gasoil in vessels of up to<br />
around 10,000 dwt.<br />
The agency side of the business<br />
handles around 40-45 vessels per<br />
month. The agency carries out<br />
crew changes, supplies,<br />
husbandry and other services.<br />
Papavassiliou claimed that crew<br />
changes are not a problem in<br />
Cyprus at the major airports of<br />
Larnaca and Paphos. Indeed, a<br />
vessel can anchor at Larnaca,<br />
almost touching the main runway,<br />
resulting in a crew change being<br />
possible in a very short space of<br />
time alleviating the need for<br />
costly hotel accommodation.<br />
Seafarers can pass through<br />
immigration with little<br />
formalities, which saves on costs.<br />
The group's software interest<br />
involves a joint venture with<br />
Danaos where the Greek<br />
company's integrated<br />
shipmanagement system products<br />
and services' software is marketed<br />
in Cyprus and elsewhere by<br />
Island Oil.<br />
Island Oil also markets its<br />
products to Cypriot-controlled<br />
vessels worldwide in co-operation<br />
with UK-based Cockett Marine<br />
Oil. Island can also supply oil<br />
major brand lubricants, both<br />
locally and internationally. TO<br />
Cymepa school initiative<br />
Cymepa, the Cypriot<br />
version of the Greek<br />
Helmepa organisation,<br />
differs from its larger<br />
influence in that, as well<br />
as focusing on the<br />
environment, it<br />
promotes initiatives to<br />
persuade senior school<br />
children to join the<br />
shipping industry.<br />
Secretary general Dr Michael<br />
Ierides explained that the idea was<br />
to get secondary school pupils<br />
interested in shipping. A biennial<br />
'day of the sea' is held and school<br />
children are encouraged to 'adopt'<br />
a ship by communicating with the<br />
officers by e-mail about twice per<br />
month. Thus far, the scheme has<br />
been extended to around 10 ships<br />
and 10 schools.<br />
Starting at Limassol, Cymepa<br />
members are attempting to visit<br />
the over 100 schools on the island<br />
to give a presentation.<br />
TO<br />
March 2007 • TANKER<strong>Operator</strong> 15
INDUSTRY - US REPORT<br />
Is shipping a good<br />
investment?<br />
Each February, New York's Hellenic American and Norwegian American Chambers<br />
of Commerce host a conference that invariable succeeds in identifying<br />
a topical issue and then bringing together some experts, explains Barry Parker.<br />
The 2007 event, which<br />
drew both locals as<br />
well as visitors from<br />
Europe, homed in on<br />
changing dynamics. The 200 or<br />
so attendees were lectured on<br />
tanker market fundamentals, on<br />
whether shipping can be<br />
considered a good investment,<br />
and a keynote address on the<br />
longer term super-cycle that we<br />
are in the middle of. Away from<br />
the usual pattern, the organisers<br />
arranged for a Marshall Islands<br />
flagged chemical tanker owned<br />
by an American stock exchange<br />
listed shipping company (with<br />
Cypriot technical managers) to<br />
feature on the evening television<br />
news after spilling its bunker<br />
fuel in New York harbourhappily<br />
this was a role playing<br />
exercise only.<br />
Luncheon speaker, Clarkson<br />
Research head Martin Stopford,<br />
added context to the entire day,<br />
suggesting that shipping markets<br />
now have changed radically from<br />
those of the 1950s. One element<br />
of the change has been the rise of<br />
the public company; with more<br />
transparency coming from more<br />
share listings, as pools of money<br />
are attracted to the now thriving<br />
business. Stopford said that the<br />
globalisation of recent years has<br />
propelled trade growth, as<br />
measured in relation to overall<br />
economic growth, to levels way<br />
above its long term averages.<br />
However, while commodity<br />
economists (such as Morgan<br />
Stanley's Wiktor Bielski and<br />
others) would place us at the<br />
beginning of a lengthy series of<br />
rising waves, Stopford suggested<br />
that we could be near a cyclical<br />
peak, reminiscent of the early<br />
1970s and the late 1940s before<br />
that. He suggested that large<br />
vessel orderbooks were<br />
symptomatic of these cyclical<br />
peaks- "shipbuilding is amplified<br />
on the bigger cycles". Stopford<br />
“<br />
did acknowledge the importance<br />
of China, which reflected an<br />
important regional growth spurt<br />
not unlike Japan in the 1970s, but<br />
suggested that economists should<br />
look beyond China into other<br />
parts of Asia. Stopford's most<br />
telling comment while<br />
moderating one of the morning<br />
sessions, "The market's cyclical<br />
rise came very unexpectedly in<br />
2003; it could quite possibly end<br />
just as unexpectedly."<br />
Poten & Partners' General<br />
Counsel, New York-based<br />
Stefanie Kasselakis, offered her<br />
viewpoint on the tanker markets,<br />
concentrating on the impact of<br />
politics over traditional logistics.<br />
She said, "We all come to this<br />
business from different vantage<br />
points." She also suggested that<br />
cyclicality was alive and well, but<br />
that the seasonal aspects may<br />
have changed pointing to the<br />
impact of new players and<br />
different business practices on the<br />
tanker trades. With these new<br />
players, and an emphasis on<br />
political considerations, security<br />
of supply and diversification of<br />
supply, oil or products were no<br />
longer moved simply according<br />
to logistical efficiencies. That is,<br />
tankers may not always take the<br />
shortest voyage.<br />
Tonne-mile increase<br />
Her view on the increased<br />
orderbook was that it had risen<br />
dramatically because vessel<br />
supply would need to expand to<br />
meet the greatly increased tonnemile<br />
demand. She said that with<br />
the new trades (using West<br />
African crude moving to Asia as<br />
one of several examples on a map<br />
criss-crossed with trade routes),<br />
demand for tonnage (measured in<br />
those tonne miles displayed on<br />
her map) had grown dramatically,<br />
and "VLCCs are passing each<br />
other in the night". "Arbitrage<br />
pricing opportunities are driving<br />
the market- this may bring about<br />
a disconnect with traditional<br />
origins and destinations, but it<br />
supports a bigger fleet." She<br />
concluded by saying that the<br />
market was still cyclical, but that<br />
everyone would be surprised how<br />
this cyclicality ends up. But, in<br />
the meantime, the market was<br />
strong in historical terms.<br />
“The market’s cyclical rise came very<br />
unexpectedly in 2003; it could quite<br />
possibly end just as unexpectedly.”<br />
Martin Stopford, Clarkson Research<br />
”<br />
Several bankers and analysts<br />
touched upon tanker-related<br />
issues in various sessions<br />
throughout the one day<br />
conference. Citibank shares<br />
analyst John Kartsonis presented<br />
a cautious view on whether<br />
investors should continue to<br />
pump money into share buying.<br />
Kartsonis provided a numerical<br />
example based on a hypothetical<br />
VLCC owner buying at the<br />
present price, and worked out the<br />
numbers to support his thesis that<br />
the returns available may not be<br />
in line. In discussing the dividend<br />
paying rage (see page 18) among<br />
tanker stocks, he suggested that<br />
companies paying out rich<br />
dividends, and driving stock<br />
prices above company<br />
net asset value, may not be<br />
reserving sufficient money for<br />
16<br />
TANKER<strong>Operator</strong> • March 2007
INDUSTRY - US REPORT<br />
fleet renewal.<br />
During the day others<br />
disagreed with this viewpoint.<br />
Dean Criares, from private equity<br />
powerhouse Blackstone Group, a<br />
newcomer to shipping, talked<br />
about the perceived<br />
supply/demand imbalance in the<br />
US flag sector. Considerable OPA<br />
induced retirements were not far<br />
off, which were behind<br />
Blackstone's decision to invest in<br />
US Shipping Partners- with plans<br />
to build product tankers at the<br />
NASSCO shipyard in San Diego.<br />
Good share trading base<br />
Niels Lyng-Olsen, at DNB Nor<br />
Markets in New York, talked<br />
about the excellent trading<br />
environment for shares now,<br />
exactly because of the divergent<br />
points of view. Lyng-Olsen also<br />
sang the praises of the offshore<br />
sector, where a huge business<br />
backlog and contracts at high<br />
rates are drawing "excess<br />
shipping capital" in. Longtime<br />
banker Paul Slater, Griffin<br />
Holdings Group chairman,<br />
offered a different slant on the<br />
China exuberance. Noting China's<br />
plans to jump to the front of the<br />
shipbuilding leagues, Slater (who<br />
has also been an owner) raised<br />
the spectre of a Japan-like<br />
situation where shipyards were<br />
encouraged to over-build,<br />
with the resultant impact of<br />
cheap freight rates on raw<br />
material imports.<br />
The changing dynamics of the<br />
shipping industry were perhaps<br />
most visible in the mock oil spill.<br />
A local TV reporter peppered US<br />
Coast Guard Captain of the Port<br />
Scot Graham with questions<br />
about the spill's severity and<br />
whether the oil would drift into<br />
Brooklyn and Staten Island. A<br />
dozen role players, including a<br />
leading ship registry and legal<br />
figures, worked through the cycle<br />
of two newsdays; following a<br />
calamitous explosion with loss of<br />
life. The spill was contained and<br />
plans were set in motion to move<br />
the vessel to a terminal for<br />
emergency repairs.<br />
Aside from the sheer<br />
complexity of who exactly does<br />
what, and how funds are<br />
released, a number of interesting<br />
asides emerged. Listed<br />
companies face additional<br />
liabilities, such as suits by<br />
shareholders who see value<br />
evaporating if the market reacts<br />
negatively to the accident. Such<br />
litigation might give owners<br />
cause to move outside the private<br />
company sector, irrespective of<br />
the lofty valuations identified<br />
during the financial presentations<br />
earlier in the day. One sidebar,<br />
ostensibly to compare the mock<br />
event with a real event, the MSC<br />
Napoli containership stranding,<br />
led to a debate between two class<br />
societies attending the<br />
conference- one represented on<br />
the panel, and another offering<br />
divergent opinions from the<br />
audience during the Q & A<br />
session. But the sharpest<br />
delineation of the new era we are<br />
all in came from the fight to<br />
interview crew members between<br />
the P & I Club (tasked with<br />
defending the management and<br />
supporting the crew) and the US<br />
Government attorney (eager to<br />
build a criminal case against the<br />
company, officers and crew).<br />
Probably the greatest<br />
indictment of the criminalisation<br />
trend came from the one outsider<br />
on the panel, TV reporter Eric<br />
Shawn, who sadly had covered a<br />
number of high profile air-crashes<br />
in the New York area. Shawn<br />
observed, "If this were an<br />
airplane accident, the company<br />
president would not hide from<br />
the media, nor would the<br />
government try to lock him up<br />
before a lengthy fact-finding<br />
into what happened."<br />
TO<br />
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March 2007 • TANKER<strong>Operator</strong> 17
INDUSTRY - US REPORT<br />
Cash in the bank,<br />
or in the ship?<br />
<strong>Tanker</strong> companies have gone from strength over the past four years, on the back of<br />
firming freight markets. Even during the dips, timecharter equivalents exceeded the<br />
previous historical highs of the 1980s and 1990s, says Barry Parker.<br />
Maritime partnership<br />
or joint stock<br />
structures are<br />
hardly innovative.<br />
However, when a tanker company<br />
chooses to list on a regulated<br />
exchange, it competes in capital<br />
raising against other sectors<br />
where much of the revenue<br />
capacity has been contracted out<br />
under long contracts. This article<br />
picks out four companies<br />
operated out of the US*.<br />
Nordic American<br />
<strong>Tanker</strong>s (NAT)<br />
Suezmax specialist Nordic<br />
American, with shares trading on<br />
the NYSE (under the symbol<br />
NAT), was formed in the mid<br />
1990's, around three Samsung<br />
built double hull suezmaxes that<br />
were bareboated to BP Shipping<br />
in 1997. NAT's arrangements<br />
were similar to those for UK’s<br />
Knightsbridge; the oil major paid<br />
a bareboat hire of $13,500 per<br />
vessel per day, plus an<br />
