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DNV Tanker Update information from Dnv to the tanker industry

no. 1 June 2010

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Voc TechNology

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knudsen oas teekay – shuttle tankers Jahre group angelicoussis maran tankers nightmare prevention

Contents

06 New VOC reduction technology has been developed ››

08

16

The next generation of shuttle tankers

Photos: Front page ©Knudsen OAS, p8, 17, 19, 20 ©DNV/Magne A. Røe, p11 ©DNV/Nina E.Rangøy, p12 ©Gettyimages, p18 ©Maran Tankers, p24 ©Marinvest, back page ©Georgios Teriakidis

Increasing focus on small-scale LNG..................... 4 Background - why care about VOC?.......................... 5 New VOC reduction technology has been developed............................... 6 The next generation of shuttle tankers............................................................ 8 fpso...........................................................................................11

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A type of crisis that we have never experienced before ››

DNV Tanker Update We welcome your thoughts! DNV Tanker Update is a newsletter published by Det Norske Veritas It is distributed to DNV customers and stations worldwide.

Nightmare prevention...................................................12

© Det Norske Veritas AS

New LNG fuel tank concept developed by the Jahre Group...................................15

Please direct any enquiries to your nearest DNV station or Tanker Update e-mail: Lisbeth.Aamodt@dnv.com

A type of crisis that we have never experienced before............................................16 Maran Tankers Actions to further reduce the environmental footprint..................................18 DNV’s Piraeus office: from a representative office to a regional hub.............................................20 Improving the TMSA score through a focus on competence.................................................22 Marinvest Alternative Propulsion System (MAPS) wins recognition...............................................24 Tanker market better than expected..................25 2 | DNV tanker update NO. 1 2010

Editorial committee: Jan Koren, Business Director, Tankers Editor: Magne A. Røe Production: Lisbeth Aamodt Design and layout: Coor Design 1005-011 Print: Grøset, 6000/07-2010 Online edition of DNV Tanker Update: www.dnv.com/tankerupdate DNV (Det Norske Veritas AS) NO-1322 Høvik, Norway Tel: +47 67 57 99 00 Fax: +47 67 57 99 11 An updated list of all regional offices can be seen on DNV’s website: www.dnv.com

eDitorial

regulation by Disaster

Jan koren Business Director, tankers jan.koren@dnv.com

It is too early to say what the implications of the unfortunate major accident and subsequent oil spill in the Us gulf will be for the oil industry in the years to come. we have already heard people in the industry say that this disaster will be a ‘game changer’. others have claimed that we now have to become more independent of oil and go for cleaner energy……. The shipping industry, and not least the tanker industry, has throughout modern history been subjected to ‘regulation by disaster’. This is learning the hard way. New and stricter regulations are a result of serious accidents. risk management and brand management sometimes push company standards beyond mandatory requirements.

we do not need to be

clever fortune tellers to predict that new regulations and developments will be a result this time too. The oil industry will have to improve and change and there may be knock-on effects for the tanker industry as well. planned oil and gas exploration projects with associated and subsequent shipping activities in sensitive ecological areas may be shelved or reduced. The consequences for their brands and the direct expenses involved this time will probably be so dramatic that oil companies will amplify their efforts to protect themselves in the future. The need for oil companies as a group to be perceived by politicians and the general public as having a greener profile

could also grow significantly. companies may be looking for opportunities to demonstrate that they do everything possible to protect people and the environment. higher technical and operational standards for tankers may be one consequence of this. This is likely to have implications for vetting practices. The use of gas (lNg) as an alternative to oil fuel will significantly reduce emissions to the atmosphere as well as the risk of oil pollution from bunker oil. we saw considerably greater interest in gas fuel even before the disaster struck in the Us gulf. as we reported in Tanker Update three years ago, the use of lNg fuel to power supply vessels and other ships has already been successfully proven in Norway.

There is also a significant untapped potential for reducing Volatile organic compound (Voc) emissions from oil tankers to the atmosphere. This is relevant for both the economy and the environment. There are many opportunities for positive developments! we in DNV are pleased to confirm that managing risk is our business and that we are among the pioneers in supporting developments and practices which are more relevant for the oil and tanker industries now than ever before. This Tanker Update focuses on subjects associated with the challenges outlined above that we believe are of interest to a wide audience. hope you enjoy the read!

environmental performance – challenges and solutions environmental issues are top priority for DNV. our vision is “global impact for a safe and sustainable future.” DNV is already serving the industry extensively within this field, and we are spending considerable resources to develop state-of-the-art competence and services. we are pleased to service the shipping industry with a wide range of environmental services and contribute to sustainable development that benefits all of us. let us see how we can support you in developing your competitive edge.

Dnv tanker uPDate no. 1 2010 |

3

fkab

Increasing focus on small-scale lNg:

fkaB designs lNg carrier for regional distribution TexT: magnuS wikander, FkaB

fkaB of sweden has designed a 16 500 m3 lNg carrier intended for the regional distribution of lNg. This comes in response to the fast-growing interest in small-scale lNg. The interest in lNg as a fuel for vessels and smaller shore-based consumers is a result of attractive price prospects for lNg compared to oil fuels, combined with the environmental benefits of gas fuel.

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fkaB’s so-called l2 design has three bi-lobe type Imo Independent Type c cargo tanks with spherical heads, designed for a pressure of 4.1 bar. every tank is equipped with two deep-well pumps, each with a discharge capacity of 300 m3/hr. The vessel is designed for high energy efficiency with heat recovery and slim lines. The basic machinery design

includes a dual fuel 5 250 kw main engine (85% mcr), which normally consumes boil-off gas from the cargo but can use mgo fuel as back-up. The service speed is 15.2 knots. The vessel’s tonnage is 7 300 dwt and 11 800 gt based on a 6.2 m design draft. 

voc

Background - why care about VOC? The requirements only relate to operational procedures. There are no technical requirements or any specified requirements for percentage reductions of VOCs. The purpose of the VOC Management Plan is to ensure that the operation of a tanker prevents or minimises VOC emissions to the greatest extent possible. Text: jan koren

