Tanker Shipping & Trade December/January 2018/19

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“We have been through this two- or three-year period of decline in earnings. In 2018, we reached what we believe is the bottom�

Tim Smith, oil and tanker markets director, Maritime Strategies International, see page 4

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Contents December/January 2018/19 volume 12 issue 6 Regulars

3 Comment 4 Analysis 37 Legal briefing 38 Contracts and completions 40 Last word

www.tankershipping.com Tankers & Markets Editor: Craig Jallal t: +44 20 8370 1717 e: craig.jallal@rivieramm.com Production Editor: Kevin Turner t: +44 20 8370 1737 e: kevin.turner@rivieramm.com

Ship-to-Ship Transfers

Brand Manager – Sales: Paul Dowling t: +44 20 8370 7014 e: paul.dowling@rivieramm.com

Shuttle tankers

Sales Manager: Chris Tims t: +44 20 8370 7015 e: chris.tims@rivieramm.com

7 Safety and efficiency are the buzzwords driving development in STS

10 Shuttle tankers are being made safer and better suited to operating in treacherous waters

Escort tugs

12 Tugowners challenged to enhance escort towage safety 14 Innovative designs are improving performance when towing tankers

Ice operations

16 Tanker operators must balance robust technology with clean running when navigating Arctic waters 18 The view from class on tanker ice operations 19 The latest developments in ice operations from RS; New stabilisers optimised for ice operation

Emissions tech

21 Is the industry finally readying itself for a post-sulphur cap world?

Conference review

26 The key issues and the big winners from the Tanker Shipping & Trade Conference Exhibition and Awards

Coatings

30 Specialised hull coatings are enabling tankers to operate in new waters 31 Anti-fouling coating benefits MR tanker; Anti-bacterial coating developed 32 Hull performance can support environmental considerations and energy efficiency

Tanker Markets

34 Q3 financial reports show earnings among tanker owners were generally better than expected

Next issue

Main features include: Safety: gas detection; Tank cleaning; Cargo pumps; Area report: Singapore; Sulphur Cap/ Scrubbers (are we ready?); Chemical Tankers

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Tanker Shipping & Trade | December/January 2018/19

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COMMENT | 3

Five predictions for the tanker market in 2019

E Craig Jallal, Tankers & Markets Editor

www.tankershipping.com

arlier this year I predicted that “if 2018 has been unremarkable, expect fireworks in 2019” and as we near the end of 2018 I believe this still holds true (albeit one of the predictions I made has already proved inaccurate; as MEPC 73 made it clear, there will be no delay in the implementation of the IMO 2020 global sulphur cap).

So what can we expect from 2019? Well, there is likely to be logistical chaos during the switch over from one fuel to another in the run up to the sulphur cap. Confusion will take many forms, from the lack of available fuels to fuel performance after delivery. Adding to the misery, some port authorities are now banning the use of the equipment in port that was designed to ensure compliance.

My second prediction for 2019 is that the above-mentioned fuel issues may well be compounded by a cut in oil production by Saudi Arabia, whose role of swing producer and setter of the crude oil price has been usurped by a boom in crude oil production in the USA’s Permian Basin ((one million barrels per day alone in August).

President Trump has spoken of a decrease in the price of crude oil as a “tax cut” while Saudi Arabia is looking to push the price back towards US$70/bbl. US net oil imports peaked at 13M b/d in 2005 and are predicted to fall to 2.4M b/d in 2018 and just 350,000 b/d by the end of 2019. This would bring a significant change in the direction of crude oil flows, even if China has shunned US imports. Further, a boost of North American shale oil exports from the North West coast of Canada to Asia is now unlikely to happen.

A third prediction also plays on the theme of logistical chaos stemming from the global sulphur cap and the possible re-routing of tanker flows, coupled with tonne-mile increases as global oil producers seek to exert influence over the price. This will result in spikes in tanker earnings in the second half of 2019.

To manage these global changes we

require measures on a global scale, coupled with truly long-term strategies. Maersk has stated that it has set itself a target of net zero CO2 emissions by 2050 and for those companies with access to cash or understanding shareholders, the second half of 2019 onwards may well offer some exciting investment opportunities.

Sadly however, there will also be those tanker operators that, for one reason or another, failed to plan adequately for the switch over, or simply bet on what turns out to be the wrong solution for compliance.

Which brings us on to my forth prediction: that 2019 will see a wave of investment and mergers among tanker owners and shipmanagement companies.

“My third prediction plays on the theme of logistical chaos, stemming from the introduction of the global sulphur cap”

My final prediction involves the 2019 implementation of the European Regulation on Ship Recycling (EU SRR). Under EU SRR, a Greek flag VLCC that is sold for scrap will have to be recycled in a European yard. Despite this new regulation, I feel very confident in predicting that no VLCC will be scrapped in Europe in 2019.

What are your predictions for the tanker market in 2019? Email me, Craig Jallal at: craig.jallal@rivieramm.com For further discussion of the prospects in 2019, book your place at the Asian Tanker Conference in Singapore. TST

Tanker Shipping & Trade | December/January 2018/19

4 | ANALYSIS

Tanker market: demand, fleet growth and earnings outlook Maritime Strategies International's oil and tanker markets director Tim Smith assesses whether the tanker market has truly turned a corner

Tim Smith (Maritime Strategies International): Growth in rates across tanker sectors is coming, but so too are the macro-level risks

S

peaking at the first day of the annual Tanker Shipping & Trade Conference & Awards in London in November 2018, Tim Smith, oil and tanker markets director at Maritime Strategies International (MSI) outlined his views on demand drivers and the fleet dynamics that help predict tanker market earnings.

“If we look at the one-year time charter rate across a range of tanker benchmark types, we see a market that is highly correlated across different asset types. Tanker markets move together, they cycle together; you need to look at this sector holistically."

Mr Smith highlighted the well-publicised uptick in earnings over recent months, saying MSI’s research leads it to believe the market has hit the bottom and made the turn. Weak freight markets have been the norm and Mr Smith said volatility, particularly in the spot market sector, remained. "We have been through this two- or three-year period of decline in earnings. In 2018, we reached what we believe is the bottom."

The major driver of improved earnings, of course, has been the increase in oil prices from a low in 2016, and Mr Smith forecasted that both

Tanker Shipping & Trade | December/January 2018/19

short-term oil consumption demand growth and oil prices would now remain steady at 1.4-1.5% and US$70 per barrel, respectively.