operational component of at least<br />
$8,500 per day that could rise<br />
with the market rates on suezmax<br />
trades- as calculated by the<br />
London broker panel.<br />
Upon expiry of the original<br />
charters, with an Ugland related<br />
concern acting as the company's<br />
manager, BP exercised options to<br />
continue employment on two of<br />
the original vessels- under<br />
timecharters indexed to the spot<br />
market. The third was put on a<br />
five year time charter to Gulf<br />
Navigation, through end 2009. At<br />
the same time, NAT was<br />
expanding beyond its original base<br />
and at end 2006, it took delivery<br />
of its 12th double hulled vessel,<br />
named Nordic Cosmos. Built at<br />
Samsung in 2003 for Greek<br />
interests it was sold to NAT as part<br />
of a three vessel deal worth $246<br />
mill. Except for the five year<br />
timecharter, NAT has maintained<br />
spot market exposure - even on<br />
timecharter type contracts.<br />
Technical management was<br />
farmed out to V Ships, OMI and<br />
Teekay (which acquired Ugland<br />
Nordic in 2001), while the spot<br />
vessels operate in various suezmax<br />
pools, including those of Teekay,<br />
OMI, Frontline and StenaBulk.<br />
NAT continued to pay out its<br />
surplus operating cash flow, after<br />
adjusting for needed reserves as<br />
dividends. In its second 2006<br />
stock offering, worth $184 mill<br />
including the 'greenshoe', the<br />
company said: "Our business<br />
strategy is to manage and expand<br />
our fleet in order to enable us to<br />
continue to pay attractive<br />
dividends to our shareholders."<br />
More ships equal more cash flow<br />
and more distributions. Indeed, the<br />
dividend performance has been<br />
impressive, paying $3.57, $5.31,<br />
$4.47 for the results of 2003,<br />
2004, and 2005, respectively, a far<br />
cry from the $1.35 per share paid<br />
out during 2002.<br />
The ability of any tanker<br />
company to pay dividends is<br />
constrained by covenants in credit<br />
facilities, which include measures<br />
of financial strength or ship<br />
valuation in relation to debt<br />
outstanding. NAT entered into a<br />
fresh debt arrangement, which was<br />
renegotiated in late 2005 - and<br />
subsequently upped to $500 mill<br />
in late 2006 in conjunction with an<br />
equity raise. NAT's policy of<br />
capping debt at $15 mill per vessel<br />
is very conservative in a<br />
marketplace where its vessels are<br />
worth $65- $70 mill (mid to late<br />
1990s built) to $80 mill (2002 and<br />
2003 built), and very respectful of<br />
debt covenants which, if violated,<br />
would lead to a prohibition on the<br />
ability to pay dividends.<br />
General Maritime<br />
General Maritime, with stock<br />
symbol GMR, went public in late<br />
Summer 2001, at a price of nearly<br />
$20 per share, with backing of a<br />
smart-money crowd of investors<br />
cultivated by the company<br />
founder, ex-banker Peter<br />
Georgiopoulos. During 2002,<br />
while maintaining a spot posture<br />
in a weak market, GMR shares<br />
dipped to under $5 per share. But<br />
rising rates and accretive<br />
acquisitions turned the company's<br />
fortunes upward. During 2002,<br />
the shares of the then peer<br />
company Stelmar <strong>Tanker</strong>s<br />
(absorbed into OSG in late 2004)<br />
held up much better because of<br />
the defensive strategy of placing<br />
the majority vessels out on<br />
timecharters. But GMR's savvy<br />
set of financial managers,<br />
recognised that they, like<br />
Frontline (which began buying<br />
GMR shares around the same<br />
time), could offer both payouts<br />
with upside. GMR shifted to a<br />
dividend payout strategy in early<br />
2005, which had the effect of<br />
bolstering the share price, partly<br />
on the back of the out-sized<br />
dividend payouts flowing from<br />
Worldscale rates and timecharter<br />
business at historic highs.<br />
In early 2005 presentations to<br />
investors, GMR defined its<br />
strategy, saying: 'We intend to<br />
pay a dividend in an amount<br />
substantially equal to:<br />
• EBITDA during the previous<br />
quarter.<br />
• Less interest expense.<br />
• Less a reserve for indefinite<br />
fleet maintenance and renewal.'<br />
At that time, when GMR had<br />
$250 mill of high yield bond debt<br />
on its books, it added: 'The Board<br />
currently intends to establish a<br />
reserve for maintenance capital<br />
expenditures, as well as the<br />
indefinite renewal of the fleet.'<br />
The slimmed down GMR,<br />
which absorbed two large fleets<br />
and then sold its single hulled<br />
tonnage at premium prices (and<br />
paid off its 10% bonds), has been<br />
a good performer in the stock<br />
market. Its timecharter coverage<br />
was in the middle of the road,<br />
with 55% - the equivalent of nine<br />
vessels, on period employment, to<br />
2009 in some cases.<br />
Meanwhile, the Frontline/SFL<br />
experiment spawned imitators,<br />
with specialist companies created<br />
by larger companies optimising<br />
their finances. Two entities with<br />
similar structures are tied to<br />
StenaBulk/Concordia, and<br />
Overseas Shipholding Group.<br />
Both are large owners that have<br />
been able to profit from the<br />
opportunity to sell vessels in a<br />
strong asset market while<br />
retaining control of the tonnage in<br />
the marketplace.<br />
Arlington <strong>Tanker</strong>s<br />
Arlington <strong>Tanker</strong>s, listed with<br />
symbol ATB on the NYSE is a<br />
18<br />
TANKER<strong>Operator</strong> • March 2007
INDUSTRY - US REPORT<br />
vehicle holding eight modern<br />
vessels (including the two well<br />
known 'V-maxes' Stena Victory<br />
and Stena Vision) operated<br />
commercially by Concordia and<br />
companies in the Stena camp. The<br />
vessels, all technically managed<br />
by a related company- Northern<br />
Marine - are on timecharters at<br />
market reflective rates back to<br />
their sellers varying between three<br />
and five years. Nevertheless, a<br />
market responsive element is tied<br />
on to the basic timecharters, as<br />
described in a recent prospectus:<br />
'each Vessel has the possibility of<br />
receiving additional hire from the<br />
charterers through profit sharing<br />
arrangements related to the<br />
performance of the tanker markets<br />
on specified geographic routes, or<br />
from actual time charter rates.' The<br />
extra hire is computed based on<br />
50% of the surplus earned by the<br />
timecharterer, above the<br />
timecharter rate from ATB, as<br />
computed by specified formulas.<br />
Arlington seeks to pay out the<br />
maximum dividend feasible from<br />
charter hire after paying cash<br />
expenses and establishing<br />
appropriate reserves for<br />
maintenance. Since its founding<br />
in late 2004, dividends have been<br />
paid every quarter. Its prospectus<br />
shows a calculation for estimated<br />
2006 payouts thus:-<br />
Basic hire per timecharters<br />
Extra hire- V Maxes<br />
Extra hire- panamaxes and product carriers<br />
ESTIMATED TOTAL HIRE RECEIVED<br />
Less vessel operating expenses<br />
Less company administrative expenses<br />
Less finance expenses (interest only on debt)<br />
In the calculation above, the<br />
vessel operating expenses, set at<br />
$5,843/day during 2007 for its<br />
four product tankers, $6,339/day<br />
for its two panamaxes, and<br />
$8,269/day for the V-maxes,<br />
include a reserve for drydocking.<br />
The financial expenses reflect the<br />
terms of Arlington's loan with<br />
Royal Bank of Scotland, which<br />
provides for no repayments of<br />
principal prior to maturity (in<br />
January, 2011).<br />
Double Hull <strong>Tanker</strong>s<br />
(DHT)<br />
OSG, a giant in its own right,<br />
controlling more than 12 mill<br />
dwt, has been exploring varied<br />
financing strategies in recent<br />
years, including operating ships<br />
that are owned by others; this<br />
enables an 'off the books'<br />
accounting treatment not<br />
$64.5 mill<br />
$2.4 mill<br />
$2.3 mill<br />
$69.2 mill<br />
-$18.8 mill<br />
-$2.4 mill<br />
-$12.3 mill<br />
ESTIMATED CASH AVAILABLE FOR DIVIDENDS $35.7 mill<br />
ESTIMATED PER SHARE DIVIDEND<br />
Arlington's V-Maxes are on timecharter back to the sellers at market reflective rates.VisiononthebusyDelawareRiver<br />
$2.30p/share<br />
employing capital. In 2005, it<br />
created a new company, DHT,<br />
which owns three VLCCs and<br />
four aframaxes, all modern ships<br />
that are timechartered back to<br />
OSG with various expiry dates<br />
in late 2010 through 2012 and<br />
later, if renewal options are<br />
exercised. Like Arlington, DHT<br />
holds on to funds needed to pay<br />
all its expenses, with the<br />
intention of passing through the<br />
maximum feasible amounts<br />
(after establishing needed<br />
reserves) to shareholders.<br />
Similarly to ATB, an affiliated<br />
company handles technical<br />
management.<br />
The charter rates, reflecting<br />
the strong period market at the<br />
time the deal was structured in<br />
3Q 2005, also provide for a 40%<br />
profit split on spot market rates<br />
earned by OSG employing the<br />
ships in their respective VLCC<br />
and aframax pools - <strong>Tanker</strong>s<br />
International and Aframax<br />
International. Management fees<br />
for much of 2007 are $5,800 per<br />
day on aframaxes and $6,500 per<br />
day for VLCCs. In a recent<br />
prospectus for shares being sold<br />
as OSG reduces it's holding in<br />
DHT, it estimated cash available<br />
for distribution to be $1.23 per<br />
share during 2007, down from<br />
anticipated 2006 levels. The<br />
volatility of DHT's dividends<br />
reflect the volatile market in the<br />
VLCC and aframax sectors; its<br />
1Q 2006 payment was a strong<br />
53 cents per share; its is<br />
estimating that its 4Q 2006<br />
dividend will be 30 cents per<br />
share, which would put<br />
dividends for 2006 earnings at<br />
$1.61 per share.<br />
The future<br />
In 2007, after nearly half a decade<br />
of healthy shipping markets, the<br />
sometimes conflicting concerns of<br />
yield (periodic payouts in relation<br />
to share price) and revenue<br />
visibility (the proportion of<br />
potential vessel-days are<br />
committed in forward markets)<br />
have been important<br />
considerations to investors. In the<br />
marketplace, analysts said that<br />
tanker companies with higher<br />
payouts, and yields competing<br />
with bond investments, achieve a<br />
higher ratio of share price to net<br />
asset value per share than their<br />
cash-hoarding brethren.<br />
Ten years after the formation of<br />
UK-based Knightsbridge <strong>Tanker</strong>s,<br />
Singapore has now got the bug,<br />
with First Ship Lease and its<br />
portfolio of long term steady<br />
paying charters, including seven<br />
products and chemical tankers, is<br />
now set to be offered to the public.<br />
When the market picks up, several<br />
tanker IPOs presently on hold, but<br />
in the pipeline, may well be<br />
brought to market. No doubt,<br />
investors and ship operators will<br />
be keenly aware of this aspect of<br />
TO<br />
company valuation.<br />
*A profile of a few<br />
quoted UK-based<br />
companies will appear in<br />
the April issue of<br />
TANKER<strong>Operator</strong>.<br />
March 2007 • TANKER<strong>Operator</strong> 19
INDUSTRY - CMA/INTERTANKO REPORT<br />
Its Stamford then<br />
south to Houston<br />
The first is the<br />
Connecticut Marine<br />
Association's (CMA)<br />
Shipping 2007<br />
shipping and trade conference<br />
plus its attendant exhibition in its<br />
usual home of Stamford,<br />
Connecticut, while the second,<br />
Intertanko's Houston <strong>Tanker</strong><br />
Event, takes place a week later.<br />
Intertanko's Bill Box explained<br />
that the date had been picked a<br />
long time ago and that the timing<br />
had been more positive than<br />
negative in that would be<br />
participants have said that they<br />
would take advantage of both.<br />
First, under the banner of<br />
'Adapting to Change - Riding the<br />
Dragon', CMA's annual event<br />
takes place at the Westin<br />
Stamford from 19th-21st March.<br />
A new addition this year, given<br />
the drive to recruit people into the<br />
shipping industry worldwide, is a<br />
'job fair' taking the form of table<br />
top displays given by companies<br />
looking to hire new people.<br />
More than 1,700 visitors are<br />
expected from 50 countries<br />
attending the conference sessions<br />
and visiting the exhibition area.<br />
However, the undoubted highlight<br />
of each event is the annual<br />
Commodore Award presentation,<br />