The plan must be specific to each ship and, a) the installation and use of a vapour colSignificant volumes of VOC (Volaa)provide written procedures for minimislection and return system tile Organic Compounds) are normally ing VOC emissions during the loading, released into the atmosphere from cargo b) installations onboard the vessel to sea passage and discharge of cargo reduce the formation of VOCs oil tanks, particularly in connection with b)give consideration to the extra VOCs c) the installation of equipment on board loading, laden voyages and Crude Oil generated by crude oil washing Washing (COW). Overall, this has been to recover VOCs inside the tanks observed to be most significant for shutd)cargo tanks designed and built to cope tle tankers carrying out offshore loading, with increased tank pressure IMO’s VOC Management Plan – amplified by ship movements in the waves, e)optimised operational procedures on Intertanko and DNV have jointly and also in connection with ship-to-ship board developed a modelplan transfers. Losses to the atmosphere in the In MARPOL Annex VI (Regulations for The VOC Management Plan is range of up to 1-2% of the loaded cargo the Prevention of Air Pollution), Regularequired to be consistent with guidelines have been reported. For other vessels tion 15 only refers to a) and e) above. established by the MEPC in resolution 185 and trades, the VOC (59). Prior to the Marine emissions are normally Environmental Protection VOC emissions to the atmosphere represent significant lower but can still be Committee meeting (MEPC significant. economic losses for cargo owners and also have negative 59) in July 2009, DNV and The amount of Intertanko established a joint local and global environmental effects. VOCs generated is industry project to develop highly dependent on a model VOC Management the specifications of the crude oil, includa) is not an internationally mandatory Plan. This model plan was adopted by the ing temperature, i.e. properties that are requirement and it is up to the individual IMO as MEPC.1/Circ.680 on 27 July 2009. outside the control of the ship. The termiport state to make it mandatory for designals’ cargo loading arrangement also has nated ports. The USCG has implemented The model VOC Management Plan an impact and could lead to VOC being such requirements. can be downloaded from Intertanko’s generated outside the ship but ultimately home page http://www.intertanko.com/ transferred to the ship’s tanks. Recent upload/79314/MEPC%2059-24-Add1Implementation of IMO requireresearch and testing indicate that a sig2009-VOCMmentPlan.pdf ments to reduce VOC emissions, 1 nificant amount of the VOC emitted origiJuly 2010: VOC Management Plan nates from the design of the cargo piping Regulation 15.6 of MARPOL’s Revised Volatile Organic Compounds (VOC) system on board tankers, particularly the Annex VI requires all crude oil carriers of Any chemical compound containing carbon drop line system. To reduce this effect cer400 grt and above to carry and implement that evaporates/vaporises readily under normal tain design changes may be required or a a ship-specific VOC Management Plan, conditions. Typically substances you can smell. reduction in loading rates. approved by the Administration, by 1 July Odour does not indicate the level of risk from 2010. DNV is authorised by flag authoriinhalation of this group of chemicals. ties to approve VOC Management Plans Means of reducing VOC emissions on their behalf. from cargo tanks The following help VOCs contribute to the greenhouse effect and the formation of smog. to reduce VOC emissions:

DNV tanker update NO. 1 2010 |

5

voC

New Voc reduction technology has been developed TexT: Jan koren

knutSen oaS Shipping has been developing Volatile organic compound (Voc) reduction technology since 2002. Its patented kVoc system has so far been fitted on board 11 of its shuttle tankers in operation and will also be installed on board another six of its tankers on order. In addition, the kVoc system has been installed on one Teekay ship in operation plus four tankers on order for Teekay and two tankers on order for stena.

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Formation of gas bubbles in a conventional drop line

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the kVOC system (left) and a conventional drop line (right) during oil loading

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The kVoc system reduces the formation of Voc gases in the ships, particularly in connection with the loading process. It is a passive prevention technology that does not require energy. There are no moving parts or instrumentation required to operate the system. In a conventional tanker, most of the Vocs are created due to flashing inside the piping system at deck level as a consequence of the weight of the liquid column in the drop line from the deck to the liquid level in the cargo tanks. The greater the height of the drop lines, the greater the volume of Voc released. oil flaShing iS SpontaneouS and the re-absorption and condensation of gas when the oil is re-compressed is a much slower process. for this reason, some of the gas generated by flashing in the piping system is carried with the oil into the cargo tanks and further released into the tank atmosphere inside the tanks. The kVoc system replaces the conventional drop line with a unit designed to eliminate the sudden pressure reduction and associated production of Voc gases. It is basically a larger-diameter drop line whose core volume is filled with hydrocarbon gases during loading, while the oil is spiralling down along the cylinder’s outer volume. The kVoc system does not prevent Voc formation due to flashing at other locations or evaporation inside cargo tanks. however it has some effect on these mechanisms.

voC

per lothe, knutsen oas shipping’s Director of Technology who came up with the idea for the kVoc system and has been in charge of its development, is confident that the kVoc system has a big global potential. he explains that, so far, the company has had good experience of the system being used on aframax/ suezmax-size tankers. for bigger tankers like Vlccs, the height of the drop lines is closer to 30m, so the potential for reducing the generation of Voc gases in connection with loading should be even greater. per lothe also claims that the kVoc system has had a similar effect on hydrogen sulphide (h2s) generation since h2s gas behaves similarly to the components in the Voc gases. Due to the increasing environmental concerns and focus on loss reductions, he believes the time has come for emissions of Vocs to the atmosphere and significant losses of valuable cargo to be more aggressively reduced, beyond what is so far required by the formal and mandatory regulations. 

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a typical kVOC aframax, Suezmax and VLCC cargo system design

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per Lothe, knutsen OaS Shipping’s Director of technology

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Installation of a kVOC system on the M/t elisabeth knutsen

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7

teekay

The next generation of shuttle tankers teekay is the world’s largest operator of shuttle tankers, with a fleet of 34 vessels in operation and four on order. about two thirds of the fleet in operation trade in the North Sea area, while one vessel is in australia and the rest are in Brazil. In response to the increasing focus on environmental performance by its charterers, Statoil in particular, as well as Norwegian authorities in the North Sea, teekay has developed a new shuttle tanker design. “We are the test pilots for new environmental requirements,” says kenneth Hvid, president of teekay‘s Shuttle tanker and FSO division in Stavanger, Norway. TexT: magne a. røe

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m, teekay Stavanger and Capt. Johan Ludvig eide kenneth Hvid, president,

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teekay

project Delivery Milestones: amundsen Spirit Nansen Spirit peary Spirit Scott Spirit

July October april July

2010 2010 2011 2011

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amundsen shuttle tanker class notations Det Norske Veritas: 1a1, ”tanker for Oil eSp”, CSr, pLuS-2, CSa-2, e0, DYNpOS-autr, rp, Opp-F, ICS, tMON, BOW LOaDING, HeLDk-SH, CCO, Naut-aW, BIS, BWM-e, F-aMC, VCS-2, CLeaN DeSIGN, COMF-V(3)-C(3), Green passport.

teekay haS located its shuttle tanker headquarters in stavanger, just inside the harbour with the company’s classic colin archer-design sailboat moored outside. Tanker Update has been invited to a little round table discussion on Teekay’s new shuttle tanker design, with a special focus on the features intended to reduce emissions in general and Volatile organic compounds (Vocs) in particular. “we work actively with the authorities to establish cross-industry regulations to reduce Voc emissions. we are on the third generation of increasingly better Voc solutions,” says captain Johan ludvig eidem, Teekay’s manager for shuttle, Tendering and projects. also present at our little round table discussion on shuttle tankers and environmental footprints are axel wiedenmann, Teekay’s communications manager, Jan koren, DNV’s Tanker segment Business Director, and eirik Jacobsen, DNV’s District manager for

south Norway. “we have previously installed Voc recovery systems, i.e. process plants, on board 15 of our shuttle tankers to meet the requirements on the Norwegian continental shelf. The first-generation largescale Voc plants were introduced about ten years ago and were quite complicated. They involved investments of around UsD 15–20 million dollars and had to have a dedicated Voc operator on board. we started an internal innovation project with our own team to further develop the Voc reduction performance using existing technologies. an important element here was also to consider the pressure inside the cargo tanks. full-scale tests on board one of our shuttle tankers demonstrated a significant reduction in Voc emissions, in the range of 15–20%, during offshore loading when the vessel was operated with higher tank pressure. In addition, emissions during the voyage were avoided.”

the reSultS of the innovation proJect were reflected in the contract specification for the four amundsen class shuttle tankers with cargo carrying capacity of 121,700 m3, now on order at samsung heavy Industries. The main features for reducing Voc emissions are as follows: n

n

n

the installation of kVoc to reduce Voc production during loading (see separate article in this TU issue) the installation of gBa marine’s patented swirl absorber unit, cVoc, which recycles the tank atmosphere from the top of the cargo tank for absorption into the oil cargo by “mixing” them together during the voyage, see separate figure. the cargo tank design pressure is increased from 0.25 bar overpressure to 0.7 bar, which is higher than the separation stage pressure for most North sea oils.