He cited multiple macro-level risks, including a potential cut in supply from OPEC in 2019. He said he was in "constant crisis management" in an attempt to balance internal "shocks" with the changing dynamics of global markets.

The primary shift in global markets has come from a "massive increase in US production," he said. "There is a lot happening on the production side, and I haven’t yet mentioned Iran – obviously there is a lot of uncertainty about how OPEC will respond to Iran."

US shale output continues to rise, with a more than 2M b/d year-on-year increase in the second half of 2018, although some caution is warranted in the short term due to pipeline/ takeaway capacity restraints in the Permian basin. Mr Smith said that, as opposed to historic market gains that came from major shifts in production or supply, the same had not proven true over the last decade.

"Prior to 2009, there was a positive correlation," he said. "Since that period, it has flipped, and you can see that a rise in oil price has produced an opposite effect on tanker earnings."

He added: "Part of that, in our view, is the rise, during that time, of US shale production."

Mr Smith said that, although US crude exports have dominated narratives in the sector over the last three years or so, they have not transformed tanker rates, which have declined. "Going forward, this [trend] is likely to have more effect," he said.

Regarding US-China trade issues, Mr Smith said the wider Asian market had made up for any shortfall in US crude exports to China.

He said America's crude oil supply would grow significantly over the next decade, as a long-term market support mechanism.

“We do not assume the China-US trade spat is going to put the brakes on the longer-term flow of long-haul crude,” he said.

Ultimately, we are now at a trough point according to Mr Smith, with MSI viewing upside to rates as a key feature of the market moving forward. However, said Mr Smith, "the improvement in earnings will be substantial but not exceptional by 2020." TST

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SHIP-TO-SHIP TRANSFERS | 7

STS operations in progress: a “controlled collision"

Raising safety standards in the STS sector Ship-to-ship transfers can be particularly economical when a vessel has multiple unload points throughout its journey, or when draught restrictions prevent it from entering port

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S

afeSTS is a ship-to-ship STS operation management company formed in Diss, UK in May 2010 by Future Marine Services. Since that time it has performed more than 1,900 STS transfers, totalling 460M barrels of oil. Earlier this year the company commenced STS operations in the Port of Spain in the Gulf of Paria, off the northwest coast of Trinidad; more recently, it opened SafeSTS Middle East FZE. The UAE office has undertaken five UAE STS transfers for two oil majors in its first six weeks of operation.

The first two transfers took place at the company's Khor Fakkan "C" Anchorage, whilst the next three were at its Fujairah "S" Anchorage; both anchorages are in the Gulf of Oman and a total of nearly 2,334,000 barrels of oil were involved in the five operations. SafeSTS Middle East regional

director Capt Jagdeep Singh Sodhi said: "The company was formed to support the growing demand for STS transfers of the full range of petroleum products, and these first five operations involved black fuel oil, crude oil and gas oil.

Elsewhere, the Latin American region has experienced significant growth in STS operations, but as Reuters reports, there have also been some major failings. For example, Reuters found that even the most basic safety and operational statistics were not available in Brazil. Companies are required to report STS operations, but Reuters found gaps between local reports and those submitted to the Brazilian Navy, including at least one collision.

Safety at each stage of the process is paramount to an STS operation, which has been likened to a controlled collision. Key elements in the process are the fenders used to keep the vessels separated

Tanker Shipping & Trade | December/January 2018/19

8 | SHIP-TO-SHIP TRANSFERS

Capt David Nichol (UK P&I) 2014: joined Thomas Miller 2010 – 2014: claims executive with another P&I Club, handling a wide variety of P&I and FD&D claims as well as being actively involved in loss prevention initiatives 1997: established his own consultancy, with the majority of work being P&I related

and damage-free. “A priority for a shipowner is the safety and security of their assets,” said Teekay Marine Solutions business development manager Ozlem Kir. “When two ships come together for an STS operation, you want the best fenders to protect your assets. Remember, these ships can be up to 330 m long and weigh 320,000 metric tons.”

Together with Trelleborg, Teekay has developed HALO fenders, which are premium pneumatic fenders that are fully compliant with the ISO 17357-1:2014 standard. They are made with an abrasion-resistant outer rubber layer that protects the inner rubber and tire-cord layers from external damage. The fenders are usually supplied in sets of four and are typically 3.3 m in diameter by 6.5 m long for oil transfers.

UK P&I senior loss prevention executive Capt David Nichol has investigated STS operational incidents, including a case where the cargo hose ruptured near the receiving vessel’s manifold, causing oil to spray on deck and overboard.

“The investigation into the incident concluded that the failure of the hose was related to its condition, as there was no evidence the agreed pumping rate or pressure in the system was exceeded. Markings on the hose indicated it was last pressure-tested more than two years before the incident and no valid certificate of inspection and test could be produced on demand,” he noted.

“The crew should carefully inspect transfer hoses as far as safely accessible and request access to the hose documentation, cross checking that identification markings match up and protesting any defects or anomalies. Industry guidelines require that periodic tests of hoses are undertaken at intervals not exceeding 12 months,” explained Capt Nichol.

This incident, and the subsequent investigation report, demonstrate the need for all involved – operators, owners and crew – to ensure that this process is conducted safely and efficiently. It also illustrates the need for suppliers to ensure that they are playing a role in raising standards across the industry, contributing their expertise as much as their products. In any oil transfer process, equipment not only needs to improve efficiency while operating safely and being easy to operate, it must also exhibit resilience in the face of environmental challenges.

Typically, the EN 1765 standard is used to qualify STS hoses. However, the GMPHOM 2009 standard mandates tougher requirements, increasing resilience and service life beyond that which is typical. This higher level of assessment guarantees a superior level of certainty and confidence when it comes to STS transfers, in line with best practice regulations, with more accurate performance predictors including service life and resistance. Investing in a hose that meets this higher specification will improve operations, decrease maintenance, and ultimately result in fewer expensive replacements over a project’s life-span.

Tanker Shipping & Trade | December/January 2018/19

Trelleborg’s oil and marine hoses operation used this standard when developing a unique solution for STS transfer, the Kleline STS. Due to the nature of their use, STS hoses can be subject to accidental kinks or crushes because of external forces; the Kleline STS hose is a dualcarcass design, using technology initially utilised for truck tyres and applied in the form of two carcasses made up of steel cables. The first carcass provides resistance to internal pressure, up to five times that of the working rated pressure (WRP), with the second carcass responsible for generating resistance to inherent STS stresses and loads.