which for 2007 goes to Morten<br />
Arntzen, president and ceo of the<br />
Overseas Shipholding Group<br />
(OSG). This is presented at the<br />
gala dinner on Wednesday 21st<br />
March. Last year's recipient was<br />
Torben Jensen, chairman and ceo<br />
of the Clipper Group. The first<br />
person to be awarded<br />
Commodore status was Ole<br />
Skaarup in 1990.<br />
Shipping 2007 kicks off on<br />
Monday afternoon 19th March<br />
when the exhibition opens and<br />
the first conference session takes<br />
place. Called 'Defining<br />
During March two major conventions<br />
take place in the US somewhat<br />
surprisingly almost on top of one another<br />
yet at different ends of the country.<br />
Leadership', it will be opened by<br />
CMA's president Peter Drakos, a<br />
partner in Blank Rome LLP. The<br />
moderator will be Per<br />
Heidenreich of Heidmar.<br />
Bill Gallagher's IRI is<br />
sponsoring CMA's first<br />
evening cocktail party.<br />
The first panel for the session<br />
will include Admiral Thad Allen,<br />
commandant USCG; Philip<br />
Embiricos, director Embiricos<br />
Shipbrokers and president<br />
designate of BIMCO; Sean<br />
Connaughton, maritime<br />
administrator, US Department of<br />
Transport (MarAd) and Spyros<br />
Polemis, chairman ICS, president<br />
ISF and chairman and managing<br />
director of Seacrest Shipping.<br />
The second panel will consist<br />
of Intertanko's managing director<br />
Peter Swift, ABS's recently<br />
appointed president and coo<br />
Christopher Wiernicki and Ole<br />
Stene, president InterManager<br />
and managing director Aboitiz<br />
Jebsen Bulk Transport.<br />
This will be followed by the<br />
opening cocktail reception<br />
sponsored by International<br />
Registries (IRI).<br />
On Tuesday 20th March, the<br />
morning session will be split into<br />
two distinct forums. One will<br />
address the complexity of<br />
markets in the 21st Century,<br />
while the other will take in the<br />
technical and regulatory changes.<br />
The moderator of the markets'<br />
morning is Jeremy Penn, the ceo<br />
of the Baltic Exchange and the<br />
panellists will include Peter<br />
Sandler, director Louis Dreyfus<br />
Commodities; Jonathan<br />
Rodriguez-Atkatz, ceo Jacob<br />
Stern & Sons; David Morgan,<br />
managing director Morgan<br />
Stanley; Gilbert Landy, a broker<br />
with Pasternak Baum; Robert<br />
Curt vice president, SeaRiver<br />
Maritime and Ted Petrone,<br />
president Navios Corp.<br />
As for the regulatory sessions,<br />
the moderator will be Clay<br />
Maitland, managing partner of<br />
IRI. LR's Alan Gavin will present<br />
a paper on 'The Politics and<br />
Realities of Criminality in<br />
Europe: Significant Challenges<br />
and Constructive Approaches.<br />
Gavin will be followed by Joseph<br />
Cox, president and ceo of the<br />
Chamber of Shipping of America<br />
who will address 'Environmental<br />
Compliance: When the<br />
Department of Justice is Intent on<br />
Jail, how do you avoid the trap?'<br />
The next conference addresses<br />
KPIs under the stewardship of<br />
Svein Sorlie, senior vice<br />
president Wilh Wilhelmsen and<br />
chairman InterManager's KPI<br />
steering committee. He will be<br />
joined by Peter Cremers, ceo<br />
Anglo-Eastern and Eric<br />
Christensen, commander USCG<br />
and Tor Svensen, DNV's coo.<br />
At lunch, the keynote speech<br />
will be given by Bureau Veritas'<br />
Bernard Anne.<br />
During the afternoon, professor<br />
Costas Grammenos of London's<br />
City University will moderate on<br />
a session devoted to 'Maritime<br />
Clusters', which will include<br />
panellists such as Michael<br />
Hudner, chairman and ceo B&H<br />
Management; Ken McLean,<br />
director Bahamas Maritime<br />
Authority; Stamatis Molaris,<br />
president and ceo of Quintana<br />
Maritime and Saleem Alavi,<br />
business development manager of<br />
Dubai Maritime City.<br />
Another evening cocktail<br />
reception will end the day's affairs<br />
coinciding with the Job Fair.<br />
Wednesday is another split day<br />
with one session (Track 1)<br />
looking at the expansion of the<br />
Panama Canal, while the other<br />
(Track 2) addresses legal issues.<br />
The moderator for the Panama<br />
Canal session is Ernst Frankel,<br />
professor of management, Sloan<br />
School of Management,<br />
Massachusetts Institute of<br />
Technology. Not surprisingly, the<br />
panellists include Alberto Aleman<br />
Zubieta, the Panama Canal's<br />
administrator; Robert West of<br />
Global Insight and Alexei<br />
Oduber, administrative manager,<br />
GAC - Wilford & McKay.<br />
Following this, the next session<br />
looks at manning under the<br />
moderator Robert Kunkel, vice<br />
president business development,<br />
Seacoast Electronics and<br />
20<br />
TANKER<strong>Operator</strong> • March 2007
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chairman Short Sea Shipping<br />
Cooperative Program (SCOOP).<br />
Kunkel will be joined by<br />
Roberto Giorgi, V Ships'<br />
president; Norm Gauslow, vice<br />
president marine labour relations,<br />
OSG; John Torgersen, quality<br />
and safety director of McAllister<br />
Towing and Transportation and<br />
Rear Admiral Peter Brady,<br />
director general of the Maritime<br />
Authority of Jamaica and also<br />
chairman of the IMO STCW<br />
sub-committee.<br />
The parallel conference on<br />
Wednesday morning tackles legal<br />
issues and is co-sponsored by the<br />
US Maritime Law Association<br />
and the Admiralty Committee of<br />
the Association of the Bar of New<br />
York City.<br />
The moderator will be<br />
Raymond Burke Jr, counsellor at<br />
law and partner in Burke &<br />
Parsons, while the first session<br />
looks at the legal loopholes<br />
allowing single hull tankers to<br />
trade after 2010 with James<br />
Power, attorney, Holland &<br />
Knight at the helm. Arrest of<br />
ships will be addressed by<br />
Clive van Aerde, lawyer and<br />
partner with Van Aerde &<br />
Partners and recent<br />
developments in US taxation<br />
will be looked at by Joseph<br />
Gulant, partner Blank Rome.<br />
During the afternoon, delegates<br />
and panellist will discuss<br />
branding - how shipowners<br />
distinguish themselves. The<br />
moderator for this session will be<br />
Brad Berman, president of the<br />
Liberian Registry. The panellists<br />
will include Gary Vogel,<br />
managing director Clipper Bulk<br />
(USA); Kim Ullman, executive<br />
vice president and coo<br />
StenaBulk; Keith Denholm,<br />
commercial director Pacific<br />
Carriers; Paul Gridley, chairman<br />
and ceo US Shipping Partners<br />
and Jean Lemay, senior vice<br />
president Fednav.<br />
In the evening, the whole event<br />
ends on a high when the<br />
Commodore Gala Dinner takes<br />
place at which Morten Arntzen<br />
assumes the title of Commodore<br />
from predecessor Torben Jensen.<br />
Peter Swift, Intertanko's<br />
managing director.<br />
Intertanko<br />
This event kicks off on Sunday<br />
25th March with a welcome<br />
reception at the venue - Houston's<br />
Hilton Post Oak Hotel. All day<br />
Monday and on Tuesday<br />
morning, Intertanko will hold its<br />
executive committee meeting,<br />
which is closed to all other than<br />
to committee members.<br />
Past events have drawn anything<br />
from 400-500 people through the<br />
door and there are around 15<br />
exhibitors at this year's event.<br />
For the three day conference,<br />
once again an array of top speakers<br />
has been lined up covering many<br />
subjects, all of which are pertinent<br />
to the tanker industry.<br />
The seminars start on Monday<br />
26th March with three sessions<br />
on the technical issues facing<br />
shipping, such as air emissions<br />
and common structural rules. The<br />
chairman is Intertanko's Dragos<br />
Rauta. His first panel includes<br />
Keith Michel of Herbert<br />
Engineering, Dr Rudolph<br />
Kassinger of DNV Petroleum<br />
Services and Gary Horn of ABS.<br />
The second panel will discuss<br />
chemicals and biofuels with Inge<br />
Steensland's Tina Gilje, ABS'<br />
Philip Rynn, Kinder Morgan's<br />
John Mahon and Dow Chemical's<br />
Dennis Reiswig. Another couple<br />
of panellists have been invited to<br />
lead a debate on the LNG Market,<br />
notably Braemar Seascope's<br />
Debbie Turner and BG LNG<br />
Services' Marc Hopkins.<br />
Later on in the afternoon the<br />
The Marshall Islands<br />
maritime registry<br />
Service and Quality are Within Your Reach<br />
International Registries, Inc.<br />
The Marshall Islands Maritime and Corporate Administrator<br />
Tel: +1-703-620-4880 Fax: +1-703-476-8522 E-mail: info@register-iri.com<br />
Contact Any One of IRI’s Worldwide Locations<br />
Dalian • Ft. Lauderdale • Hamburg • Hong Kong • London • New York • Piraeus • Shanghai • Singapore • Tokyo • Washington, DC/Reston • Zurich<br />
www.register-iri.com<br />
22<br />
TANKER<strong>Operator</strong> • March 2007
INDUSTRY - CMA/INTERTANKO REPORT<br />
contentious subject of vetting will<br />
be aired with the help of V Ships'<br />
Bob Bishop who is in the chair<br />
and is also Intertanko's vetting<br />
committee chairman. He will be<br />
helped by John Dudley, vice<br />
president Koch Shipping and<br />
Doug McCormick, insurance<br />
manager Chevron Shipping.<br />
On Tuesday 27th March, the<br />
conference will be opened by<br />
Intertanko chairman Stephen van<br />
Dyck and his keynote speakers<br />
will be the USCG's commandant<br />
Admiral Thad Allen and the<br />
executive director of the Port of<br />
Houston.<br />
In the afternoon, a more<br />
commercial tone will be adopted<br />
chaired by Basil Mavroleon,<br />
managing director of shipbrokers<br />
Charles R Weber and a member of<br />
Intertanko's associate committee.<br />
Speakers will include EA Gibson's<br />
Steve Christy, Braemar Seascope's<br />
Colin Cridland, Inge Steensland's<br />
Tina Gilje, McQuilling Services<br />
David Saginaw and Trans-Energy<br />
Research Associates' Nancy<br />
Yamaguchi.<br />
On Wednesday 28th March, the<br />
talk turns to the Poseidon<br />
Challenge, once again under the<br />
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Intertanko's chairman Stephen<br />
Van Dyck.<br />
chairmanship of Stephen van<br />
Dyck. Speakers for the morning<br />
session will include Mitch Tamiya<br />
of NYK; Rear Admiral Craig<br />
Bone of the USCG, LR's Alan<br />
Gavin representing class;<br />
FONASBA's president Philip<br />
Wood, representing the agents<br />
viewpoint; LISCR's Brad Berman<br />
representing flag states; SAMCO's<br />
Bengt Hermelin, representing the<br />
owners; and IUMI's president<br />
Deidre Littlefield who will be<br />
representing hull insurance<br />
interests.<br />
After lunch, Stephen van Dyck<br />
will introduce OSG's Bob<br />
Johnson for the owners; a leading<br />
ship manager; Thomas Tay of the<br />
Singapore Maritime Officers'<br />
Union and a board member of the<br />
ITF, representing the seafarers; a<br />
cargo representative; the<br />
executive director of the Port of<br />
Houston, who is also the<br />
president of IAPH, representing<br />
the ports; Don Toenshoff of<br />
Marine Spill Response and<br />
representatives of both pilots and<br />
the finance sector.<br />
The procedures end with a gala<br />
dinner, sponsored by OSG,<br />
General Maritime and the<br />
Marshall Islands Registry (IRI).<br />
A separate event takes place on<br />
Thursday 29th March, which<br />
takes the form of an International<br />
Seminar on <strong>Tanker</strong> Chartering - A<br />
Legal Perspective.<br />
TO<br />
24<br />
TANKER<strong>Operator</strong> • March 2007
Winner - Sea Trade,<br />
Dubai International<br />
Maritime Awards, 2006 for<br />
“Outstanding Maritime Services”<br />
Finalist - Lloyd's List,<br />
Middle East and Indian<br />
Subcontinent Awards, 2006 for<br />
“Shipping Agent of the Year”
INDUSTRY - SHIPMANAGEMENT<br />
Creating a socially<br />
acceptable profession<br />
While leading<br />
shipmanagement<br />
companies who<br />
employ huge<br />
pools of seafarers - V Ships alone<br />
employs some 23,000 seafarers as<br />
well as a further 1,600 shore staff<br />
- seek to retain experienced<br />
personnel by increasingly<br />
investing in training and<br />
developing initiatives to improve<br />
the welfare of crews and their<br />
families, poaching staff has<br />
become a major issue.<br />
Indeed, Emmanuel Vordonis,<br />
executive director, Thenamaris<br />
Ships Management, warned in his<br />
keynote address to the recent<br />
annual LSM Ship Management<br />
Conference in Cyprus: "With new<br />
vessels coming into the market at<br />
a rapid pace, companies will start<br />