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9

teekay

These installations are supplemented by operational procedures intended to minimise Voc emissions. The amundsen class shuttle tankers are unique as no other tankers have ever been built with a combination of all these Voc-reducing features. These vessels are way ahead of international regulations for Voc reductions. Basically, no hardware installations are required by marpol. only a Voc management plan containing operational procedures based on current standards for oil carriers is required as from July 2010. the hull Structure’S fatigue Standard has been increased beyond what is required by the common structural rules (csr), i.e. from 25 years North atlantic to 35 years North atlantic. altogether, the additional steel weight for the increased tank pressure and fatigue standard adds up to 500 tons.

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The engine installations have also been specified for increased efficiency and reduced emissions. The vessels are built in compliance with DNV’s clean Design notation. The main engines are electronically controlled camshaft-less slow speed diesel engines for minimum fuel consumption and are the first maN B&w Tier II Nox compliant engines. The hull lines have been optimised. The vessels will also be equipped with a new and innovative low-load eco-Dp mode dynamic positioning system which is estimated to reduce fuel consumption by about 12–14 tons per loading. award winning deSign. at last year’s Nor-shipping, Teekay received the clean shipping award for its efforts to reduce greenhouse gas emissions. In particular, the company was commended for its work in developing an alternative method for

negating Voc emissions. “The amundsen class shuttle concept is an important step towards more sustainable offshore loading logistics. our guiding principles in the design and development process were enhanced operational performance, environmental leadership, extended fatigue life and structural integrity. we are looking forward to verifying the results of our efforts to design and build shuttle tankers that represent the state of the art and are in line with our company’s and the yard’s best practices and standards,” says kenneth hvid. 

fPso

fpso coNVersIoN Technical advisory service PurPose change of operational environment from Tanker to fpso will have impact on requirements to vessel’s scantling and fatigue life. The services are to enable the owner to have a sound decision support process and detail engineering analyses of converted tanker.

phase 2 Detail project engineering (Dpe) to enable successful conversion project execution by carrying out: n Detail load, strength and fatigue analysis. n Inspection and repair scope and modification plan.

Phase 1 n To select right candidate tanker for conversion. n To have a quick and accurate project budgeting. n control the risk involved in heavy investment of fpso conversion. n To fulfil stakeholders requirements.

features phase 1 Decision support analysis (Dsa) to enable quick and accurate investment prediction and bench marking by carrying out: n establishment of site specific loads and historic data. n midship scantling and simple fatigue analysis. n Vessel condition assessment and steel renewal forecasting.

benefits The services enable owners or project investors to manage the technical risks of fpso conversions, using a combination of solid practical knowledge, expert competence and a suite of tailor-made tools and risk management techniques, so that they are able:

phase 2 n To ensure that vessel is in accordance with rules, regulations and owner’s requirements. n To execute a successful project.

DNV taNker upDate no. 1 2010 |

11

nightmare Prevention

how DNV prevented another exxon Valdez It was one of those perfect summer days in Oslo; sun shining, a gentle breeze in the background. Of course nothing goes wrong on a day like this. rossen panev knew otherwise. But when his phone rang at 1300 that afternoon, he didn’t expect to help prevent what could have been South america’s worst environmental nightmare. TexT: kenneth r. windSor

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nightmare Prevention

as a group leader of DNV’s emergency response service (ers) and duty resource himself, rossen has come to expect all sorts of calls at all sorts of hours. a ship captain with a damaged hull, a container ship lost control of the rudder, a tanker taking on water – these are only a few the calls that would frighten the most hardened, sea-smart engineer. Not rossen and the ers team. rossen and the ers team have brought many nerve-testing emergencies to successful resolution, bringing tangible meaning to DNV’s purpose – safeguarding life, property and the environment. SuBScriBing to peace of mind ers is an annual fee-based subscription service for fleet owners providing rapid response guidance and technical support to help ship captains, owners and operators make decisions during crisis situations. By providing expert state-of-the-art technical advice that a fleet owner or operator might not have in-house or easily accessible, ers frees up senior executives to focus on the management of the crisis, rather than drown in details. The case of the hs elektra is a classic example of how DNV’s expertise not only strongly contributed to resolve a crisis for the owner, operator and cargo owner, but for the south american environment as well. BallaSt tankS are flooded! The german-operated hs elektra was on its way to Quintero, chile, having left Brazil loaded to 90% capacity with 88,000 metric tonnes of light crude, with a specific gravity of 0.880 t/m2. This last fact would play a critical role in the ensuing drama. after clearing the straits of magellan and encountering heavy seas as they entered the southern pacific ocean, captain sunil augustine took advice to head toward sheltered waters through concepcion channel and gulf of Trinidad closer to the chilean coast. when the hs elektra starting shaking and vibrating, captain augustine shut down the engines to determine what was happening. soon the ship started listing heavily to port and then going head down in three metre swells. after further

investigation, it soon became clear that they had struck an uncharted underwater rock. all ballasts tanks had been breached and seawater was seeping into the pump room and engine room. Things went from bad to worse when the auxiliary engines tripped and the crew had to work in total darkness until power was restored. with force six winds nudging the ship to shore in biting, snow blizzard conditions, the unfolding crisis and the impending disaster required action. The ers phone rang at 1300, that beautiful oslo afternoon. eight dayS in June The ers team was at their station within the hour, pumping calculations into the system and supplying technical information to captain augustine on the performance expectations of the ship based on what was known. as part of every ers subscription, a 3D, computerized model of the ship is created in tandem with training exercises and running worst-case scenarios. with over 300 customers and almost 2000 ships subscribed, that level of detail is essential for ers to be able to give pinpoint accurate, real-time advice when nerves are frayed. The service also includes dedicated communications lines and annual, often surprise tests, to ensure failsafe contact. The ers team provided valuable data on the status and performance ability of the hs elektra during the early chaotic hours of the crisis. Not having an accurate assessment of the situation until divers could determined the extent of the damage, this information was critical to help local authorities determine if and where the vessel could be moved to for shelter. DNV helped determine that even if the ship was totally flooded, it would not sink if it was in calm water due to the specific gravity of the crude, being lighter than water. This would enable the cargo to be transferred to another vessel, if the right location, conditions and transfer vessel could be found. at 2030 on June 9th, first day of the crisis, after all the requisite data had been supplied, and the ship operator determined everything was under control, the