The hose also features a unique nipple-less design. In contrast to a standard nipple-hose design, there is no stiff metal connector in between different sections of the hose. The hose is more flexible, and the continuous inner liner and integrated gasket create a perfect sealing. The design means that there is no need for gaskets at each connection, increasing the simplicity of installation and resulting in a hose that can withstand stresses and strains for longer.

A more flexible design also allows hoses to be built from fewer, longer segments, decreasing the number of connections needed.

A key consideration in any long-term STS operation is the impact of the controlled collision on the hull. UK-based James Fisher and Sons’ partner Fendercare has developed Strainstall, a hull stress monitoring system for FPSOs and other vessels that undertake long-term STS operations.

“Our hull stress monitoring solution is an essential piece of technology on a vessel of this nature, that is designed to remain at sea for many years whilst withstanding everything the ocean can throw at it,” explained Strainstall business manager Paul Downes. “Strainstall has been providing hull stress monitoring solutions for over 20 years with an extensive reference list and can provide a ‘from launch’ record of hull stress, enabling the operator to monitor vessel performance and calculate the fatigue life of the hull.” TST

A Kleline dual-carcass design STS hose in action (source: Trelleborg)

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10 | SHUTTLE TANKERS

A busy time for shuttle tankers as new technology presents opportunities and challenges

Shuttle tankers: fleet evolves to meet Arctic challenges Shuttle tankers are being made safer and better suited to operating in treacherous waters, expanding their reach and operational value

T

he shuttle tanker fleet consists of 102 live vessels, with another 14 on order or due to be launched. The fleet operates in several distinct locations; the SCF (Sovcomflot) fleet operates in the Arctic circle; the Teekay fleet operates off the east coast of Canada, and a slew of operators ply the North Sea. A scattering of shuttle tanker operations also exist between these busy zones and the dense activity off Latin America.

From a geo-political perspective, a concern involves the USA becoming a major crude oil exporter, while at the same time imposing sanctions on its rival Russia. The latter has made a concerted effort to finance and

construct its oil and gas exports infrastructure, including shuttle tankers, outside the influence of US sanctions. The latest stage of this development took place on 12 September 2018 during the 4th Eastern Economic Forum, when a signing ceremony was held for a trilateral agreement on co-operation between Sovcomflot (aka SCF Group), the Bank for Development and Foreign Economic Affairs (Vnesheconombank) and VEB Leasing. The agreement includes financing shipbuilding projects at Russian shipyards, the designs of which are based on the experience accumulated by Sovcomflot and its operations of tankers in the Arctic.

This includes the construction of two Arctic shuttle tankers (Mikhail Ulyanov

Tanker Shipping & Trade | December/January 2018/19

and Kirill Lavrov) built to order for Sovcomflot Group, at the Admiralty Shipyards in St. Petersburg.

These are operated under the national flag of the Russian Federation within the Prirazlomnoye offshore project operated by Gazprom Neft.

Elsewhere, in 2015, Teekay Offshore Partners LP announced it had entered into a new long-term shuttle contract with Canada Hibernia Holding Corporation, Chevron Canada, ExxonMobil Canada, Husky Energy, Mosbacher Operating Ltd, Murphy Oil, Nalcor Energy, Statoil, and Suncor Energy. Teekay Offshore was to provide shuttle tanker services for loading crude at Hibernia, Terra Nova, White Rose

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SHUTTLE TANKERS | 11

and Hebron offshore oil fields, located off St. John’s, Newfoundland and Labrador.

These 15-year contracts, plus extension options, were initially serviced by one of Teekay Offshore’s existing shuttle tankers, Navion Hispania, and two to three third party-owned shuttle tankers operating in east coast Canada.

These east coast Canada operating tankers have been replaced by three Suezmax-size, DP2 shuttle tankers Dorset Spirit, Beothuk Spirit and Norse Spirit on the shuttle run between Newfoundland and the offshore oil fields in the Atlantic. According to Teekay, these vessels are purpose-built to serve in the harsh environment on oil fields offshore the east coast of Canada at a cost of US$365M en bloc.

Teekay is also active in the North Sea, which is where its new, as yet unnamed (although Spirit will feature), two plus options E-Shuttle tanker series will operate, joining other shuttle tankers in the region including the Teekay trio (Peary Spirit,Scott Spirit and Nansen Spirit).

Regarding the aforementioned E-Shuttle tanker series, there are two firm orders, but Vessels Value lists options for a further four of these innovative 130,000-dwt tankers under construction at Samsung Heavy Industries.

The E-Shuttle tankers will operate on both liquefied natural gas (LNG) as the primary fuel, and a mixture of LNG and recovered volatile organic compounds as secondary fuel.

The project is being managed by Wärtsilä Marine Solutions and features a low-loss hybrid system, using batteries to leverage fuel savings, peak load shaving and added overall system redundancy. According to Wärtsilä, the annual emissions reduction potential is estimated at up to 42%, with fuel consumption reduced by up to 22% compared to traditional

shuttle tankers. Wärtsilä subsidiary Eniram will supply vessel performance management systems and data will be streamed to shore managers for analytics and reports. The E-shuttle concept was the recipient of the Environmental Award at the 2018 Tanker Shipping and Trade Conference, Exhibition and Awards in London.

This year’s Tanker Shipping & Trade Industry Leader Award went to AET's president and chief executive officer Capt Rajalingam Subramaniam. Earlier in 2018, he announced that AET had agreed its first contract with Shell Shipping and Trading subsidiary Brazil Shipping Limited 1, to timecharter one newbuild dynamic positioning (DP) shuttle tanker in Brazil. The 152,700 DWT DP2 tanker will be compliant to IMO NOx Tier 3 requirements and equipped with highpower thrusters, generators and the latest position reference system, fully capable of operating in harsh weather conditions.

On signing the contract, Capt Subramaniam emphasised the spread of AET’s shuttle tanker business in Brazil and worldwide: “We have two DP tankers (DPSTs) already operating in the Brazilian Basin for Petrobras and another two operating in the North and Barents Seas for Equinor (formerly Statoil). A further two DPSTs are being built for Equinor to operate in oilfields on the Norwegian Continental Shelf of the North Sea, Norwegian Sea and the southern Barents Sea, as well as on the UK Continental Shelf.