poaching seafarers from one<br />
another as there is a desperate<br />
need to man these ships."<br />
Another recent development<br />
that must be of concern to<br />
shipmanagers has seen oil major<br />
BP take back control of ships'<br />
officers in its growing fleet from<br />
the hands of Dorchester Atlantic<br />
Marine. According to BP<br />
Shipping, the main reason for the<br />
move is rapid fleet growth and an<br />
ability to ensure enough<br />
competent key personnel to meet<br />
requirements.<br />
One leading Hong Kong<br />
shipmanager told<br />
TANKER<strong>Operator</strong> that as far as<br />
the crewing problem goes, "we<br />
have seen nothing yet". He said<br />
that in addition to market<br />
pressures for quality sea staff,<br />
heightened by the recent<br />
newbuilding boom, the problem<br />
was exacerbated by formerly<br />
unacceptable people being<br />
employed without references<br />
being taken and without regard to<br />
Without any shadow of doubt the key issue<br />
concentrating the minds of shipmanagers<br />
is crew, or rather the lack of them,<br />
writes Nigel Kitchen.<br />
their poor previous performance.<br />
Faced with such issues, last<br />
December V Ships took the<br />
decision to rebranded its crewing<br />
operation under the name V<br />
People Marine, with headquarters<br />
on the Isle of Man. Managing<br />
director David Greenhalgh said<br />
the new brand's aim was to<br />
become the preferred seafarer<br />
employer by approaching the<br />
crewing of ships in a strategic<br />
fashion. V People Marine's crew<br />
recruitment network is to be<br />
expanded and will seek to develop<br />
David Greenhalgh,<br />
md of V People Marine.<br />
long-term relationships with<br />
professional seafarers, as it has<br />
about 16,000 positions to fill on<br />
about 900 managed vessels and<br />
others to supply on a contractual<br />
basis to further owners.<br />
A substantial cadet training<br />
programme is in place with 750<br />
cadets. The company currently<br />
sources seafarers from Poland,<br />
Lithuania, Latvia, Russia (five<br />
offices), Ukraine (four offices),<br />
Georgia (two offices), Romania,<br />
Bulgaria, Croatia and<br />
Montenegro (two offices), Italy<br />
(two offices), India (five offices),<br />
Myanmar, Philippines, China,<br />
Brazil and Canada.<br />
The sheer enormity of the<br />
seafarer shortage crisis was<br />
emphasised recently at the<br />
Cyprus conference by Emmanuel<br />
Papalexis, chairman and ceo of<br />
Mare International, who said<br />
more than 4,700 vessels will be<br />
built between the end of 2006 and<br />
2010, with 50% of these<br />
replacing existing tonnage. This<br />
means that there will be about<br />
2,400 additional vessels requiring<br />
10,000 extra officers and 60,000<br />
more ratings. Papalexis asked<br />
why people don't go to sea given<br />
that: "The employment conditions<br />
today are excellent. Short-service<br />
contracts, good salaries, good<br />
food, good accommodation,<br />
adequate facilities on board and<br />
ample help from ashore."<br />
So what are we doing wrong?<br />
It is a fact that ratings from<br />
traditional European maritime<br />
nations have been seriously<br />
depleted for many years and there<br />
appears no way of reversing this<br />
and that the number of officers is<br />
getting smaller on a daily basis<br />
and at such a speed that, in a few<br />
years time, it may be difficult to<br />
find one. Papalexis does not<br />
believe that it is only; "…..new<br />
'draconian' legislation, such as the<br />
European Union Criminalisation<br />
of Accidental Pollution, which<br />
keeps people away".<br />
He said: "I believe that what<br />
we have failed to achieve so far,<br />
as an industry, is to create a<br />
feeling of confidence that going<br />
to sea is a life-long career and,<br />
moreover, a good one. That it is a<br />
career which has continuation.<br />
The continuation will bring them<br />
to shore management to become,<br />
for example, port captains, port<br />
engineers and surveyors. We need<br />
to 'upgrade' the profession of<br />
mariner and to make it socially<br />
acceptable."<br />
Nigel Cleave, ceo of Epic Ship<br />
Management (see page 10), puts<br />
more emphasis on the<br />
criminalisation of seafarers issue,<br />
while accepting that the "shortage<br />
of officers is a matter on<br />
everyone's mind today". He said:<br />
"At Epic, we will continue to<br />
retain our long-serving, loyal and<br />
dedicated sea staff, where good<br />
promotion prospects exist as a<br />
result of expansion in our<br />
managed fleet. We will also<br />
maintain market level terms and<br />
conditions. So far as<br />
criminalisation is concerned, we<br />
will continue to lobby through the<br />
respective organisations to protect<br />
a seafarer's interest."<br />
On the issue of terms and<br />
conditions, Vordonis asked the<br />
Cyprus conference whether<br />
commodity market pricing<br />
policies should be applied to<br />
seafarers. "Is it right to increase<br />
the salary of a Filipino officer<br />
from $2,000 per month to say<br />
$9,000 per month when demand<br />
for their services is high, but then<br />
when the situation changes,<br />
reduce the wages back to the<br />
former?" The problem of officers<br />
from around the world seeking<br />
different conditions of<br />
26<br />
TANKER<strong>Operator</strong> • March 2007
INDUSTRY - SHIPMANAGEMENT<br />
employment was highlighted by<br />
Mike McCabe, fleet personnel<br />
manager, Dobson Fleet<br />
Management, who pointed out<br />
that while many European<br />
officers wished for shorter tours<br />
of duty of four months, Indian<br />
officers preferred longer voyages.<br />
Further challenges<br />
While accepting that sourcing<br />
quality crew is the biggest<br />
challenge facing the industry,<br />
McCabe said that there were<br />
further daunting challenges to be<br />
met. "The International Marine<br />
Employers' Committee is<br />
seriously concerned about the<br />
need to not only train more<br />
officers, but to ensure the training<br />
quality improves. The insurance<br />
company AON has warned that<br />
the shortage of skilled officers is<br />
threatening to result in an<br />
increase in claims resulting from<br />
human error and the ILO is<br />
saying there needs to be an<br />
internationally agreed minimum<br />
standard for maritime working<br />
conditions."<br />
According to Papalexis it is not<br />
too late to promote seafaring as<br />
socially acceptable. He said: "I<br />
see thousands of college<br />
graduates who, after several years<br />
of studies, remain unemployed or<br />
are compelled to undertake<br />
menial jobs for which they are<br />
overqualified. I believe that it is<br />
possible to attract these people<br />
and make them believe in this<br />
profession, provided that we will<br />
be in a position to prove to them<br />
that 'we mean business'.<br />
"Provision of long-term<br />
contracts, pension schemes, jobs<br />
ashore ... are some of the<br />
ingredients and incentives which<br />
can be used to attract people and<br />
keep them. And while this is one<br />
aspect of the manning problem,<br />
the other is how we handle the<br />
mariners we already have. We<br />
hope and assume that they will<br />
operate our ships in a safe,<br />
efficient, environmentally<br />
friendly and economical manner."<br />
Papalexis then posed the<br />
question: "Do we ask too much?"<br />
He maintained this probably is<br />
Ms Annette Malm Justad, new EMS ceo.<br />
not the case, "particularly if we<br />
put our demands in a logical<br />
perspective and understand these<br />
people better".<br />
He said: "We have to consider<br />
where these people come from,<br />
their social background, their<br />
educational standard, their<br />
behaviour and their abilities. If<br />
we do not carefully consider all<br />
these factors and, instead, we try<br />
to assimilate them into a<br />
sophisticated environment which<br />
they may have difficulty in<br />
understanding, we will fail as<br />
ultimately it will prove<br />
too daunting."<br />
The key Papalexis believed<br />
was training. "Dealing with the<br />
manpower issue we should bear<br />
in mind the ever increasing cost<br />
of vessels and their equipment.<br />
Assets of many millions of<br />
dollars are entrusted in the hands<br />
of 20 to 30 people serving on<br />
board. It is therefore common<br />
sense that these people [crews]<br />
should be properly educated,<br />
trained and have the appropriate<br />
experience. It is obvious that<br />
when budgeting crew costs, they<br />
should be directly proportionate<br />
to the cost of the investment for<br />
the acquisition and operation of<br />
the vessel itself."<br />
TESMA is no more<br />
Meanwhile, in another rebranding<br />
exercise the well known name of<br />
TESMA has been replaced by<br />
EMS Ship Management. Eitzen<br />
Maritime Services, the parent<br />
company of the global maritime<br />
services group operating within<br />
three business sectors, is to<br />
rebrand all subsidiary companies<br />
in a drive to create a larger and<br />
more competitive group.<br />
According to ceo Annette Malm<br />
Justad: "We believe size is<br />
important and is becoming a<br />
major driver. We at EMS want to<br />
be prepared for the consolidation<br />
in the maritime industry."<br />
The three segments that make<br />
up EMS are TESMA Holding, a<br />
shipmanagement company<br />
delivering full technical<br />
management to 117 vessels and<br />
crewing to 275 vessels; Strømme,<br />
an international ship supply<br />
company delivering products and<br />
services to more than 4,000<br />
vessels annually and Polaris, an<br />
insurance broker to an<br />
international client base. All<br />
subsidiaries were re-branded<br />
to EMS Ship Management,<br />
EMS Ship Supply and EMS<br />
Insurance Broker respectively on<br />
1 st February this year.<br />
Justad explained that the<br />
supply and management sectors<br />
are both essential to the running<br />
of a ship and that by combining<br />
them, EMS can achieve larger<br />
economies of scale and obtain<br />
better terms and conditions by<br />
buying larger volumes to the<br />
benefit of the shipowner<br />
and EMS.<br />
Sales at EMS in 2005 reached<br />
NoK505 mill, up from NoK442<br />
mill in 2004, although gross<br />
profit was down to NoK83 mill<br />
compared with NoK174 mill in<br />
2004. Sales to the third quarter of<br />
last year were NoK445 mill, with<br />
gross profit up to NoK160 mill.<br />
Last year, EMS continued to<br />
expand through acquisition.<br />
Justad explained: "By including<br />
Polaris the group extended the<br />
service range to shipowners and<br />
the acquisition of Blystad Ship<br />
Management gave further<br />
economies of scale. The group is<br />
well balanced with regard to the<br />
two main divisions. Last year was<br />
used to build the business and to<br />
clean up the accounts.<br />
Procurement and branding<br />
projects were initiated and the<br />
number of vessels on technical<br />
management and crewing rose by<br />
25% and ship supply revenue<br />
rose revenue by 31%."<br />
According to Justad, EMS's<br />
strategy is to improve<br />
procurement and organisational<br />
efficiency. "We want to release<br />
operational synergies and volume<br />
potential to deliver high revenue<br />
growth and expand our global<br />
network. Today EMS is located in<br />
the traditional shipping centres,<br />
but we also see other<br />
geographical areas with growth<br />
potential. We will actively seek<br />
acquisition targets and new<br />
partners and also aim to<br />
grow organically."<br />
She continued: "I see ship<br />
management and ship supply as<br />
complimentary businesses where<br />
our people have a better insight<br />
into each other's segments and are<br />
able to provide knowledge driven<br />
services to the shipowners with a<br />
focus on maintaining<br />
transparency and building trust".<br />
Justad is pragmatic in her<br />
approach and accepts that the<br />
EMS' business model is a<br />
concept which will take time to<br />
be established and for<br />
shipowners to realise its<br />
complete benefits.<br />
TO<br />
28<br />
TANKER<strong>Operator</strong> • March 2007
TECHNOLOGY - CARGO MONITORING<br />
Military specialist<br />
goes commercial<br />
For a company that was the first to hit upon the concept of radar based liquid level<br />
sensors, VEGA Grieshaber is not a name that springs easily to mind when thinking about<br />
liquid cargo measurement. But that was 20 years ago in 1987, writes Brian Warshaw.<br />