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Nightmare prevention

ERS team was demobilized. Rossen was not surprised to receive a call at quarter past midnight that the situation had worsened They would be back in action supplying critical technical data and advice in real time to the HS Elektra for the next seven days around the clock. Not a single drop A vessel to offload the crude from the HS Elektra arrived on the scene on June 22th. But before any offloading could be performed, calculations were required to determine the right transfer sequence to prevent the change in pressure from exacerbating the damage. It was clear from the divers’ reports that the damage was significant, including serious transverse cracks across the hull. The wrong cargo discharge could split the vessel in half, spilling all 88,000 tonnes of crude. Working together with DNV’s Hull Department to determine the right steps, the ERS team developed over 200 discharging sequences before finalizing the recommended 10 steps for offloading the crude. Shell, the owner of the crude had made it explicit that ‘not one drop of oil was to be spilled into the ocean’. Unbeknownst to the ERS team, Shell had their team running the same calculations behind the scenes, tracking every recommendation DNV made. “I think there may have been a situation where Shell did not want another Exxon Valdez, so even if they did trust Wallem and DNV to make the right decision, they weren’t going to trust anyone or leave to it chance.” The ERS team received the first transfer data for verification at 04.45am on June 23. During the evening before, Shell demanded hourly reports on the calculations being done to prepare for the transfer. Everything went to plan and by 02.51am on June 25th, the transfer was complete. But that was only half the story. The receiving vessel was only large enough to take on 59% of the crude and another vessel was on its way to the scene. Back to the yard The second discharge finally took place on July 9th. Rossen wonders out loud, “Perhaps because the first transfer had

14 | DNV tanker update NO. 1 2010

gone so smoothly, Shell was not as highly visible during the second one. They only asked for spot verifications during the process. I think we took a lot of pressure off Wallem because we helped give Shell confidence that Wallem was doing things in the most professional way possible. That’s pretty important in a crisis. It’s easy to lose that ability.” The owner and Wallem, (the ship operator) met with the ERS team in Oslo on June 30th to discuss options for how to get the damaged vessel back to the shipyard for repair – and whether it should be Europe or Asia – once the discharge process was complete. While it was clear from a second divers report that the transverse cracks were not as extensive as originally thought, calculations were needed to determine which option to take: an 88 day/US$6.5m voyage to the Guangzhou shipyard in China or a 58 day/US$4.5m transatlantic voyage. With the help of DNV’s Hydrodynamics department, it was revealed that the transatlantic voyage could actually do more serious damage to the vessel because of the greater wave impact on the vessel (BM 2.5 mtm vs. BM of 1.6 mtm for the transpacific journey). DNV’s guidance helped Wallem secure agreement from the insurer to go for the Chinese route, despite the greater expense. The ERS team remained in constant contact with the HS Elektra through to Talcahuano, Chile for final inspections. Before departure to China, ERS prepared calculations for the transpacific trip to prevent further damage. Even during the long, journey when oil was discovered in the ballast tanks, DNV helped prevent another debilitating situation where the requested transfer between ballast tanks could have caused even more serious hull damage. ERS prepared a safer transfer sequence which was executed during the voyage. How summer ends With the arrival in Hong Kong in September 17th (much quicker than expected, thanks to additional DNV input), ERS was asked to prepare new loading calculations to ensure the right draught for the journey up the Guangzhou River. Optimized

loading conditions were also calculated to prevent extra offloading charges that could be incurred in the repair yard. The Norwegian summer was coming to chilly ending in late September. The ERS team was managing a few other crises that had hit their desks over the summer. But the “not-so-out-of-the-ordinary” call they took on September 22nd was one that the team was expecting. HS Elektra had made it safely to the repair yard in Guangzhou. While it may have seemed anti-climactic, 3.5 months and many nerve-wracking man-hours later, the fact that South America could breathe a bit easier, was something to be proud of.  Sources: Wallem Group News, Spring 2010, Inside DNV – June 2009, Interview with Rossen Panev, May 2010

Jahre grouP

New lNg fuel tank concept developed by the Jahre group One challenge for designers of vessels intended to be powered by LNG has frequently been the volume of space to be allocated for LNG fuel. the combination of significant volumes of insulation and cylindrical tanks often used for gas-fuelled vessels requires more space. TexT: Jan koren

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artist’s impression of the LNG fuel tank arrangement

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(57) abstract from patent application: a support structure for a prismatic or upright cylindrical tank in a hold of a ship or other movable transport unit or storage unit, comprises a prismatic or upright cylindrical tank having a base, a base support on wich the tank base is supported to carry the weight of the tank, a tank support surface provided on the tank, and a hold support surface provided on the hold and arrange to co-operate with the tank support surface, the support surfaces extending in a direction of thermal movement of the tank and the support surfaces extending at an angle which is intermediate to a horizontal an vertical direction so as to restrict lateral movement of the tank relative to the hold.

the Jahre group in Norway has developed a new tank concept and support system which can be used for both cylindrical tanks and prismatic tanks. The latter is claimed by the Jahre group to increase the utilisation of the hull volume by up to 30% compared to cylindrical tanks. a prismatic fuel tank can be tailor made to fit into the allocated fuel tank space on board. These tanks are Imo type a fuel tanks with insulation serving as a full secondary barrier. The supporting arrangement for the

Jg Imo a lNg fuel tank system has been patented. This tank system is now in the final stage of obtaining approval in principle by DNV. an extract from the patent application explains the tank support principle The tanks are lifted into the insulated tank space and positioned on support blocks. The insulation serves as a full secondary barrier, preventing lNg from leaking into the ship in the case of tank leakage. The two tanks shown in the figure will be independent of each other and one

tank may be gas-freed and entered with the other tank in operation. This arrangement is particularly suitable for pure gas engines for which a backup tank system is required. The tank construction itself will be according to the International code for the construction and equipment of ships carrying liquefied gases in Bulk (Igc). The Jahre group has entered into an exclusive agreement with rolls royce for application for their gas-fuelled engine installations. 

DNV taNker upDate no. 1 2010 |

15

John Angelicoussis

A type of crisis that we have never experienced before “Since the 2nd world war, shipping crises have been caused by aggressive expansion of fleets, usually accompanied by a world–wide, economic downturn in most of the important markets. The most recent major crisis, that I can recall, was in the mid1980s, which had its origin in high oil prices and consequently high inflation. Interest rates sky rocketed to fight inflation. Business was affected negatively, as well as the cash flow of ship owners. Banks arrested many vessels and bankrupted a number of ship owners,” says John Angelicoussis, President of Angelicoussis Group. Text: Magne A. Røe

This time, the world crisis emanated from the banks. They got involved in risky investments, mainly in bad quality real estate, which their management did not understand. Almost all banks and investment banks in the west overextended their balance sheets and found themselves grossly undercapitalized. Few could survive without government intervention. In contrast, in 2008, when this banking crisis started, most ship owners found themselves in very strong financial positions. Bankrupt banks; but solid ship owners. The origin of the bubble was too much liquidity. We have seen excesses in liquidity in the past. Never before, however, anything like the period between 2001 and 2007. Money was running out of fashion. I.P. Os were a regular feature; cheap overlending to unknown entities was frequent.

16 | DNV tanker update NO. 1 2010

This is financial mismanagement by the people responsible for extending credit to industry. Credit is the life-line of most industries. Credit automatically disappeared. Defaults became common by receivers, charterers and some shipping companies. When looking back at 2008 and 2009, what were the biggest hurdles? “Non availability of bank credit. Now, for good companies and solid balance sheets, the situation is much better than it was a year ago. In shipping we need cash. This gives you strength. But cash is also dangerous as this may lead you to make investments that are not solidly based on good business decisions.”