Our two modular capture vessels in the Gulf of Mexico also have DP capability. In addition, we have a further four DP vessels currently being built to take-up long-term charters for Petrobras." TST

Capt Rajalingam Subramaniam • Winner of 2018 Tanker Shipping & Trade Industry Leader Award • November 2009: appointed Honorary Commander in the Royal Malaysian Navy • Head of the shipmanagement division of MISC • Served as a fleet superintendent and operations manager, before heading up shipmanagement in AET and latterly MISC • Began his career as a cadet at MISC’s training academy, ALAM; progressed to Master Mariner.

LEFT: The distinct pockets of global shuttle tanker activity

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Tanker Shipping & Trade | December/January 2018/19

12 | ESCORT TUGS

When injuries occur during terminal operations and escort duties, the main reasons cited are human error and equipment failure or misuse

Tugowners challenged to enhance escort towage safety Clear procedures, simplified safety management systems and better heavingline usage will reduce risks during tanker escorting and terminal operations

T

ug operators should reduce the complexity of onboard safety management systems (SMS) and have clear procedures in place to prevent accidents. This was one of the clear messages that came from the British Tugowners Association (BTA)’s annual safety seminar, held at the UK Chamber of Shipping in London on 8 November. During the seminar, BTA chairman Nick Dorman said safety had improved, but there is no room for complacency as not all stakeholders are following procedures.

“Safety towage practices need to be understood at every level, by pilots, terminal operators, owners, managers, regulators and ship operators,” he said. “There have been examples of seafarers being injured.”

Some of these injuries have occurred during terminal operations and escort duties, with the main explanations being human error and equipment failure or misuse. “There needs to be a balance between safety and commercial requirements, with all stakeholders understanding the challenges,” said Mr Dorman.

He highlighted the need for more practical SMS and clear guidance for tug crews on safe operations. “The way ahead is to have simple SMS, risk assessments and procedures that are not too detailed and are practical,” Mr Dorman explained.

Another way forward is through the adoption of better towage technology, that minimises the risk of a tug capsizing. To this end, Multraship Towage & Salvage has started operating two of Novatug’s revolutionary Carrousel RAVE tugs, that incorporate a safer towage system.

Multratug 32 and Multratug 33 came into service in Q1 and Q2 in 2018, enhancing

Tanker Shipping & Trade | December/January 2018/19

safety and efficiency of ship escort operations.

They each have a carrousel towing system that revolves around the wheelhouse, minimising the risk of tugs becoming unstable.

“Capsizing should be impossible when towing with the carrousel system,” said Novatug managing director Julian Oggel. “This allows for the safe execution of manoeuvres that would be a higher risk with traditional tugs.” These tugs have Voith Turbo inline propulsion for manoeuvrability and for dynamic towage to escort oncoming tankers into terminals, instead of static towage.

Multratug 32 and Multratug 33 have an overall length of about 32 m and 77 tonnes of bollard pull. They were designed by Robert Allan and classed by Bureau Veritas. They each have two Voith 32RV5 EC/250 propellers with precise thrust control, quick response and insensitivity to variations in inflow direction. They enable the towline force to be continuously controlled safely from the wheelhouse. Novatug’s vessels are driven by two ABC 12VDZC engines that each deliver 2,650 kW at 1,000 rpm.

Machinefabriek Luyt delivered the carrousel unit, which consists of a base structure surrounded by a ring that can rotate freely 360˚ in the horizontal plane around the tug’s deckhouse.

This carries a towing winch that can tilt vertically 45˚ so that the winch can always be aligned with the towing line, providing optimal control.

Tug incidents

During the BTA seminar, Shipowners P&I Club loss prevention manager Carri Woodburn said inadequate procedures and guidelines were a contributing factor in multiple tug-related

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ESCORT TUGS | 13

incidents. She gave an example of a tug accident that occurred partially because seafarers had not read the SMS or updated onboard charts.

This tug hit a charted obstruction and caused US$1.75M of damage.

“The tug’s SMS had so many checklists that it was not viewed by the crew and charts had not been updated for two years,” Ms Woodburn explained. There had been no risk assessment, no towage plans or operations procedures.

She said the lessons learnt from this accident should be “to ensure the SMS and checklists are viewed by crew and are easy to read and charts are updated.” Other lessons taken from this and other accidents include ensuring that toolbox talks and risk assessments are conducted and that crew receive regular skill assessments and retraining if necessary.

Lessons can also be learnt from maritime accidents involving tankers during tug escort, the latest of which occurred on 8 November near the Sture oil terminal in Norway. Østensjø Rederioperated tugboat Tenax was escorting tanker Sola TS when the Tsakos Energy Navigation Aframax struck a Norwegian naval frigate.

There are reports that the frigate had its AIS locator beacon turned off, but there are questions as to why the 2017-built, 112,700-dwt tanker nor the escort tug failed to prevent the accident off the island of Øygarden.

Pocket guidance

At the BTA seminar, UK Maritime Pilots’ Association secretary general Don Cockrill discussed the risks of crew fatigue and the ease with which crew awareness can be degraded. He urged tug owners and pilots to use checklists to reduce risks.

His organisation has worked with BTA and UK Chamber of Shipping to produce Pilots’ Pocket Guide & Checklist to improve towage and ship escort safety. This includes best practices, an information exchange checklist, points on good seamanship, operations during restricted visibility, and guidance on the use of messenger, heaving and towing lines.

The guide also features a section on escort towage of tankers, in which it recommends that when an escort tug is tethered and following a tanker, speed is maintained between 10-12 knots for indirect towing, in case the tanker needs assistance with steering. When the speed of the tanker falls to 4-5 knots, it is more efficient for the escort tug to change to the direct towing mode.

30-m messenger line, which in-turn is connected to the towline. The tug remains on the lee side under the bow of a tanker, ready to receive the heaving line. However, if these heaving lines are too heavy it increases the time that tugs need to remain close to the ship, prolonging the most dangerous part of the assist.

Delegates at the BTA seminar said tug operators and pilots should report ships that are using dangerously weighted heaving lines, as this increases risks and causes serious incidents.

Around a third of all serious incidents on tugs, reported to the BTA, are related to dangerously weighted heaving lines.