By 1991, the<br />
Company was in a<br />
position to reveal<br />
the results of its<br />
development work - an<br />
instrument that used a pulse to<br />
obtain the level of a liquid in a<br />
tank. A further four years on, in<br />
1995, microprocessor technology<br />
had reached the stage where it<br />
could be integrated into the<br />
instrument, thereby increasing<br />
the sensor's memory capacity,<br />
and enabling the introduction of<br />
a digital signal processor using<br />
fuzzy logic algorithms to aid<br />
in echo discrimination. Two<br />
years on it became possible to<br />
power the microprocessorcontrolled<br />
sensor via a 2-wire,<br />
4-20mA signal.<br />
Developments to the sensor<br />
have continued, and, today,<br />
more than 175,000 non-contact<br />
radar units have been sold for<br />
level measurement in storage<br />
tanks on land and at sea. In<br />
January this year, a new low<br />
temperature unit was added to<br />
the range, which is suitable for<br />
use with LNG products.<br />
The shipbuilding industry is<br />
just one in which VEGA sensors<br />
are sold, operating on vessels<br />
worldwide, in applications<br />
covering cargo and ballast tanks,<br />
oil and water monitoring,<br />
separation, fuels and waste water<br />
tanks, and ship engine<br />
management systems, as well as<br />
measurement systems controlling<br />
the ship's trim and list.<br />
Four years ago, VEGA<br />
introduced a system it called<br />
plics®. Plics® is a mix and<br />
match design concept for<br />
assembling the units, allowing<br />
the use of different process<br />
connections, standard or<br />
adjustable indication, four<br />
versions of housing - plastic,<br />
stainless steel, coated<br />
aluminium, a choice of<br />
electronics, and different sensor<br />
types. The concept and units<br />
have gained approval from<br />
several classification societies,<br />
including Lloyd’s Register, GL,<br />
RINA, ABS, CCS and Det<br />
Norske Veritas.<br />
In recent years, VEGA has<br />
focused on developing products<br />
that provide a high level of<br />
reliability, seeking to prevent<br />
cargo tanks being overfilled. The<br />
sensors can be used for<br />
continuous level measurement<br />
and provide dual redundant<br />
monitoring by installing level<br />
switches in the cargo tanks. IMO<br />
regulations require that, when the<br />
level reaches 95%(High), and<br />
again at 98% (High High) of tank<br />
capacity, the alarm must be<br />
raised and indicated on various<br />
control panels.<br />
The principle of operation<br />
adopted for the VEGAPULS 63,<br />
which is the radar sensor that it<br />
recommends for level<br />
measurement in the cargo tanks,<br />
is to use extremely short<br />
microwave pulses with low<br />
emitted power in the C-band and<br />
K-band frequency range. The<br />
pulses are directed at the product<br />
surface and on contact are<br />
reflected back, and are received<br />
by the antenna system. With<br />
tank dimensions preloaded into<br />
the microcomputer, the level and<br />
volume of product in the tank<br />
can be calculated, based on the<br />
time that lapsed between the<br />
transmitted and returned pulses;<br />
lapsed time being proportional to<br />
the level of the liquid in the<br />
tank. The signal processing<br />
software ECHOFOX®<br />
embedded in the microprocessor<br />
is able to detect the level echo<br />
reliably out of a number of false<br />
reflections and to measure the<br />
echo exactly.<br />
TO<br />
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kaminco@kaminis.com www.kaminis.com<br />
30<br />
TANKER<strong>Operator</strong> • March 2007
TECHNOLOGY - NAVAIDS<br />
What’s the latest<br />
with ECDIS?<br />
ECDIS equipment has been on the market since 1998 but for most shipping companies<br />
it remains as something to fit in the future, if at all. Probably rather less than 10%<br />
of vessels are using ECDIS and of these only a small proportion are using ENCs,<br />
which are the official vector charts, writes Andy Norris.<br />
There now seems to be<br />
less misunderstanding<br />
concerning electronic<br />
charts. Most bridge<br />
officers and technical<br />
superintendents know that ECDIS<br />
is the IMO approved electronic<br />
chart system. When displaying<br />
updated ENCs, which are<br />
inherently authorised by national<br />
hydrographic offices, use of<br />
ECDIS can replace the use of<br />
paper charts.<br />
In practice, flag states set the<br />
detailed requirements,<br />
particularly those regarding<br />
backup, which could for instance<br />
be another ECDIS or a suitable<br />
set of paper charts. It is<br />
interesting that the main takeup<br />
of ECDIS has been on ships<br />
that have safety high on the<br />
agenda, including tankers and<br />
cruise liners.<br />
ENC coverage during February this year.<br />
The IMO Safety of Navigation<br />
sub-committee (NAV) has<br />
recently looked at both the safety<br />
and the cost effectiveness of<br />
ECDIS, and favourably<br />
commented on the positive<br />
results from formal safety<br />
assessments undertaken by<br />
member states on various<br />
examples of vessel: an 80,000<br />
dwt oil tanker, a 4,000 dwt<br />
products tanker, a 75,000 dwt<br />
bulk carrier and passenger ships<br />
covering a range of sizes.<br />
RNC Coverage<br />
So if ECDIS is so good, why has<br />
it yet to catch on? The most<br />
valid reason is that ENC<br />
coverage is not complete.<br />
However, the situation is rapidly<br />
improving. The illustration<br />
shows the coverage as at<br />
February 2007. The red areas<br />
show the ENC cells currently<br />
available and the blue areas<br />
those cells under preparation.<br />
An up-to-date version of this<br />
diagram can be downloaded<br />
from http://ih-net-www.<br />
hidrografico.pt/website/icenc/<br />
viewer.htm.<br />
Over 6,000 ENC cells are<br />
available for use; this is<br />
increasing by about 1,000 every<br />
year. It is seen that much of the<br />
coastline of Europe, Asia and<br />
North America is already covered<br />
at a detailed level. Many ocean<br />
areas are also covered by<br />
overview charts.<br />
IMO's Maritime Safety<br />
Committee (MSC) is currently<br />
determining whether there should<br />
be a phased introduction of<br />
compulsory carriage requirements<br />
for ECDIS on all vessels. It has<br />
already mandated that ECDIS is<br />
fitted to high speed craft from 1st<br />
July 2010. NAV is giving<br />
preliminary consideration to the<br />
proposal, with a view to<br />
submitting a report to MSC<br />
in 2008.<br />
The discussion at NAV has<br />
already emphasised that 'ENC<br />
coverage was a necessary<br />
prerequisite for the introduction<br />
of a mandatory carriage<br />
requirement for ECDIS', although<br />
what is meant by 'ENC coverage'<br />
is a debating point.<br />
The International Hydrographic<br />
Organisation (IHO), which<br />
represents the national<br />
hydrographic offices, recognises<br />
the importance of this occurring<br />
in the short term.<br />
Rear Admiral Kenneth Barbor,<br />
who is a director of the<br />
International Hydrographic<br />
Bureau, the secretariat for IHO,<br />
told TANKER<strong>Operator</strong> that "The<br />
IHO is conducting an extensive<br />
assessment of ENC coverage<br />
that will, at the request of IMO,<br />
be recorded in an on-line<br />
catalogue. From this<br />
assessment, areas where ENC<br />
coverage is not projected to be<br />
sufficient to support HSC or<br />
international shipping will be<br />
targeted for production through<br />
bilateral or regional agreements<br />
to ensure their timely<br />
availability".<br />
If coverage is seen to be<br />
sufficient in 2008, when MSC<br />
debates the possible mandatory fit<br />
of ECDIS, it will undoubtedly<br />
have a significant impact on<br />
its decisions.<br />
March 2007 • TANKER<strong>Operator</strong> 31
TECHNOLOGY - NAVAIDS<br />
In the minds of all shipping<br />
companies the cost of ECDIS<br />
remains at the forefront of any<br />
decision on its implementation.<br />
The total cost includes the<br />
purchase and fitting of units, the<br />
training of users and the cost<br />
of data.<br />
Price reduced<br />
The price of type approved<br />
ECDIS hardware has<br />
substantially reduced since its<br />
introduction. Also, the now<br />
universal use of flat panels on<br />
new equipment has made retrofit<br />
easier and generally less costly,<br />
because of their smaller space<br />
requirements.<br />
Data prices have also reduced<br />
since earlier days. Thomas Gunn,<br />
managing director of the<br />
international chart agent TGNS,<br />
has said "We have helped a<br />
number of companies to transfer<br />
from paper charts to ENCs.<br />
The annual cost of data is very<br />
similar."<br />
Chart agents play an essential<br />
role in the use and distribution of<br />
In the minds of all shipping<br />
companies the cost of ECDIS<br />
remains at the forefront<br />
of any decision on<br />
its implementation<br />
“<br />
”<br />
ENCs. Good agents are<br />
conversant with the regulations,<br />
have distribution contracts with<br />
all ENC data suppliers and can<br />
provide good advice on providing<br />
a cost effective set of data.<br />
Updates are provided by CD,<br />
or increasingly by satellite data<br />
links, through companies such as<br />
ChartCo.<br />
Flag Approval<br />
Another barrier had been fears<br />
that there will be difficulty in<br />
achieving flag state approval.<br />
There is also a worry that some<br />
port states may have different<br />
views than the flag state on<br />
conformance to IMO ECDIS<br />
requirements. If so, could this not<br />
lead to port inspection delays?<br />
The approval process for many<br />
flag states is now clear - but it is<br />
essential that proper liaison is<br />
made with the flag state when<br />
contempla-ting the fitment and<br />
use of ECDIS.<br />
There have always been<br />
differences between flag states in<br />
the detailed interpretation of IMO<br />
requirements. This is rarely an<br />
issue for visiting ships as port<br />
states are required to respect<br />
the certification of flag states<br />
under Regulation 19 of Part A of<br />
SOLAS.<br />
There is no indication that this<br />
is not applying to vessels using<br />
ECDIS with ENCs.<br />
It is now becoming clear that<br />
the use of ECDIS with ENCs<br />
is both beneficial and practical<br />
for many shipping operations.<br />
Furthermore, future mandatory<br />
fitting of ECDIS is inevitable<br />
because of its benefits<br />
to safety.<br />
More costly<br />
Just as importantly to shipping<br />
companies, paper charts will<br />
become the more costly option.<br />
They are expensive to print,<br />
store and distribute and need<br />
extensive manual updating.<br />
Digital charts have far less costs<br />
associated with their replication<br />
and distribution. Updates are<br />
quick and easy to apply.<br />
However, hydrographic<br />
offices will need to ensure that<br />
the momentum on data<br />
production is maintained and<br />
that the quality of data<br />
necessitated by ENCs is steadily<br />
improved. The clinical display<br />
of charts on ECDIS makes<br />
charting inaccuracies a lot more<br />
evident than they appear to be<br />
on a paper chart.<br />
TO<br />
Enraf<br />
Tanksystem<br />
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<br />
<br />
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Enraf<br />
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32<br />
TANKER<strong>Operator</strong> • March 2007
TECHNOLOGY - NAVAIDS<br />
Integrated bridge<br />
systems in a state of<br />
continuous evolution<br />
According to the Ergonomics Society, the origins of which go back to 1947, the term<br />
ergonomics was first used by Wojciech Jastrzebowski in 1857. The word is derived from<br />
Greek, ergon, work, and nomos, principles or laws. In its simplest definition, it is the<br />
science of designing a workstation to be compatible with the worker. It embraces the<br />
notion that each worker is physically unique and the physical work surroundings should<br />
reflect each worker's uniqueness, reports Brian Warshaw.<br />
SOLAS Chapter V,<br />
Regulation 15,<br />
Principles relating to<br />
bridge design, design<br />
and arrangements of navigational<br />
systems and equipment and bridge<br />
procedures requires owners, naval<br />
architects, manufacturers and<br />
administrations to ensure<br />
compliance with specific<br />
ergonomic principles; and for<br />
owners and masters to ensure that<br />
bridge procedures are adopted<br />
which take ergonomic criteria into<br />