What are some good and some “not so good” business decisions these days? “Many Greek shipping companies and particularly the medium or small size companies that did not order new buildings during the good years have amassed quite a lot of cash. Several of them are taking the decision to start investing now. My opinion is that the crisis is not over yet. The latest trend in Greek shipping is to buy container ships. In the current container market, these are relatively cheap purchases. The problem is that the container market segment is oversupplied. Laying up a container ship and waiting for better time is also expensive – and who knows when these better times will come? In two years from now or maybe in five. The Kamsarmax bulk carriers that are being ordered by many seem as a

John angeliCoussis

››

John angelicoussis, president of angelicoussis Group

better investment to me. The prices are decent and these ships are filling slots at the yards. This is a good opportunity for owners and yards alike. But too many have been ordered already.” You mentioned the role of the banks – can you comment on this? “Banks in the west have too many nonshipping problems to solve. shipping was the least of their concerns. so they are adopting a “wait and see approach”, extending time to the least problematic loans and even deferring principal payments. This approach has paid off handsomely, for the banks and the ship owners.”

So investing in container ships may be not so good but what about the bulk and oil tanker markets? “These two sectors show better promise. europe has a lot of economic problems but the U.s. is in a lot better position. china appears to be the healthiest major economy in the world today. Domestic demand is growing fast and exports are improving. Between them, china, India, korea and Japan and the remaining far eastern countries have a total population of some three billion people. This is where you find the best market demand right now and this will increase. china will continue to grow in the dry market and India is also growing fast and will need more local coal and iron ore. more oil will also be needed by both. south korea is also

doing reasonably well. I would like to state that every downturn creates opportunities.” aS we Speak, there are demonstrations here in athens as the problems in the greek economy have become a hot issue for greece and the european Union. What are your comments on this?

“In spite of the current problems, I am optimistic about greece. we will have to sort this out and we are on the right track. I am proud of being greek! greece is one of the best countries in the world for ship operations. europe needs us as we need them. most countries like for instance germany, have their own issues to handle. however, I believe that the current demonstrations are not helping greece to go through the crisis.” concludes mr. angelicoussis. 

DNV taNker upDate no. 1 2010 |

17

Maran Tankers

Maran Tankers Actions to further reduce the environmental footprint “Maran Tankers Management Inc. actively supports the industry initiatives to increase energy efficiency both by operational measures and by the introduction of tested technical innovative solutions,” say Stavros Hatzigrigoris, the Managing Director of the Oil and Gas tanker units of the Angelicoussis Shipping Group, and Sokratis Dimakopoulos, the HSQ manager of MTM. Text: Magne A. Røe

18 | DNV tanker update NO. 1 2010

maran tankers

‹‹

Diploma accompagnying a uS flag which was flown over the united States Capitol on February 23, 2010, in honor of Captain Sakaleros Ioannis and the crew of the M/V Maran Gas Coronis on their voyage to Boston, Massashusetts

››

Stavros Hatzigrigoris, Managing Director Oil and Gas tanker units, angelicoussis Shipping Group, tor e. Svensen, president, DNV and Sokratis Dimakopoulos HSQ manager, MtM

maran tankerS haS a long-term commitment to reducing the environmental footprint of the managed ships and, so far, has been relatively successful in doing so. “we have to be pro-active in shaping our future by focusing on energy saving. This is very important from an environmental perspective but also from an economical point of view. “shipping is by far the most energy efficient mode of transport, however, in our industry there is room for improvement. This calls for a synergy of all the stakeholders including builders, owners, class, operators, and charterers.” maran Tankers has established and implements a number of environmental programs on energy efficiency which are based on the following three pillars: operation optimization, introduction of technical innovations/better design, training of personnel. a number of projects are in place to support these initiatives which include, amongst others: n monitoring, recording and analysing the Imo energy efficiency operational Indicator (eeoI) per vessel on a quarterly basis with the aim of identifying energy improvement opportunities and carrying out benchmarking. n calculating the energy efficiency Design Index (eeDI) of the ships – in accordance with mepc 1/circ.681 – and carrying out a benchmark analysis of the fleet eeDI against the published available baselines. n promoting the implementation of the company’s “energy efficiency Best

n

n

n

practice manual” and ensuring its compliance with the Imo “guidance for the development of a ship energy efficiency management plan (seemp)”. Introducing technical systems and design changes that would enhance the energy efficiency of the new-building vessels such as electronically controlled main engines; devices that improve the hydrodynamic performance of the hull/propeller combination including bote pre-swirl stator installation and the application of fouling release coatings ; engine performance monitoring; m/e sequential turbochargers or variable nozzle ring turbochargers etc. Implementing a program for “weather routing” as well as frequent propeller polishing. participating in a number of r&D and Joint Industry programmes in co-operation with Universities and other industry partners.

The seagoing personnel involvement is also a key success factor. The training of the officers in energy efficiency and environmental matters at the in house Training centre in athens is an on-going process. win-win Situation our improvements are the sum of all our efforts. when we translate this into how we work on a daily basis within the company, it is important to demonstrate, how these efforts also yield financial benefits for the owners of the ships. all the efforts make us more

efficient, we consume less fuel, we operate and maintain our fleet in a smarter way and we can read this directly off the bottom line of our balance sheet. It really is a win-win situation, say the two gentlemen. we achieve better results while reducing our environmental footprint.” Being active to Shape the future concerning the legal developments in this area we are fully supportive of the action in the Imo and we believe that since the reduction of the co2 emissions is a global problem it needs global solutions. It is important for us that the shipping industry influences the process so as the targets to be set would be promising but at the same attainable and practicable ensuring also a level playing field. In this process we actively participate in various industry committees and forums (e.g. INTerTaNko, class Technical committees, marTechma, Union of greek ship owners) with the aim of promoting environmental considerations and actions as well as safe shipping. In this respect the role of the classification societies should be underlined as well as their responsibility in assisting the owners and the yards in evaluating, selecting and installing the best technical solution available. This would ensure energy efficiency improvements as well as safer, more robust, reliable and user friendly vessels. class should re-focus on their technical work and use their expertise to the benefit of the industry and the society in general. 

DNV taNker upDate no. 1 2010 |

19

profiling dnv greece

DNV’s Piraeus office: from a representative office to a regional hub

››

Piraeus harbour view from the DNV office. The picture was taken a few years ago.

Since 1921, when DNV’s first Greek office was opened in the Cunard Building at 4 Sotiros Street, many things have changed for Norwegian classification society Det Norske Veritas in Greece. Text: Georgios Teriakidis

What started off as a small representative office headed by Danish broker W. Wellis has now become a busy hub serving the whole of the East Mediterranean and Black and Caspian Seas and, of course, Greece’s shipping centre, Piraeus. Currently DNV Piraeus is a regional office, located over three floors of the Karagiorgis Building at 26–28 Akti Kondyli Street and overlooking the port of Piraeus. In addition to the Greek market, it oversees a region consisting of twenty-seven (27) countries and eight (8) offices; from Croatia and the Balkans in the west, to Egypt in the south, Cyprus and Israel up to Azerbaijan in the east and as far north as Ukraine. The regional office is now responsible for major shipping centres on a world scale: Greece, Cyprus and Turkey have a large number of owners that have head offices in these three countries.