If bad heaving line practice is reported, this could trigger a port state control inspection, which depending on the port authority, could lead to a deficiency notice or ship detention, or even prosecution of the offending master or shipowner.

At the BTA seminar, the UK Government’s Marine Accident Investigation Branch (MAIB) chief inspector Andrew Moll set challenges for the towage sector to improve safety throughout 2019. This included insisting that tug operators understand the towage project requirements prior to them commencing and for improvements to be made in communications between ship, tug masters and pilots. “There have been problems in masterpilot exchanges and communications,” he said.

Mr Moll said tug masters should have a clear understanding of what might be required if and when projects change and there should be contingency plans in place, especially when escorting tankers. “They should insist that pilots fully explain plans to ship and tug masters,” he said.

Mr Moll also challenged the towage sector to ensure that crewing levels on tugs remain at practical levels for the work they are expected to conduct. TST

Types of escort towage Passive escort – tug follows a ship closely but is not connected Active escort – tug is connected centre lead aft to assist steering of a ship Indirect towage – tug assists a ship around a channel. It uses propulsion to steer the tug away from the general direction of heading to create drag and includes towline force Powered indirect – similar to indirect, but the tug actively drives forward and turns away from the direction of heading, generating high towline forces and doubling tug bollard pull Transverse arrest – tug is connected centre lead aft, but used to slow and stop ship – can be brought around into direct pull once speeds drop to less than 7 knots Source: Pilots’ Pocket Guide and Checklist

BELOW: Multratug 32 has a rotating winch and two Voith in-line propellers for dynamic towage

Heaving-line dangers

Pilots’ Pocket Guide & Checklist also highlights the increasing use of dangerously weighted heaving lines. Heaving lines are used by the assisted ship to bring the messenger and towing lines on board.

They should be made of 8-10 mm diameter rope so they are not too heavy to handle.

A tug takes the heaving line and attaches a

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Tanker Shipping & Trade | December/January 2018/19

14 | ESCORT TUGS

Ingenious tug designs enhance escort operations Innovative tug designs are improving performance when towing tankers and helping assist them at terminals

I

n Q4 2018, Kotug Smit chartered Damen Shipyard’s first reversed stern drive (RSD) tug, Innovation, for towage operations in Rotterdam.

This tug design combines elements of azimuth stern drive (ASD) and tractor tugs and can operate equally well in fore and aft towage.

Innovation was built by Damen to an RSD 2513 design, featuring a patented twin-fin skeg and the ability to tow ships ahead or astern. This 25-m tug has a bollard pull of 75 tonnes ahead and 71 tonnes astern. It has a 13 m beam and 5.5 m draught and a maximum speed ahead of 13 knots.

A Kotug Smit manager confirmed that this tug was chartered-in for at least one year and that there was a purchase option.

Damen has also built a second RSD 2513 design tug - Bis Viridis - with propulsion that is compliant with IMO Tier III requirements. It is currently in a test period for the Port of Antwerp in Belgium.

Damen says it can also build a version with hybrid propulsion and has a fullyengineered and class-approved design for an RSD 2513 tug that could be fuelled by compressed natural gas.

Escort tug technology will take a further step forward in 2019 when the world’s most powerful hybrid-powered tug enters service in Sweden. Gondan Shipyard is building an icebreaking escort tug for the Port of Luleå at its facilities in Figueras, Spain.

The bulk of this tug was launched in October at the shipyard. It was built to a Robert Allan RAL TundRA 3600-H design and to Lloyd’s Register class, with a hull structure that exceeds Finnish-Swedish ice class rules. When the tug is delivered in Q2 2019, it will incorporate Wärtsilä’s HYTug hybrid power systems and be

Escort tug technology will take a further step forward in 2019, when the world’s most powerful hybrid-powered tug enters service in Sweden

BELOW: Damen unveiled its first RSD design tug, Innovation, in Southampton in June 2018

Tanker Shipping & Trade | December/January 2018/19

capable of breaking 1 m of ice at a speed of up to 3 knots, with a bollard pull of around 100 tonnes. Port of Luleå will use this tug for ice management, escort, shipassist, coastal towing, fire-fighting and navigation-aiding services.

Another ice-class tug will be delivered for Norwegian operations in 2019. Sanmar is building a low-emission escort tug that can operate in light ice and slush conditions for Buksér og Berging.

This azimuthing tractor tug will be built in Turkey to a Robert Allan TRAktor 3000 design, with forward-mounted Z-drives and engines that comply with IMO Tier III emissions requirements. It will be built to ABS classification with full Fifi1 and escort notation. TST

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16 | ICE OPERATIONS

Decreasing ice coverage means the Northwest Passage and Northern Sea Route are increasingly viable as transit routes for tankers (credit: US Coast Guard)

Arctic operations – balancing the robust and the clean Tankers may now be able to transit the Arctic all year round, but ice operations still bring unique challenges in terms of vessel design, equipment, and the wellbeing of seafarers

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or centuries, seafarers have attempted to shorten the length of time needed to transit from the Atlantic to the Pacific Oceans by taking a northerly route through Arctic waters. The Westward route, via Greenland and Canada, is known as the Northwest Passage, while the Eastern route, via Russia, is known as the Northeast passage.

Countless expeditions were either forced to turn back, or as in the case of the HMS Terror and HMS Erebus – the two vessels that comprised Sir John Franklin’s ill-fated 1845 expedition – were lost to the ice. It was not until 1878-9 that the Northeast Passage was successfully navigated, while the first complete passage of the Northwest Passage was only made between 1903-1906.

Commercial shipping has been making use of these routes for more than a century now, but for much of this time they have only been navigable

Tanker Shipping & Trade | December/January 2018/19

for parts of the year. Now however, decreasing sea ice levels mean that year-round transits of both routes is possible.

The second session of the Offshore Dialogue conference at SMM in Hamburg this year was devoted to ‘technologies for a responsible development of the Arctic’, with increased transit of the Northwest Passage and Northern Sea Route high on the agenda. Wärtsilä’s general manager for market innovation Teus van Beek discussed the engineering challenges vessels face in Arctic operation, saying, “We need to find a balance between robust and clean while operating in the Arctic.”