consideration. Equally, there is a<br />
requirement that integrated bridge<br />
systems (IBS) should be<br />
organised so that the failure of<br />
one sub-system is brought to the<br />
immediate attention of the officer<br />
in charge of the navigational<br />
watch, using both audible and<br />
visual alarms, and that it does not<br />
cause failure to any other subsystem.<br />
In the event of failure in<br />
one part of an integrated<br />
navigational system (INS), it must<br />
be possible to operate all other<br />
individual items of equipment or<br />
part of the system, separately.<br />
The UK's Maritime and<br />
Coastguard Agency (MCA) has<br />
stated that the IMO's document<br />
MSC.Circ/982 relating to the<br />
ergonomically designed bridge<br />
equipment and layout is for<br />
guidance only, and that in order<br />
to comply, it is necessary to<br />
follow ISO 8468 and, if<br />
applicable, ISO 14642.<br />
Det Norsk Veritas maintains that<br />
approximately half of all accidents<br />
at sea can be related to navigation<br />
bridge system failures, causing<br />
collision, grounding, or contact<br />
damages. It's NAUT-OC notation<br />
is the minimum of its<br />
requirements to ensure that the<br />
bridge has been designed for<br />
reduced workload and improved<br />
operational conditions. It also<br />
stipulates that the bridge layout<br />
should provide the information<br />
and equipment required for safe<br />
performance of the functions to be<br />
carried out at dedicated<br />
workstations; and that the working<br />
conditions must allow the officer<br />
of the watch to perform all<br />
primary bridge functions,<br />
including lookout, from one<br />
workstation when sailing in ocean<br />
and coastal waters.<br />
'The bridge environment',<br />
according to Øystein Andreassen,<br />
'is a constellation of the human,<br />
the technical system and the<br />
physical environment acting<br />
together.' Andreassen is a<br />
principal engineer, working in<br />
business development, with<br />
Kongsberg Marine of Norway.<br />
His involvement in control<br />
systems in the marine<br />
environment has encompassed the<br />
past 25 years, and since 1996, he<br />
has been directly concerned with<br />
the engineering of bridge systems.<br />
The ergonomy of the bridge is<br />
not just a question of equipment<br />
Kongsberg's IBS' are compliant with class rules.<br />
and functions; but is also about<br />
factors such as fields of vision,<br />
interior colours and lights,<br />
ventilation and other aspects that<br />
have to do with the construction<br />
of the bridge itself, Andreassen<br />
told TANKER<strong>Operator</strong>.<br />
'Yet the equipment and design<br />
are not the only factors to<br />
consider.' he explained. 'For safe<br />
operation, it is also essential that<br />
the crew develops good procedures<br />
for navigation and manoeuvring.<br />
It is the reason that we encourage<br />
them to be trained to work as a<br />
team in stressed situations.'<br />
Andreassen said that the<br />
current trend in bridge design was<br />
towards more and more systems<br />
being computerised or, at the very<br />
least, to have a display with a<br />
mouse user interface. At the<br />
same time, bridges are more often<br />
being designed for seated<br />
operators, and this creates another<br />
challenge for equipment<br />
manufacturers, requiring more<br />
equipment to be located within a<br />
smaller area. Kongsberg's<br />
response to this demand for<br />
smaller panels and multifunctional<br />
displays is the K-<br />
Bridge navigation system, which<br />
includes the extra facilities<br />
needed to control auxiliary<br />
functions like window wipers,<br />
deck lights, signal lights,<br />
navigation lights, and ventilation,<br />
directly from the bridge displays.<br />
Kongsberg's bridge systems are<br />
compliant with classification<br />
societies' rules for nautical safety<br />
class notations. In addition,<br />
Andreassen said that the company<br />
March 2007 • TANKER<strong>Operator</strong> 33
TECHNOLOGY - NAVAIDS<br />
SAM's NACOS IV IBS' is fitted on board Fisher's Speciality.<br />
designers seek to provide a full<br />
field of vision to the operator,<br />
also focussing on the displays, on<br />
careful design of alarm systems,<br />
and to give a recognisable look<br />
and feel between different subsystems.<br />
These all help the<br />
operator make the right decisions<br />
when in a stressful situation.<br />
The Company has recently<br />
delivered the first of four systems<br />
ordered by Samsung and Hyundai<br />
for incorporation on the QatarGas<br />
vessels, which are being<br />
constructed for the QSG/QGII<br />
expansion project. QatarGas is the<br />
first company to purchase the K-<br />
Bridge solution. The total value of<br />
the four systems is said to be worth<br />
approximately $3.2 mill. The first<br />
of the systems successfully passed<br />
its factory acceptance tests in<br />
South Korea, last May.<br />
Another company that works<br />
comfortably with DNV NAUT-OC<br />
notation, and the more extensive<br />
AW notation, is SAM Electronics<br />
of Hamburg. The company's latest<br />
Series 5 range of navigation and<br />
command systems (NACOS) is<br />
available in nine configurations.<br />
They all feature a fully integrated<br />
radar, and electronic chart display<br />
and information system (ECDIS)<br />
with interactive on-screen highresolution<br />
displays.<br />
The latest NACOS also forms<br />
an integral part of SAM<br />
Electronics' new series of Ship<br />
Control Centre (SCC) total bridge<br />
assemblies, which was introduced<br />
at the SMM Exhibition last<br />
September. The SCCs combine<br />
navigation, communication,<br />
propulsion control and alarm<br />
monitoring functions through a<br />
series of newly designed 23-inch<br />
flatscreen monitors that can also be<br />
provided in a retractable design.<br />
Comprising a standardised<br />
package of common hardware<br />
and software, which can be<br />
adapted to the individual<br />
requirements of ship operations,<br />
they significantly reduce<br />
engineering costs at the point of<br />
installation. According to a<br />
company spokesperson, it meets<br />
the growing requirements from<br />
the shipyards for a proven singlesource<br />
supply of turnkey bridge<br />
systems. To date, SAM<br />
Electronics has commissioned<br />
over 150 NACOS systems.<br />
SAM is participating in the<br />
EU-supported Design, Operation<br />
and Regulation for Safety<br />
(SAFEDOR) project, and as a<br />
result, the company anticipates<br />
further design refinements in its<br />
NACOS components.<br />
SAFEDOR was launched in<br />
2005 with Germanischer Lloyd as<br />
project co-ordinator. It is the<br />
single largest maritime safety<br />
programme to be funded by the<br />
EU, which has contributed 12 of<br />
the Eur20 mill budget; the<br />
remaining sum is being met by the<br />
consortium of 53 partners drawn<br />
from all sectors of the European<br />
maritime industry. The four-year<br />
SAFEDOR project advocates a<br />
risk-based approach to maritime<br />
safety, wherein safety is regarded<br />
as a basic design objective rather<br />
than as a constraint.<br />
SAM Electronics is a member<br />
of the SAFEDOR project<br />
steering committee, and is<br />
making a direct contribution<br />
involving the development of<br />
new safety-critical energy<br />
distribution networks, as well as<br />
technical and ergonomic<br />
improvements to bridge layouts.<br />
The work will involve replacing<br />
switches and local area networks<br />
with a single programmable logic<br />
controller, and touch-screen<br />
panel for direct control.<br />
In May last year, the UK's<br />
Kelvin Hughes confirmed that it<br />
had fitted bridge systems certified<br />
to DNV NAUT-AW onboard two<br />
SAM's new Ship Control Centre (SCC) total bridge assembly.<br />
vessels, the Stena Arctica, and<br />
SCF Baltica, both being built at<br />
Hyundai Heavy Industries Ulsan<br />
shipyard in Korea. The two<br />
113,600dwt ice strengthened<br />
crude oil tankers were fitted with<br />
Manta IBS with multifunction<br />
workstations, operating on a dual<br />
redundant CanBus network. As<br />
defined by the notation AW, the<br />
bridge is equipped with a<br />
grounding avoidance system. The<br />
officer of the watch is able to<br />
perform all the bridge functions<br />
pilot station to pilot station under<br />
normal operating conditions.<br />
ERGOPOD controls were fitted<br />
to the navigator's chairs.<br />
ERGOPODS is Kelvin Hughes'<br />
patented user machine interface<br />
with its display systems, utilising<br />
a tracker ball and three buttons.<br />
Although the interface is usually<br />
mounted on a desktop, and can be<br />
used to control a variety of<br />
systems including radar, ECDIS,<br />
and HAP, it was in this case<br />
installed in the navigators chair<br />
arm, and enabled the office of the<br />
watch to select and remotely<br />
operate any of the displays. The<br />
facility is particularly useful in<br />
rough sailing conditions, allowing<br />
the navigator to remain seated<br />
while carrying out his job.<br />
The development of IBSs or<br />
SSCs, as they are also known, is<br />
in a state of continuous evolution,<br />
differing in the equipment that is<br />
installed, the technology used,<br />
and in layout. New technologies<br />
will enter the market place and be<br />
adopted by some manufacturers<br />
and passed over by others in<br />
favour of an alternative concept,<br />
and as Brian Sherwood of<br />
Process Contracting Limited<br />
wrote, in the September 2004<br />
issue of Lloyd's Register's<br />
Horizons magazine, 'The scale of<br />
this variation means that a fully<br />
prescriptive approach to the<br />
installation and integration of<br />
new systems is not achievable, so<br />
safe and effective operation will<br />
depend on vigorous risk<br />
assessments, supported by sound<br />
ergonomic criteria.'<br />
TO<br />
34<br />
TANKER<strong>Operator</strong> • March 2007
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TECHNOLOGY - CARGO PUMPS<br />
Ice age pumps<br />
As the world faces up to the problems of global warming, engineers at the headquarters<br />
of Marflex are looking towards a new ice age. The management too, have responded,<br />
and are in the process of building 4,000 sq m of extra space<br />
in order to meet the challenge, reports Brian Warshaw.<br />
In October 2006, Russia's<br />
largest shipping company,<br />
Sovcomflot, placed an order<br />
with Samsung for three<br />
70,000 dwt Ice Class 1A tankers.<br />
The tankers will be equipped with<br />
a dynamic positioning system, two<br />
10 megawatt (MW) Azipod 360<br />
deg rotatable propulsion units, two<br />
13,180 kW main generators,<br />
helipad, and an Arctic bow loading<br />
system in which the hose<br />
connection is located well within<br />
the deck area. The vessels, which<br />
are 256 m in length, 34 m wide,<br />
and have a draught of 14 m, will<br />
be equipped with three main<br />
diesel-electric engines, which are<br />
capable of delivering propulsion<br />
totalling 24 MW.<br />
Able to sail in the harsh winter<br />
months, the vessels will be<br />
capable of ploughing through<br />
1.57 m of ice without the<br />
assistance of an escorting<br />
icebreaker, and to operate in<br />
conditions of down to 45 deg C<br />
below zero. In the event of<br />
entrapment in the ice, the Azipod<br />
thrusters can be turned to move<br />
the vessel sideways to break free<br />
from the ice. These are the first<br />
ships to have the ability to move<br />
fore, aft, port and starboard; a<br />
factor included in the price of the<br />
vessel which is believed to have<br />
cost three-times that of a<br />
conventional oil tanker.<br />
Built to a dual classification of<br />
the Russian Maritime Register of<br />
Shipping LU6 class, and Lloyds<br />
Register 1A ice class, the vessels<br />
Pump warning device<br />
A simple, yet effective<br />
safety device has been<br />
developed by Pres-Vac<br />
Engineering of Allerød,<br />
Denmark, for<br />
installation on its deepwell<br />
cargo pumps. The<br />
device provides a<br />
warning when the main<br />
impeller bearing has<br />
been damaged or, as a<br />
result of long usage,<br />
has reached the stage<br />
where significant wear<br />
had taken place.<br />
Pres-Vac cargo pumps, which<br />
are electrically driven, feature a<br />
magnetic coupling between the<br />
drive shaft and the impeller.<br />
Unlike pumps that use a direct<br />
mechanical coupling to transfer<br />
power from the drive shaft to<br />
the pump head, and have always<br />