20 | DNV tanker update NO. 1 2010

Cyprus has actually become one of the largest ship management centres in the world. During the past few years, Turkey has also established active newbuilding and ship repairing facilities in Tuzla, where many owners prefer to build or repair their vessels. These factors make this region an important one for DNV’s Division Europe and Africa. The hub has managed to multiply in numbers and competence; at the beginning of 2010 there were about sixty (60) permanent employees working in different departments: n A Regional Office headed by Mr Nikolaos Boussounis n A Maritime Service Centre & Advisory Services Department headed by Dr Loizos Isaias n A Production & Customer Support Department headed by Mr Andreas Pagalos

A Research & Innovation Department headed by Dr Nikolaos Kakalis n DNV Industry headed by Mr Nikolaos Charissis n DNV Petroleum Services headed by Mr Vassilis Stamatopoulos Regional Office The regional office is actively involved in customer service management for the companies located in Greece and also co-ordinates the rest of the region. Another of this department’s important roles is to communicate with the Greek authorities. It is worth mentioning that around 970 of the about 4,000-vesselstrong Greek fleet fly the Greek flag. Maritime Service Centre & Advisory Services Department The Maritime Service Centre (MSC) is probably the most important element of this hub as it caters for many of the needs of the local market. Since it was formally established in 2000, it has gained a good reputation for training. n

profiling dnv greece

The courses provided are expanded every year and enhanced in order to reflect the local and current needs of the participants. The department currently has eleven (11) employees who, among other things, can help the shipping community in the following sectors: n training n CAP and fatigue calculations n conversions n advisory services (e.g. Hull Integrity Management and Inspection Manuals) n pre-contract and newbuilding support services Customer service management as well as with approvals of: n water ballast management plans n hulls and stability n SOPEP manuals n loading computer systems n etc Production and Customer Support Department The Ships in Operation (SiO) department is manned by thirteen (13) surveyors, who have expertise in all the types of vessels calling into Greece. CAP Hull and Machinery surveys can also be carried out by local Greek surveyors. This department includes another team of five auditors. This active group, headed by Mr Frantziskos Kamizoulis, carries out audits relating to International Safety Management, Approval of Service Suppliers, ISO 9000 as well as ISO14000 and other standards. It is worth mentioning that after an initial inspection on board the vessel SEACROWN of THENAMARIS SHIPS MANAGEMENT in Milazzo, Italy on 22 November 2009, Mr Kamizoulis Frantziskos and Mr Olkvam Tomm awarded the first ever Maritime Labour Convention certificate. Research & Innovation This new Research & Innovation department was established in 2008 and has proven to be quite a successful move. With a team of four (4) highly qualified people, DNV Research & Innovation (R&I) Greece develops next-generation solutions for energy-efficient, greener and more effective maritime transportation. The department’s activities range from joint industry

projects with Greek shipping companies to large EU innovative projects as well as a strategic collaboration with the School of Naval Architecture and Marine Engineering of the National Technical University of Athens (NTUA). Business Assurance Although only one person is employed in this department, it has quite a strong presence, especially in the field of certifying companies in connection with corporate social responsibility, something that Greek companies have only recently started paying attention to. DNV Petroleum Services This vibrant team of five persons is expanding and offers a high quality Fuel Management Programme which not only includes fuel quality testing but also provides consulting and training solutions for ship operators, delivering measurable improvements to risk management, cost and operational efficiency as well as environmental performance. It is worth mentioning that the head of DNV Petroleum Services (DNVPS) in Greece is now the Regional Manager for Europe, having managed, together with his team, to secure a large percentage of the local market. GREEK SHIPPING STATISTICS: A QUICK LOOK Shipping is one of the top contributors to Greece’s Euro 240 billion (USD 323.7 billion) economy along with tourism and construction. It accounted for about 5 per cent of the country’s GDP in 2009. n The Greek shipping community owns one seventh of the world’s fleet in terms of deadweight tonnage (dwt). Its merchant fleet is the second largest in the world after Japan and ahead of China and Germany. n Greece’s fleet accounts for about 8 per cent of the world’s fleet in terms of vessels. The total number of ships in the fleet stands at close to 4,000. n Greek ship owners are key players in the dry bulk shipping sector, which ferries strategic commodities including coal and iron ore, as well being active in the oil tanker market. n Greek shippers have taken delivery of 230 newbuildings since the start of 2009. About 367 vessels are on order in 2010.

Foreign banks account for about 75 per cent of lending to the Greek shipping industry. The total loans related to Greek ship financing booked last year fell by nearly 9 per cent to USD 67.02 billion from USD 73.23 billion in 2008. n The number of Greek companies operating ships stands at 1,142, with each managing on average three ships of 43,795 dwt capacity. n The Greek-controlled fleet is registered under 47 flags. About 969 ships are Greek-flagged. Other big flags in the Greek fleet are Liberia and Panama, under which 581 and 558 vessels are registered respectively. n While shipping accounts for just over 1 per cent of Greece’s 5 million workforce, its economic influence is far higher. Foreign earnings from shipping were about Euro 13.5 billion last year, according to the central bank. n Greek shipping magnates invest in everything from Greek banks to construction and tourism.  n

DNV Piraeus The office has a lot of expertise with which to serve the needs of the local Greek market through training, surveys, approvals, etc. An office where about 65 people work Within the office we have DNVPS, Certification, Research and Innovation (the only hub outside Norway), the Maritime Service Centre, Customer Service Management Department, Production (surveys) Department and a regional office covering the Region East Med, Black & Caspian Seas. Gives emphasis to customer support The Maritime Service Centre has been very successful in delivering CAP projects involving Greek surveyors in various places around the world. Other activities include water ballast management plans, hull and stability inspections, SOPEP manuals, loading computer systems, etc The Advisory Services Department has also started to deliver with the introduction of hull inspection manuals in the local market. Within the past two years, four Energy Management & Fuel Efficiency projects have been completed for local customers.

DNV tanker update NO. 1 2010 |

21

TMSA

Improving the TMSA score through a focus on competence

The Tanker Management and Self Assessment (TMSA) has increased the focus on how various aspects of tanker operations are managed. The TMSA score has become an important performance indicator. Although competence management is not defined as an isolated element within TMSA, competence-related requirements can be found throughout the self assessment. This may be a good time to take a closer look at competence management as a whole and where the TMSA requirements fit in this picture. Text: Ruud de Bruin

TMSA Element 3, Stage 4: The company has a documented planning process to ensure that future manning needs can be met

TMSA Element 3A, Stage 2: The company has procedures to identify additional training requirements

TMSA Element 4A, Stage 3: The vessel operator identifies and documents competency standards with regard to critical equipment and systems

TMSA Element 7, Stage 2: The system ensures that training needs arising from changes to equipment or procedures are identified and documented

TMSA Element 3, Stage 4: Appraisal and competence development for vessel personnel are linked to future training and promotion requirements TMSA Element 3A, 5, 6, 8A, 9A,11: Large number of specific training related requirements (Ref.TMSA) TMSA Element 7, Stage 2: The vessel operator has a documentted familiarisation process for both shore-based and vessel crew (see also TMSA Element2, Stage1)

TMSA Element 3, Stage 2: The vessel operator verifies that the manning agents ensure that crew quality recuirements are consistently met TMSA Element 3, Stage 3: Manning agencies used by the company are audited annually top ensure their practices meet the vessel operator’s selection and recuirement procedures