A key issue Mr Van Beek highlighted is that most ships operating in the Arctic also need to be able to operate in open seas. This presents unique challenges as many of the design features required for ice operations detract from a vessel’s open-water efficiency. “On one side we have to make [the vessel’s

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ICE OPERATIONS | 17

hull] really thick and robust, and on the other side we want to improve the efficiency,” he said. “That’s a conflict of interest we need to balance.”

Additional challenges involve the manner in which seafarers carry out their duties. Mr Van Beek noted that when operating in ice and darkness for long periods of time it is difficult to maintain awareness and concentration, and to keep active. “We have been doing interviews with ice captains and the ones who are experienced all say they have broken a propeller – you are not experienced if you have not broken a propeller,” he said, noting that this also highlights the issue of the robustness of equipment.

The environmentally sensitive nature of the Arctic is also a cause for concern. For example, if a vessel is operating behind an icebreaker, equipment such as engines will be operating under a low load for which they are not optimised. “This produces particle matter and soot in an area where we don’t want that to happen; if you use normal equipment there are a lot of elements that are not good for the Arctic environment,” said Mr Van Beek.

Using cleaner fuels and energy storage systems (ESSs) could help in this regard, especially as new battery technology comes on stream: “Developments in electrification help us to operate more safely in Arctic environments,” said Mr Van Beek. Hybrid solutions that combine batteries with conventional engines mean that batteries can help with operations when a lower than normal load is required. “That is a benefit we have now that we didn’t have 10 years ago because batteries were too expensive,” he added.

Also helping facilitate safe and clean operations in the Artic is the requirement to ensure vessels are designed with redundant systems, so that should something go wrong, there is a back-up in place. “I think we should focus more on redundancy in systems and this is not what today’s shipyards are doing… they are focused on reducing cost,” Mr Van Beek said.

Digitalisation too can also help facilitate safe operations. “Connectivity is a way forward that helps operations in the Arctic and makes them safer,” said Mr Van Beek, adding that technologies such as remote monitoring make it is possible for vessels to stay connected with shore staff to provide support. “We need to look at remote connections for asset management, especially in remote areas,” he said.

“Our thinking about a clean Arctic vessel is a robust combination of things,” said Mr Van Beek, detailing the core components as system redundancy, remote connectivity, and clean fuels in combination with energy storage systems to handle dynamic loads.

Different kinds of ice

Elaborating on the trends observed in recent years, Hamburg Model Ship Basin’s head of Arctic technology Nils Reimer explained that while in some areas ice has completely disappeared, in others

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the type of ice vessels encounter has changed from close ice sheets to open drift ice, which means vessels will experience wave motion that can influence their operations. “This is a challenge we must take into account when we design the ship and plan operations,” said Mr Reimer.

Formerly, vessels operating in the arctic tended to be dedicated ice ships, such as Russia’s fleet of nuclear-powered icebreakers and tankers plying Russia’s northern coastline between specific locations. Now however, a trend is emerging for vessels operating in the arctic at lower ice classes than previously was the case.

“We have to learn more about low-ice class vessels operating in the Arctic,” said Mr Reimer, noting that as the ice situation becomes more unpredictable there are more uncertainties. “Even though operations might be a bit easier in the summer, we might face problems that we have not identified yet.”

On this subject, Lloyd’s Register new ship construction consultant Robert Tustin noted that the traffic regime for the Northern Sea Route had traditionally envisaged commercial ships travelling in convoys assisted by icebreakers, but commercial imperatives are now making much larger vessels, such as the Yamal project’s ice-class Arc7 icebreaking LNG carriers, realistic options.

“These very large ships may render unfeasible some of the tactics of escorting icebreakers in the current regimes,” said Mr Tustin, adding “As of today there are no suitable icebreakers to assist a Yamal heavy LNG carrier.”

Soon to join the LNG carriers in operation around the Yamal peninsula, Boris Sokolov is a condensate tanker built to an Aker Arctic ARC212 design to transport gas condensate to Europe and Asia from Sabetta. Launched on 15 June at Guangzhou Shipyard International in China, Aker Arctic said at the time of writing the vessel was nearing delivery.

The finished vessel will measure 214 m in length by 34 m in width, with a regular draft of 11.7 m and an ice draft of 12 m. Doubleclassed by both the Russian Maritime Register of Shipping and Bureau Veritas, it has an ice class of Arc7, equivalent to Polar Class 3. It has a Wärtsilä diesel-electric powerplant comprising two 12V32 units and two 16V32 units, with total capacity of 31.4 MW. Propulsion comes from two 11 MW ABB Azipod thrusters, giving the vessel a service speed of 13 knots. Boris Sokolov will have capacity for about 57,000 m3 of gas condensate or oil cargoes across five cargo segregates.

The vessel utilises the Double-Acting Ship (DAS) principle to break level ice of up to 1.8 m in thickness stern-first, allowing it to operate independently without a need for icebreaker escort. All equipment and systems are winterised to -50°C and the cold temperatures the vessel will be operating in have been taken into account to ensure crew comfort is maximised. TST

“You are not experienced if you have not broken a propeller”

Teus van Beek (Wärtsilä): “We need to find a balance between robust and clean while operating in the Arctic” (credit: Hamburg Messe und Congress/Hartmut Zielke)

Tanker Shipping & Trade | December/January 2018/19

18 | ICE OPERATIONS

The view from class on tanker ice operations ABS senior technical advisor James Bond gives the view from class on key issues concerning ice operations for tankers

Central to raising the safety bar is the requirement for an operator to have a firm understanding and awareness of the environment that the ship will be entering

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ith the entry into force of IMO’s Polar Code, the regulatory environment for tankers operating in ice has changed substantially. SOLAS has a new Chapter 14, Marpol annexes have been revised and the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW) has been revised to include specific crew training requirements for tankers operating in ice.

Central to raising the safety bar is the requirement for an operator to have a firm understanding and awareness of the environment that the ship will be entering.

The detailed environmental conditions, including the possible presence of sea ice and low air temperature, are supplemented by knowledge of the typically remote location and associated poor hydrography and search and rescue resources, especially in the North American Arctic and the Antarctic region.

Knowledge of the environment feeds the Polar Code's mandatory Operational Assessment (OA). The OA is a ship-specific review and documentation effort for Polar waters hazards and possible mitigation measures. The OA in turn forms the basis for the contents of the mandatory Polar Waters Operation Manual (PWOM), the onboard reference manual defining the limitations of the vessel and mitigation means if the actual conditions of operation in the highly variable Polar regions impinge on those limits.