been subject to a small leakage,<br />
the magnet coupling ensures<br />
that the pump is leak-free. A<br />
static housing prevents<br />
lubrication oil from the drive<br />
shaft seeping out to contaminate<br />
the cargo, and conversely, the<br />
cargo cannot enter the drive<br />
shaft housing to dilute or<br />
replace the lubricating oil.<br />
The warning device consists<br />
of a nitrogen charged capillary<br />
tube, one end of which is fitted<br />
in the pump housing just below<br />
the impeller: the other end being<br />
attached to a small pressure<br />
container mounted on the pump<br />
deck. In the event of a failure in<br />
the main bearing, the impeller<br />
will oscillate, break the tip of<br />
the capillary tube, and the tube<br />
will operate under a 25 year<br />
timecharter. They will be used to<br />
transport oil from Varandey Island<br />
in the Pechora Sea, north-western<br />
Arctic Russia, to international<br />
markets, on behalf of<br />
Naryanmarneftegaz, a jointventure<br />
company between LukOil<br />
and ConocoPhillips. The three<br />
vessels are due to be delivered at<br />
the end of 2007, spring 2008, and<br />
in early 2009. The Varandey<br />
terminal is currently being<br />
expanded from 200,000 to<br />
240,000 barrels per day, and due<br />
to shallow water in the area of the<br />
terminal, oil is loaded on the<br />
tankers from an offshore platform.<br />
Dutch deepwell pump<br />
manufacturer Marflex is supplying<br />
42 deepwell pumping sets to<br />
will lose its pressure. The loss<br />
of pressure will immediately<br />
effect an indication and alarm on<br />
the control system. The pump<br />
will continue to operate safely<br />
on its secondary bearings in the<br />
period during which the pump is<br />
automatically shutting down.<br />
Pres-Vac's Eric Sorensen told<br />
TANKER<strong>Operator</strong> that the unit<br />
had been developed in response<br />
to the findings of an industry<br />
study into incidents that had<br />
occurred on chemical carriers.<br />
He said that at the moment it<br />
was an optional feature on Pres-<br />
Vac pumps, although it will be<br />
fitted as a standard on the<br />
company's next generation of<br />
single-stage magnetic driven<br />
pumps when they become<br />
available later this year. •<br />
Samsung in a contract worth<br />
nearly Eur6 mill. The pump sets<br />
for the first vessel are scheduled<br />
for delivery in June this year.<br />
Each vessel will be fitted with<br />
10 cargo pumps, type MDPC-<br />
250, with a discharge capacity of<br />
up to 800 cu m per hour, two<br />
slops-tank pumps operating to<br />
500 cu m per hour and ballast<br />
tank pumps with a flow rate of<br />
2,500 cu m per hour. The pumps<br />
are electrically driven and the<br />
controls are being supplied to<br />
Marflex by Siemens Netherlands.<br />
The Marflex deepwell pump<br />
consists of three major parts, an<br />
electrical drive motor that is<br />
installed on the deck, an oil<br />
lubricated drive shaft rotating in a<br />
separate pipe, and the pump head.<br />
It is claimed by the manufacturer<br />
that the drive shaft has a life<br />
exceeding 10,000 operating hours<br />
without maintenance, and is<br />
sufficient to last the 20 to 25<br />
lifespan of an average tanker.<br />
Each of the 14 pumps fitted per<br />
vessel is fitted with EExd<br />
certified electric motors, which<br />
are designed to a particular<br />
specification for Marflex, and are<br />
linked to a series of variable<br />
drives. The variable Sinamics<br />
drivers, and Simatic S7<br />
programmable logic controllers,<br />
deliver an electrical output of<br />
between 220 and 390 kW, which<br />
controls the pump discharge at<br />
flow rates within the range of 400<br />
and 2,500 cu m per hour.<br />
Communication signals to the<br />
electric motors are facilitated by a<br />
Profibus interface, and the operations<br />
are managed from the ships'<br />
bridge using a Siemens designed<br />
panel. This solution enables the<br />
pumps to be directly controlled, and<br />
36<br />
TANKER<strong>Operator</strong> • March 2007
One pump<br />
One tank<br />
One supplier<br />
Frank Mohn AS, located outside Bergen<br />
in western Norway, is the leading supplier of<br />
submerged cargo pumps to the world tanker market.<br />
More than 32.000 Framo submerged cargo pumps<br />
are in service onboard some 2.000 tankers.<br />
In 2006 alone about 200 complete cargo pumping<br />
systems were commissioned.<br />
Framo Cargo Pumping System<br />
• Submerged Framo Cargo Pumps with<br />
individual capacities up to 2.000 m 3 /h<br />
• Submerged Framo Ballast Pumps with<br />
• Deck mounted Framo Cargo Heaters<br />
• Framo Hydraulic Piping System<br />
• Framo Control System<br />
Ballast Pumps<br />
Hydraulic piping<br />
Control Panel<br />
Hydraulic Power<br />
Unit (HPU)<br />
UPCOMING EVENT:<br />
Please visit us at Europort Eurasia, Istanbul.<br />
25. - 29. April 2007<br />
Cargo Heaters<br />
Cargo Pumps<br />
Bow thruster<br />
motor<br />
Hydraulics for<br />
deck machinery<br />
Frank Mohn AS<br />
P.O.Box 98 Slåtthaug - NO-5851 Bergen - Norway<br />
tel. +47 55 999 000 - fax +47 55 999 380<br />
marine@framo.no<br />
www.framo.no<br />
HOUSTON<br />
BER<br />
GEN<br />
GOTHENBURG<br />
ROTTERDAM<br />
SHANGHAI<br />
PUSAN<br />
TOKYO<br />
SINGAPOR<br />
E<br />
“To a brave and faithful man<br />
nothing is difficult”<br />
RIO DE JANEIRO
TECHNOLOGY - CARGO PUMPS<br />
also through a linkage with the<br />
ship's cargo computer.<br />
Paul van Beveren, Marflex's<br />
general manager, told<br />
TANKER<strong>Operator</strong> that the<br />
company's growth had been<br />
phenomenal, and that was the<br />
reason for the new assembly and<br />
testing area being built. Last year,<br />
the order intake was four times the<br />
yearly turnover, and he believed<br />
that the upward trend would<br />
continue for at least the next five<br />
or six years. This belief is based<br />
on current market demand, the<br />
company's direct approach to<br />
customers, and the reliability<br />
record of the Marflex product and<br />
organisation, he claimed.<br />
Marflex has received at least 15<br />
other orders for deepwell pumps to<br />
be installed on Ice Class tankers.<br />
Van Beveren said that, 'There are a<br />
number of Russian companies,<br />
including Primorsk Shipping and<br />
Rosnefteflot/Sovcomflot, that<br />
have ordered, or are planning to<br />
order Arctic tankers, and Marflex<br />
is obviously hoping to be<br />
considered for the supply of these<br />
pump systems.'<br />
Another company involved in<br />
the unloading of oil and<br />
chemicals from Ice Class vessels<br />
is Frank Mohn of Bergen,<br />
Norway. The deepwell cargo<br />
pumps manufactured by Framo of<br />
Frank Mohn's marine division,<br />
differ from those of Marflex,<br />
which are electrically driven, by<br />
being powered by a traditional<br />
hydraulic motor.<br />
Since 2003, Framo said that it<br />
has enjoyed a boom in orders from<br />
the medium range tanker market,<br />
those between 35,000 and 50,000<br />
dwt. Eivind Borgen, a senior<br />
member of the management team,<br />
said, 'The boom has been brought<br />
about by a replacement of older<br />
tonnage, and an [industry] belief<br />
in the future for increased cargo<br />
volumes to be carried. A majority<br />
of these replacement tankers are<br />
equipped with Framo submerged<br />
cargo pumps with individual<br />
capacities of 500 to 600 cu m per<br />
hour and a total vessel discharge<br />
rate of 3,000 to 4,000 cu m<br />
per hour.'<br />
With sales of more than 200<br />
Framo cargo-pumping systems<br />
during 2006, Frank Mohn has<br />
continued its progress and<br />
capitalised on the market<br />
opportunities offered by the 15,000<br />
to 95,000 dwt products carriers<br />
being built in South Korea, Japan,<br />
China, and Croatia. A significant<br />
number of these installations have<br />
been on products tankers built to<br />
Ice Class 1A, intended for winter<br />
Plenty Mirrlees pumps satisfy a tall order<br />
Plenty Mirrlees Pumps,<br />
an SPX Process<br />
equipment company, has<br />
developed a solution for<br />
the bulk transfer of Tall<br />
oil using its Twinro<br />
W125 (125 cu m per<br />
hour) and W225 (225 cu<br />
m per hour) pumps. The<br />
electric motor driven<br />
pumps are used for<br />
discharging tankers to<br />
storage tanks.<br />
The Tall oil, which is produced<br />
from Scandinavian trees, is a<br />
product currently being<br />
introduced to UK industries as a<br />
new biofuel having low<br />
environmental emissions. The<br />
construction of this pump<br />
presented Plenty Mirrlees with a<br />
problem whereby the company<br />
had to produce an engineering<br />
solution to ensure complete<br />
sealing of the product.<br />
The Twinro is a positive rotary<br />
twin screw pump developed<br />
primarily for the bulk transfer of<br />
liquids. Twin screw pumps are<br />
fully self-priming and have<br />
excellent air/vapour handling<br />
A cutaway drawing of a Twinro pump.<br />
characteristics, which makes them<br />
ideally suited to applications<br />
involving tank and line stripping.<br />
The pumping element consists of<br />
two contra-rotating shafts from<br />
which right hand and left hand<br />
epicycloids screw shapes are<br />
accurately machined. The screw<br />
set conveys the fluid being<br />
pumped from each end and out<br />
through the centre. The screw<br />
shafts are carried in roller bearings<br />
at the drive end and ball bearings<br />
at the non-drive (gear case) end.<br />
The driven (lower) screw is<br />
synchronised from the driving<br />
(upper) screw by a pair of<br />
hardened and ground timing gears.<br />
To satisfy non-lubricating<br />
products, the Twinro has been<br />
designed with four<br />
mechanical seals to<br />
contain the product<br />
with the timing<br />
gears and bearing<br />
outside the pumped<br />
fluid. The<br />
mechanical seals<br />
are normally<br />
unheated and<br />
flushed by the<br />
product in the suction chamber as<br />
it passes the seal. However, in the<br />
case of this application were the<br />
seal area to cool, the tall oil will<br />
crystallise and failure of the seal<br />
will occur. To ensure that<br />
adequate heat is maintained at the<br />
mechanical seals, Plenty Mirrlees<br />
incorporated a steam quench and<br />
flush was into the design this<br />
involving a complete re-design of<br />
the seal chamber area.<br />
According to Jim Miller of<br />
Plenty Mirrlees, this design of<br />
pump has proved to be successful<br />
and now that government<br />
subsidies are available for the use<br />
of this fuel, the company sees<br />
more orders and enquiries for<br />
this application.<br />
•<br />
Framo deepwell hydraulic<br />
cargo pump<br />
operation in the Baltic Sea and<br />
Russian Arctic waters.<br />
According to Borgen, the<br />
benefit of the Framo cargo pump<br />
design is that it has no rotating<br />
parts installed on the deck. 'The<br />
hydraulic motor', said Borgen, 'is<br />
located inside the pump head,<br />
down in the tank and surrounded<br />
and protected by the returning<br />
hydraulic oil. This is a definite<br />
advantage over a deepwell pump<br />
with an electric motor that is<br />
located on the deck, where ice<br />
conditions may be severe in<br />
Arctic waters, during wintertime.'<br />
Borgen claimed that the<br />
company had delivered pumping<br />
systems to over 70 Ice Class 1A<br />
tankers of between 5,000 and<br />
70,000 dwt, for shipowners<br />
operating out of Sweden, Norway,<br />
Germany, Greece and Cyprus.<br />
Framo pumps employ a single<br />
stage, single suction impeller<br />
connected by a short shaft to the<br />
hydraulic motor. The motor<br />
control module provides a smooth<br />
transition in rotational speed that<br />
enables discharge rates of between<br />
50 and 2,000 cu m per hour on all<br />
types of oil and chemical,<br />
regardless of weight, viscosity, and<br />
temperature. The hydraulic fluid,<br />
which drives the pump head, is<br />
also used for lubrication and<br />
cooling functions.<br />
TO<br />
38<br />
TANKER<strong>Operator</strong> • March 2007
TECHNOLOGY - SHIP TO SHIP TRANSFER<br />
STS expert expands<br />
empire and gets into gas<br />
This was achieved by<br />
the purchase of<br />
Melbourne Marine<br />
Services, which now<br />
trades under the banner of SPT<br />
Marine Services (SPTMS).<br />
Skaugen's Simon Duncan<br />
explained that the purchase of<br />
Melbourne Marine gave the<br />
company entry into markets that<br />
had been previously identified for<br />
expansion and was viewed as a<br />