22 | DNV tanker update NO. 1 2010

Assess current competencies

Review results

TMSA Element 3, Stage 1: A process is in place to screen new crew-members for job competence TMSA Element 3, Stage 3: The company operates an enhanced appraisal process for senior officers

TMSA Element 9A, Stage 3: Safety best practice identified on individual vessels is transferred across the fleet TMSA Element 9A, Stage 4: Appropriate company representatives make extended visits to all vessels to confirm safety standards and ensure that safety training programmes are effectively implemented

TMSA Element 2, Stage 2: The recruitment process identifies any training needed to ensure that personnel have the required skills and capabilities

Define competence needs

Formulate business goals & KPIs

Implement solutions

TMSA Element 3, Stage 4: The company conducts pre-employment assessment for job competence and training for officers and ratings

Map competence gaps

Plan closing of gaps

TMSA Element 5, Stage 4: The vessel operator arranges independent random navigational reviews across the fleet to check general navigational competences TMSA Element 9A, Stage 2: Drills and safety exercises are used to determine and record training needs of individual employees and records are maintained on board and ashore

TMSA

How can you define competence gaps if you haven’t defined the required measurable competences or competence standards? (TMSA’s Element 2 (stage 2) and Element 3 (stage 1 &4)) Managing competence is one of the key challenges in managing a company. Defining KPIs related to competence appears to be very challenging. For many companies, competence management equals having a training matrix based on STCW requirements and monitoring the expiry dates of certificates and medicals. An important contributor to this misconception is the fact that in everyday life the emphasis seems to be on the validity of certificates. Certificates are in essence far less important than the actual competence behind them. However, they are much easier to verify and for that reason always checked during audits or vetting inspections. How do you assess the performance of your people without having defined measurable performance criteria, such as competence standards? (TMSA’s Element 3, stage 4 and Element 4, stage 3) Strategic competence focus Competence management, when done properly, contributes to or enables the achievement of the higher level strategic objectives or goals you have set. It serves a strategic and meaningful purpose instead of merely a compliance-based purpose and contains the following steps: 1. Formulate business goals & KPIs 2. Define competence needs 3. Assess current competencies 4. Map competence gaps 5. Plan closing of gaps 6. Implement solutions 7. Review results against previously defined goals

A solid competence-management system addresses all competence-related issues in a coherent way. Below, competence-related TMSA elements and stages are positioned around a so-called ‘competence wheel’ (ref. graphic).

adequately to justify higher scores for the competence-related elements. “A solid building needs a good foundation. A good ship needs a strong structure. Competence management is the foundation or structure of your company.” 

Benefits of competence management Although all this may sound logical and obvious, the most crucial steps are often left out of the equation. Skipping steps 1 through 5 and simply sending people on courses raises many questions, several of which can be found throughout the text.

How can you express your training needs to a training provider and ensure that your training budget is well spent? (TMSA’s Element 5, stage 3 – Element 7, stage 2) Solid competence management will: n give you strategic leverage and greater management control over your valuable human resources n assist in improving your operational performance and efficiency n help align your strategic goals with your resources n provide you with competence criteria for selection, recruitment, promotion, training, assessment and performance evaluation n allow you to make well-founded statements related to the value of external training or crewing services How can you indicate your needs or verify the quality provided by crewing agents if you haven’t defined these? (TMSA’s Element 3, stage 2) As an additional benefit, many TMSA elements and stages will be covered

If you would like to discuss your competence-related challenges, needs and possibilities for improvement, DNV is more than willing to meet you to help you reflect on your challenges and provide assistance where desired. Please contact your local DNV office or DNV SeaSkill™. Website: www.dnv.com Email: seaskill@dnv.com

DNV tanker update NO. 1 2010 |

23

MAPS

Marinvest Alternative Propulsion System (MAPS) wins recognition In our Tanker Update April 2009 issue, we presented an alternative propulsion system developed by Marinvest AB in Sweden for slow speed main engines without a gearbox. The system, which won the Ship Trade Award 2009 in the Innovation in Ship Operations category, is designed to comply with DNV’s additional class notation for alternative propulsion when installed on board. Text: jan koren

The Marinvest Alternative Propulsion System is currently in full commercial use on four product tankers. The system takes power from the power pack of the hydraulic cargo system and has attained speeds of up to 10 knots in tests. It is a cost-effective measure to gain the advantage of a “take me home device” as well as the opportunity to do planned main engine maintenance without going off-hire. 

©Marinvest

The product tanker Maribel, which is equipped with the Marinvest Alternative Propulsion System (MAPS), successfully demonstrated the awardwinning system to Vopak Oil Rotterdam. As a result, Vopak Oil Rotterdam has now decided that vessels moored at one of its jetties and equipped with a certified and approved MAPS will be allowed to do maintenance on their main propulsion systems without standby tug boat assistance.

››

Patrik Mossberg, Vice-President of Marinvest.

“We have been in dialogue with Vopak regarding MAPS since the autumn of 2009 and have found Vopak Oil Rotterdam to be a very safety and environmentally oriented company. Its decision is a stamp of quality for our alternative propulsion system.” Patrik Mossberg

24 | DNV tanker update NO. 1 2010

Tanker market better than expected

Tanker market better than expected The tanker market has recently recovered significantly and been surprisingly solid after a period of substantial economic setbacks, falling global oil demand and significant growth in the oil tanker fleet. Text: jarle hammer, Hammer maritime strategies CRUDE OIL PRODUCTION 25

MILLION B/D ID: 50

MIDDLE EAST OPEC (incl. Iraq)

20

(excl. Iraq)

15

OTHER OPEC 10 USA 5

RUSSIA

NORTH SEA IRAQ

0 1990

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2004

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2010

ŠFearneleys

Key factors in this development are the substantial use of storage vessels for speculation in higher oil prices after the brutal drop in late 2008 and the continued depletion of oil producing areas close to major markets. Significant slippages in tanker deliveries from shipyards have also eased the situation for tanker owners. The financial markets are still quite uncertain and possible setbacks could dampen oil demand prospects. At the same time, new overland pipelines and expected oil

production growth in some non-OPEC countries will have a negative impact on tanker tonne-miles. This setting does not bode well for the medium-term tanker tonnage balance. On top of this, shale gas prospects within or close to major oil importing areas have appeared as a sudden wildcard and possible game changer in the longer term. However, at present the market for crude tankers is upbeat, with increasing time charter rates and second-hand values.