Due to the consequences of damage to the cargo containment block, STCW sets higher standards for tankers than for other cargo ships.

As a function of the ice presence, 'Basic' training for the Master, Chief Mate and Officers in charge of a navigation watch is required if intending to operate in open waters (sea ice present in concentrations less than 1/10), and if ice concentrations exceed 1/10 the Master and Chief Mate are required to have 'Advanced' training.

The entry into force date for the STCW requirements was 1 July 2018 and is independent of the entry into force dates for the SOLAS and Marpol Polar Code

Tanker Shipping & Trade | December/January 2018/19

requirements. The Marpol requirements for all ship types entered into force on 1 January 2017. The SOLAS requirements entered into force on 1 July 2017 for new ships and at the first intermediate or renewal survey after 1 January 2018.

It has become apparent that insurers and charterers recognise the value of the Polar Code requirements for operational assessment and associated heightened environmental awareness, as they are encouraging existing ships to have a Polar Ship Certificate ahead of their mandatory date.

It is recognised by stakeholders generally that the Polar Code raises the safety bar for tanker operations in ice. TST

James Bond (ABS): “Due to the consequences of damage to the cargo containment block, STCW sets higher standards for tankers than for other cargo ships�

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ICE OPERATIONS | 19

The latest developments in ice operations from RS The Russian Maritime Register of Shipping (RS) has several developments aimed at promoting safe operations in ice conditions.

In view of demand for transit through the Northern Sea Route by larger-tonnage ships, optimising the structural configuration of a vessel’s hull is a key issue to ensure efficiency while moving both in open water and in ice.

One solution to enable a ship to effectively operate in heavy ice is the stern-first motion concept. This means the bow and stern ends of the ship are designed for different operational modes. The ship's bow is optimised for obtaining high performance characteristics on clear water, while stern end shape ensures movement in ice.

Upon completion of research and development, the icestrengthening structure of a vessel’s hull is addressed toward sternfirst operations. Based on the design scenarios of ice-hull interaction, ice loads are calculated through prescriptive formulations towards the local scantlings determined under RS class notation specific to stern-first mode. For hull-load estimating, the availability of one, two or

three steerable thrusters will be taken into consideration.

RS is also about to deliver requirements for corrosion and wear allowance in terms of the gross thickness of outer-shell plating, dependent on the type and properties of protective coatings, as well as requirements for outer-shell coatings in terms of ice strengthening (coating technology, evaluation of technical condition in service, repair, etc). Such an approach to determining wear and abrasion margins will allow optimisation of steel weight without compromising structural safety.

Also, the requirements and distinguishing marks in class notation for ships equipped with automated hull monitoring systems and actual stability systems are being prepared for implementation in RS’s rules. The application of such systems is essential for increasing the operating safety of ships because it enables ship operators to evaluate strength and stability parameters in motion on a real-time basis during the voyage and, depending on weather conditions, make a decision on changing the ship’s operating mode.

New generation of stabilisers optimised for ice operations The benefits of Rolls-Royce’s Stabilisationat-Rest (SAR) concept will be brought to ice-class ships in its Aquarius and Neptune stabilisation systems.

Using active fin-control technology and advanced hydrodynamic design, the SAR system delivers high levels of roll reduction when vessels are at rest and can also maintain stabilisation performance when vessels are under way.

The new design is especially suitable for ice-class vessels as it allows stabiliser fins to be fully retracted into a customdesigned fin box, meaning there are no protrusions from the hullform and therefore safe ice navigation can be undertaken. It also features reduced fin area and lower fin angle to meet stabilisation performance requirements.

Dynamic drag is reduced when fins are deployed under way, resulting in lower fuel costs. The stabiliser fin also incorporates Rolls-Royce’s trailing edge design, which eliminates vibration and noise.

Rolls-Royce Motion Control Dunfermline’s managing director Martin Cunningham said: “The one-piece fin construction offers simple maintenance, reducing through-life cost. The fin shape is designed to improve zero speed performance, as more chord is behind the fin centreline. This is achieved because the ice-class SAR system is based on the well-established Rolls-Royce Aquarius and Neptune retractable stabilisers. Both initial

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Rolls-Royce’s new design allows stabiliser fins to be retracted into a fin box to allow for safe ice navigation

and operational costs are minimised due to the units being easily installed, the fin box custom-designed to exactly match the ship’s hull profile, small hull openings and a simple, reliable design.”

As vessels fitted with ice-class SAR stabilisers are likely to operate in environmentally-sensitive areas, this has also been incorporated into the design. A special quad-seal arrangement minimises

the risk of leakage, and the machinery is compatible with many environmentally acceptable lubricants (EALs).

Mr Cunningham said: “The sealing arrangement and compatibility with EALs mean the ice class SAR systems meet the requirements for VGP vessels, while the low drag results in less fuel being burned, which also benefits the environment.” TST

Tanker Shipping & Trade | December/January 2018/19

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EMISSIONS TECHNOLOGY | 21

Difficult choices and not much time – the sulphur cap begins to bite

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t the last meeting of the IMO Marine Environment Protection Committee (MEPC 73), held in London in October 2018, the committee adopted a measure prohibiting vessels without scrubbers from carrying fuels containing more than 0.5% sulphur for use on board. The so-called carriage ban amendment is expected to enter into force on 1 March 2020 under IMO's ‘tacit acceptance’ procedure.

A complementary Marpol amendment will prohibit the carriage of non-compliant fuel oil for combustion purposes for propulsion or operation on board a ship – as opposed to cargo – unless the ship has an exhaust gas cleaning system (or scrubber) fitted. Scrubber systems are an accepted means of meeting the sulphur limit requirement.

According to IMO: “The amendment is intended as an additional measure to support consistent implementation and compliance and provide a means for effective enforcement by states, particularly port state control.”

MEPC 73 also considered the next phases of the Energy Efficiency Design

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With new measures to support emissions reductions agreed at MEPC 73 and more on the cards for MEPC 74, is the industry finally readying itself for a postsulphur cap world?

ABOVE: The carriage ban amendment leaves no ‘wiggle’ room for vessels with high-sulphur fuel on board after 1 March 2020

Index (EEDI). This centred around the implementation date of EEDI phase 3 for different ship types. EEDI phase 3 requires vessels to meet a 30% reduction in carbon dioxide (CO2) grams per tonne mile, as compared to a baseline average for ships built between 2000 and 2010.