long term strategic acquisition.<br />
SPTMS is active in the UK,<br />
northwest Europe, Mediterranean<br />
and West Africa. Ian Laws<br />
remained as managing director<br />
along with all his employees.<br />
One of the areas that had been<br />
under investigation for some time<br />
is the Firth of Forth. Plans have<br />
been submitted to the local<br />
authorities with the backing of<br />
Forth Ports for the development<br />
of both STS procedures and oil<br />
spill contingency plans. Duncan<br />
said that SPTMS is hopeful of<br />
gaining the necessary approvals<br />
to go ahead with the project.<br />
He said: " We feel that this<br />
location is ideal from a number of<br />
different perspectives namely - it<br />
is a sheltered and protected<br />
anchorage offering a high level of<br />
reliability in terms of conducting<br />
operations on an uninterrupted<br />
basis, the location should attract<br />
business opportunities, not only<br />
from the Baltic region, but also<br />
from elsewhere within<br />
northwestern Europe.<br />
"All operations will be<br />
conducted in accordance with the<br />
approved STS manual and<br />
existing ship vetting and<br />
suitability standards," he asserted.<br />
He also explained that one<br />
advantage that SPTMS has is a<br />
well established naval<br />
architecture division.<br />
The largest company involved in shipto-ship<br />
transfers Houston-based Skaugen<br />
Petrotrans has been operating in the US<br />
Gulf/Gulf of Mexico for many years and<br />
last year expanded its horizons.<br />
LNG STS<br />
Last year was another milestone<br />
for Skaugen in that in August the<br />
company completed the first two<br />
LNG lightering operations. The<br />
cargo was transferred between<br />
two of Excelerate Energy's LNG<br />
regasification vessels in the Gulf<br />
of Mexico.<br />
While the two cargoes were<br />
relatively small parcels of<br />
liquefied natural gas, it allowed<br />
for the verification process with<br />
regards to the cargo hoses, quick<br />
disconnect/dry break couplings for<br />
the hoses, vapour management<br />
and other necessary items.<br />
Both operations were<br />
completed without incident in the<br />
presence of SIGGTO<br />
representatives. Skaugen<br />
Petrotrans is a member of the<br />
working group currently<br />
developing a LNG STS guide.<br />
Duncan explained that the<br />
company had put a lot of time<br />
and resources in the development<br />
of LNG transfers and feel that it<br />
is well positioned going forward<br />
as interest grows in this particular<br />
industry segment. This is as a<br />
Trial LNGC STS transfers took place last year in the Gulf of Mexico.<br />
result of the growing number of<br />
offshore LNG terminals that are<br />
either approved or being<br />
considered worldwide.<br />
This month, the first full cargo<br />
STS trial transfer of 132,000 cu<br />
m LNG took place at Scapa<br />
Flow, Orkney Islands for<br />
Excelerate Energy using the<br />
Exmar LNGCs - the laden<br />
Excalibur and the receiving<br />
Excelsior. The cargo was<br />
destined for Excelerate's Teesside<br />
regasification receiving terminal.<br />
A risk assessment was carried<br />
out at Scapa Flow last December,<br />
while the three companies<br />
involved - SPTMS, Excelerate<br />
and Exmar - were in the area<br />
during September outlining the<br />
pans to the local council. The<br />
STS transfer was carried out in<br />
daylight, while a number of<br />
observers were invited, including<br />
the MCA, USCG and<br />
environmental regulators.<br />
Scapa Flow has been used for<br />
oil tanker STS since 1980 without<br />
any incidents occurring.<br />
Lightering tankers<br />
Skaugen Petrotrans is also<br />
heavily involved in shuttle<br />
aframaxes used for lightering<br />
purposes. The company currently<br />
has four of the six newbuildings<br />
under construction at Tsuneishi.<br />
These are 105,000 dwt purpose<br />
built lightering aframax tankers,<br />
of which the first SPT Champion<br />
is scheduled for delivery in May<br />
of this year.<br />
These newbuildings will<br />
incorporate features that will<br />
enhance the overall safety ofthe<br />
vessel and STS operations,<br />
Duncan claimed. They will be<br />
fitted with fender davits,<br />
enhanced manoeuvrability<br />
incorporating a bow thruster, 70<br />
degree rudder and ultra slow<br />
speed main diesel engines,<br />
increased deballasting capability,<br />
increased loading rate, hose<br />
handling crane with an extended<br />
reach boom and a cargo loading<br />
station in the wheelhouse.<br />
The first four will be<br />
technically managed for SPT by<br />
Bergshav management of<br />
Grimstad, while the remaining<br />
two will be managed by Teekay<br />
Shipping.<br />
TO<br />
March 2007 • TANKER<strong>Operator</strong> 39
TECHNOLOGY - SHIP TO SHORE INTERFACE<br />
A Ropey Business<br />
With today's tankers and their attendant tugs becoming more powerful, so powerful<br />
in fact that some mooring equipment, such as bitts, is becoming damaged<br />
on a regular basis, fibre is increasingly replacing wire in rope technology.<br />
One company, DSM<br />
Dyneema has<br />
developed what it<br />
calls, its patented<br />
ultra-strong Dyneema fibre,<br />
which has been taken up by rope<br />
manufacturers for the LNG and<br />
For wire, read fibre.<br />
oil transport sectors.<br />
This fibre was developed<br />
through research and<br />
development in close cooperation<br />
with end users and rope<br />
manufacturers, such as Bridon in<br />
the UK and Samson in the US.<br />
Dyneema claimed that the<br />
strength-to-strength ratio of the<br />
fibre rope allowed the<br />
manufacturers to engineer lighter<br />
and more flexible ropes without<br />
comprising its strength.<br />
A number of advantages were<br />
claimed over the more traditional<br />
steel wire and conventional<br />
synthetic fibres, including a much<br />
lighter weight making the lines<br />
easier and faster to handle,<br />
reducing mooring times and the<br />
seafarers' physical workload. The<br />
material's low elongation<br />
minimised rope backlash for<br />
improved safety on board ship<br />
and ashore.<br />
Maintenance costs are also<br />
reduced as ropes with the<br />
Dyneema fibre will not damage<br />
chocks, bits, fairleads, or other<br />
parts of the vessel, nor do they<br />
need to be lubricated, resulting in<br />
less possible pollution to the<br />
environment and on the deck of<br />
the vessel. In addition they have<br />
an increased service life, DSM<br />
Dyneema claimed.<br />
Alaska <strong>Tanker</strong> has been in the<br />
news recently for the wrong<br />
reasons, but said that the<br />
company has been using mooring<br />
lines with the fibre for four years<br />
and is very satisfied with the<br />
performance. "The lines are<br />
holding up well and the crews<br />
especially like working with the<br />
lines, as they are much lighter<br />
and easier to work with that the<br />
wire rope we had previously<br />
used," said Bill Gould, port<br />
captain Alaska <strong>Tanker</strong>.<br />
DSM Dyneema said that the<br />
company was working closely<br />
with the rope manufacturers to<br />
develop new technologies based<br />
on the Dyneema fibre. Edwin<br />
Grootendorst, DSM Dyneema's<br />
market segment manager mooring<br />
explained," By pooling our<br />
expertise with manufacturers and<br />
end-users, we are making<br />
significant strides in creating the<br />
next generation of marine ropes."<br />
Dyneema is marketed by DSM,<br />
which claimed it is the world's<br />
strongest fibre. It is an ultra<br />
strong polyethylene fibre that<br />
offers maximum strength<br />
combined with minimum weight.<br />
It is claimed to be up to 15 times<br />
stronger than quality steel and up<br />
to 40% stronger than aramid<br />
fibres, both on a weight for<br />
weight basis.<br />
It can float on water and is<br />
extremely durable and water, UV<br />
light and chemical resistant.<br />
James Mackay of UK rope<br />
manufacturer Bridon said the<br />
company was making a major<br />
push into the LNGC market,<br />
which the company entered four<br />
or five years ago. Mackay said<br />
that Bridon has secured 90% of<br />
the market for LNG carriers,<br />
mainly coming out of South<br />
Korea yards. He said that Bridon<br />
had been involved in the<br />
manufacture of mooring lines<br />
since 1991 and had been involved<br />
with Dyneema synthetic tow lines<br />
since the late 1980s/early 1990s.<br />
Explaining the need for new<br />
rope technology Mackay said that<br />
with very powerful escort tugs in<br />
service, especially in Alaska,<br />
mooring ropes were needed with<br />
a break load of up to 127 tonnes.<br />
On average, each vessel will<br />
have between 24-26 sets of ropes,<br />
making it a significant piece of<br />
business. The rope is<br />
manufactured in Coatbridge,<br />
Scotland and the new fibre rope<br />
can have a service life of 10<br />
years. Some training of seafarers<br />
is necessary to keep the rope<br />
operational for long periods of<br />
time, Mackay said and to make<br />
them comfortable with the fact<br />
that they are not dealing with<br />
steel. The rope tends to become<br />
damaged rather than suffer from<br />
fatigue as it will not react to<br />
sharp bends and edges as with<br />
wire rope.<br />
He did admit that the new fibre<br />
rope was two to three times the<br />
cost of the traditional wire rope,<br />
but that end users would see long<br />
term benefits in that no dedicated<br />
equipment or grease was<br />
necessary and the rope needed<br />
minimum maintenance.<br />
In the oil tanker sector,<br />
Mackay said that BP Shipping<br />
was a major customer as it was<br />
in the LNGC sector and has been<br />
since 1998. Other tanker owners<br />
and managers using Bridon ropes<br />
included Besiktas, Vela,<br />
SeaRiver, Alaska <strong>Tanker</strong>, OSG,<br />
Keystone Shipping and Polar<br />
<strong>Tanker</strong>s.<br />
TO<br />
40<br />
TANKER<strong>Operator</strong> • March 2007
CAPITAL LINK FORUM<br />
Invest in International Shipping<br />
Presentations & Panels March 23, 2007<br />
Shipping in a New Era<br />
Cantor Fitzgerald - Anthony Argyropoulos, Managing Director<br />
Containers<br />
Fortis Securities - Gregory Lewis, Shipping Analyst<br />
Danaos Corporation - John Coustas, CEO<br />
Euroseas - Aristides Pittas, CEO<br />
Lazard Capital Markets - Urs Dur, Vice President, Equity Research<br />
Howe Robinson Hamburg - Nick Bailey, Director<br />
Investing through Blank Check Companies<br />
Maxim Group - Clifford Teller, Director<br />
Gas (LNG / LPG)<br />
Fortis Securities - Dan Barrett, Head of Equity Research<br />
MC Shipping - Tony Crawford, CEO<br />
Morgan Keegan - Michael Drickamer, V.P, Equity Research<br />
Lorentzen & Stemoco - Thor Erik Lie, Partner & Director, Gas Department<br />
The Baltic Exchange - Jeremy Penn, Chief Executive<br />
Metropolitan Club<br />
One East 60th Street<br />
New York City<br />
In Cooperation With<br />
<strong>Tanker</strong>s (Products & Crude)<br />
Fortis Securities - Dan Barrett, Head of Equity Research<br />
Arlington <strong>Tanker</strong>s - Arthur Regan, President & Co-CEO<br />
Omega Navigation - George Kassiotis, CEO<br />
Tsakos Energy Navigation - Nikolas Tsakos, CEO<br />
JPMorgan - Jonathan Chappell, V.P., Transportation Analyst<br />
Mallory, Jones, Lynch, Flynn & Associates - John Stichter, Partner<br />
Shipping and The Global Economy Today<br />
Fortis Merchant Banking - Guy Verberne, Head of Economic Research<br />
Dry Bulk<br />
Fortis Securities - Lewis, Shipping Analyst<br />
DryShips - George Economou, CEO<br />
Excel Maritime - Christopher Georgakis, CEO<br />
Quintana Maritime - Stamatis Molaris, CEO<br />
TBS International - Joe Royce, CEO<br />
Jefferies & Company - Douglas Mavrinac, Maritime Group Head<br />
Clarkson Hellas - George Margaronis, Managing Director<br />
Media Sponsors<br />
Barron's<br />
Bloomberg<br />
Forbes.com<br />
Institutional Investor<br />
<strong>Tanker</strong> <strong>Operator</strong><br />
TradeWinds<br />
FOR INFORMATION & REGISTRATION CALL 212-661-7566 OR E-MAIL shipping@capitallink.com<br />
www.capitallink.com
First Class tankers: a new perspective<br />
TAKING<br />
TANKERS<br />
SERIOUSLY<br />
<strong>Tanker</strong>s are like a work of art – the more quality they offer, the more<br />
valuable they are. Welcome to GL, your First Class partner in improving<br />
the operational safety and profitability of your tankers!<br />
Germanischer Lloyd Aktiengesellschaft<br />
Vorsetzen 35 · 20459 Hamburg/Germany<br />
Phone +49 40 36149-0 · Fax +49 40 36149-200<br />
headoffice@gl-group.com · www.gl-group.com