The IEA now estimates that the world oil demand decreased by 0.4% in 2008, followed by a decrease of 1.4% in 2009. For this year, growth of 1.9% is now predicted, which means that global oil consumption in 2010 will be at about the same level as in 2007. The tanker fleet, on the other hand, increased by 4.7% in 2008 and a further 9.0% in 2009. Without slippages in 2009, the tanker fleet growth last year would have been as high as 13.5%. At times, floating oil storage tied up about 3–4% of the tanker fleet last year. Over the last couple of years, North Sea oil production and Mexican oil production both decreased by about 0.5 million b/d, or 10% and 15% respectively. The tanker fleet growth will be significant in the next couple of years too. During the first four months of 2010, the tanker fleet increased by 2.3%. At the beginning of May, the world oil tanker fleet stood at 419.5 mdwt, according to Fearnresearch, and the order book at 117.7 mdwt, corresponding to 28.1% of the existing fleet. Scheduled deliveries amounted to 10.8% of the present fleet for the last eight months of 2010, 11.1% in 2011 and 5.0 % in 2012. In comparison,

DNV tanker update NO. 1 2010 |

25

Tanker market better than expected

OIL TANKER FLEET AND ORDERS BY SIZE. MAY 2010 225

OIL IMPORTS BY VLCC’s Tank and combined over

MILLION DWT

MILLION DWT

35%

50

225

ID: 149

225

ORDERBOOK

225

EXISTING

50

30

225 21% 225

33%

225 225 225

20

27% 21% 18%

10

11%

EUROPE

Nil%

0 10-25

25-40

40-55

55-85

85-120

120-200

Size groups in ‘000 dwt

the remaining single-hull fleet had fallen to 9.6%. Slippages in tanker deliveries have been significant, amounting to about 27% in 2009, as against bulk carrier slippages of as much as 51% of scheduled deliveries at the beginning of the year. During the first four months of 2010, new tanker orders totalled 4.9 mdwt, slightly up from 4.8 mdwt in the preceding 4-month period. The main newbuilding focus remained on Suezmax, while there was a revival in orders for MR product carriers. Demolition sales during the first four months of 2010 totalled 3.0 mdwt, down from 3.4 mdwt in the preceding 4-month period. A closer look at size ranges shows significant differences in order book shares. At the beginning of May, the order book for 10-55,000 dwt ships corresponded to 22% of the existing fleet (with 18% for 10-25,000 dwt, 11% for 25-40,000 dwt and 27% for 40-55,000 dwt). The size groups 55-85,000 dwt and 85-120,000 dwt both had order book shares of 21% of the 26 | DNV tanker update NO. 1 2010

200-325

325+

0 1989

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Source: Fearneleys

existing fleet – Suezmax 33% and VLCCs 35%. Global economic prospects have continued to improve, although some European countries are in deep economic trouble and the overheating in China gives reason for concern. The latest reported figures for 12-month changes in industrial production in leading countries are as follows: the USA up 4.0%, the Euro area up 6.9% and Japan up 30.7% from the very dismal level one year ago. China has reported impressive growth of about 18% and other countries doing remarkably well are India, Vietnam and Malaysia, all up around 14%. GDP forecasts have over the last few months been revised somewhat upwards. As per mid-May, according to a panel of experts reporting to The Economist magazine, both Europe and Japan are lagging behind and will not reach the 2008 level in the course of 2011. The USA might see GDP growth rates of around 3% in both 2010 and 2011, after a decrease of

2.5% last year. China may achieve growth rates of around 10% this year and 8% next year. India could expect 8% growth in both years and several countries in SE Asia and the Far East are estimated to see growth rates of 4-7% per year. It should come as no big surprise if these forecasts are revised somewhat downwards in view of the growing financial unrest in Europe and the dramatic escalation of the conflict in Thailand. Oil demand forecasts are heavily linked to economic developments. A changing energy mix and conservation efforts also have a significant impact. In the May issue of the IEA’s Oil Market report, the global oil demand growth forecast for 2010 was revised slightly down to 1.9%, after a decrease of 1.4% last year and 0.4% two years before. The US oil demand is now estimated to increase by a modest 0.5% to 18.77 million b/d in 2010, after decreases of 3.7% in 2009 and 5.3% in 2008. It is remarkable to see that oil demand in by

1998

199

Tanker market better than expected

200 000 DWT

99

BALTIC TANKER INDICIES 3M. AVERAGES

END OF MONTH

INDEX POINTS 3500

F.EAST

ID: 1554

3000

DIRTY

2500 OTHER AREAS

2000

1905

1500 1000 AMERICA ATLANTIC

CLEAN

500 0 2000

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2002

2003

2004

2005

2006

2007

2008

2009

2000

2001

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©Fearneleys

far the largest market in the world could be almost 9% lower in 2010 than three years before. OECD Europe might face a decrease of 1.0% in 2010 to 14.36 mbd, after a decrease of 5.3% last year and virtually no change in 2008 – leading to a level that is about 6% lower than three years ago. Japan and Korea combined are estimated to see a decrease of 1.2% this year to 6.50 mbd, after decreases of 5.3% in 2009 and 4.5% in 2008 – leading to a level that is about 11% lower than three years before. It appears that the estimated oil consumption of 45.4 mbd in the OECD countries in 2010 will be 7.6% lower than three years before, whereas non-OECD countries’ consumption will, at 40.9 mbd, be 10.1% higher than three years before. A closer look at the forecasts for 2010 shows that China’s oil consumption will increase by 7.6% to 9.16 mbd, whereas India will see modest growth of around 2% to 3.33 mbd. It is interesting to observe that Middle East oil

consumption is estimated to increase by 4.2% to 7.35 mbd, which is up almost 13% over three years. Such strong demand growth in combination with OPEC’s minimalist approach, restricting oil production in order to defend the oil price, gives more room for other oil producers that are often closer to main market areas. This development clearly has a negative impact on tonnage demand. Looking ahead, the substantial overhang of tonnage to be delivered will – despite further delays in newbuilding deliveries and some cancellations of late deliveries – be hard to balance by tonnage demand growth, and the tonnage balance seems bound to deteriorate over the next couple of years. As can be expected during times of shrinking oil consumption, product carriers have experienced poorer demand developments than crude carriers. This has also coincided with a very strong product carrier fleet growth. As much as 30% of the existing 40-55,000

dwt tonnage has been delivered since the start of 2008. On 19 May, the VLCC spot rate from ME Gulf to Japan stood at USD 30,000 per day, with Imarex future quotations at about USD 22,000 for calendar year 2011 and USD 22,500 for calendar year 2012. The spot Suezmax rate for West Africa to the US Atlantic was noted at USD 54,500, with about USD 20,000 quoted for 2011 and USD 22,000 for 2012. In comparison, reported time charter rates were significantly higher – for VLCCs at USD 44,000 for one year and USD 40,000 for three years, and for Suezmax at USD 30,000 for one year and USD 27,000 for three years. Should they materialise, such healthy rate levels way above operating costs would not induce much scrapping. There will most likely be significant market volatility in the next couple of years too, with some waves of scrapping in between. 

DNV tanker update NO. 1 2010 |

27

receNT DelIVery: Torm alexandra faCts: owner: torm a/S, Denmark builder: Guangzhou Shipyard International, China Delivered: May 2010 ship type: tanker for oil and chemicals (Mr)

loa: 183.2 m breadth: 32.2 m Depth: 18.2 m Draught scantling: 12.6 m Deadweight design: 50.200 Cargo tank capacity: 58 340 m3

great Wall of China Built, rebuilt, and maintained between the 5th century BC and the 16th century to protect the northern borders of the Chinese empire from Xiongnu attacks. ŠWikipedia

main engine: MaN 6S50Me-B8, 9 480 kW MCr (new engine with electronically controlled fuel injection system) speed: 15 knots flag: Denmark

Port of registry: Copenhagen Class notations: DNV, ď ˜1a1 CSr tanker for Chemicals and Oil eSp SpM e0 VCS-2 BIS tMON register information: Ship type 2,a2,b3,c2,f2,str.0.075


DNV Tanker Update No. 1 2010