The committee agreed to retain the provisional phase 3 start date of 1 January 2025 for tankers and bulk carriers, and significant support was voiced for moving the phase 3 start date for container ships to 2022.

The committee also considered the issue of the safety aspects for low-sulphur fuel and decided that this was an issue for the IMO Maritime Safety Committee, which meets in London on 3 December 2018.

However, there is nothing in the provision of the IMO 2020 global sulphur cap to prevent an administration implementing an earlier date, which is what Taiwan has done according to the West of England P&I Club correspondents’ Pro-Marine Law Office in Taipei. The West of England P&I Club advised of the publication of further guidance concerning the early implementation of the Marpol

Tanker Shipping & Trade | December/January 2018/19

22 | EMISSIONS TECHNOLOGY

sulphur cap in Taiwanese ports from 1 January 2019.

The guidance, issued by the Ministry of Transportation and Communications, advises that from 1 January 2019 vessels entering international commercial port areas in Taiwan, shall utilise either fuel oil with a sulphur content of not more than 0.5% m/m by weight, or equivalent methods of emission reduction in accordance with the Marpol Convention.

Marpol Annex VI allows vessels to comply with the regulations by using either fuel oil with a sulphur content below the prescribed limit, by utilising a “fitting, material, appliance or apparatus” such as exhaust gas cleaning technology, or by “other procedures, alternative fuel oils or compliance methods” such as onboard blending of fuel oil or using liquefied natural gas.

When an alternative means of compliance is used it must be “at least as effective in terms of emission reductions as that required by this Annex”. Any alternative means of compliance with the regulations must be approved by the vessel’s flag administration.

Scrubber-fitted pool

For many owners, this means the fitting of scrubbers to newbuildings. To that end, the Hunter Group ASA of Norway has been appointed senior technical advisor for the four Hartree Maritime Partners LLC VLCC tankers to be constructed at Daewoo Shipbuilding & Marine Engineering.

Altogether, there are 11 identical specification VLCCs on order at Daewoo, four for Hartree and seven for the account of Hunter Group. The specification includes scrubbers and ballast water treatment systems, with deliveries taking place between October 2018 and August 2020.

“It is Hartree and Hunter’s intention to form a new scrubber-fitted pool to operate this fleet of 11 eco VLCC vessels," said Hartree managing director Guy Merison.

"By combining Hartree’s global trading and chartering experience and Hunter’s technical knowledge, this pool will serve to minimise operational costs whilst maximising earnings. We will be working with other scrubber-fitted VLCC operators to expand this pool,” he added.

Other tanker company initiatives involving scrubbers include that of Torm, which has announced a joint venture which sees it taking a 27.5% stake in ME Production, alongside Guangzhou Shipyard International

Paddy Rodgers (Euronav): “Shipping must embrace [new] targets”

(GSI), part of the China State Shipbuilding Corporation group. The size of the GSI stake in ME Production is not reported.

Torm has ordered 16 scrubbers with ME Production and signed a letter of intent for an additional 18 scrubbers with the new joint venture.

With these orders, Torm has committed to installing scrubbers on 21 vessels and potentially up to 39 vessels, or roughly half of its fleet.

“Our long-standing relationships with GSI and ME Production helped to facilitate this joint venture at a time when demand for scrubbers is expected to increase significantly,” said Torm executive director Jacob Meldgaard. “This strategic move provides us with a substantial economic interest in a venture that has the potential to be a large-scale international scrubber manufacturer. It will also result in Torm obtaining attractive prices for the scrubber investments that already have a short payback time.”

On one level, investing in a key supplier could reduce the capex on a major item; according to Torm, the capex on the confirmed scrubber orders was estimated to be, on average, below US$2M per unit, including installation costs.

However, there is another side to the story, hinted at in a Torm statement that explains “it expects to be able to obtain financing for a significant portion of this investment”. Taking a stake in another

Tanker Shipping & Trade | December/January 2018/19

company is an investment which is treated differently in the accounts compared to a sizable one-off outgoing to fit a fleet with scrubbers. As an investment there is the potential to sell on the stake later and, if there is a rush for scrubbers, this could produce a healthy return on investment.

Following its announcement on fitting ballast water management systems to its fleet, Scorpio Tankers has now also committed to fitting exhaust gas cleaning systems to approximately 90 tankers in its fleet.

In the latest announcement, Scorpio Tankers reported an agreement to retrofit 15 of its LR2s with scrubbers.

Scorpio has agreed letters of intent with suppliers, engineering firms, and ship repair facilities to cover the purchase and installation of scrubbers on most of its remaining owned and leased LR2, LR1, and MR tanker vessels (approximately 75 vessels) between Q2 2019 and Q2 2020.

The scrubbers and their installation are expected to cost between US$1.5M and US$2.2M per vessel, and the company anticipates that between 60-70% of these costs will be financed.

Scorpio Tankers chairman and chief executive officer Emanuele Lauro commented: “We have long maintained that the IMO 2020 regulations are both disruptive to the shipping industry generally as well as a powerful demand catalyst for product tankers. Although many well-capitalised and publicly-listed

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EMISSIONS TECHNOLOGY | 23

shipowners can source capital and publicise their intentions to pursue scrubbers, most of our industry cannot, and will rely on cleaner fuels to the benefit of tonne-mile demand for product tankers. Irrespective, our focus remains on operating the most competitive fleet in our marketplace, and this has led us to carefully evaluate and ultimately opt for the benefits of fitting hybrid-ready scrubbers on approximately 90 ships in our fleet.”

2,000 estimated fleet of scrubber-equipped VLCCs operational when the sulphur cap comes into force

Are there enough scrubbers?

The fleet of scrubber-equipped VLCCs is growing, although it is hard to pin an exact number on how many will be available when the global sulphur cap is introduced.

Estimates range up to 2,000 vessels, and there has been talk that should the industry rush to comply in 2019, this would create a shortage of scrubbers.

Wärtsilä Moss general manager Stian Aakre told delegates at Riviera’s Asian Sulphur Cap 2020 Conference in Singapore that there were no technical, operational or regulatory barriers to adoption, with time being the main hurdle.

“There are fewer problems with subsystems – the emissions monitoring is working. Clumsily-framed IMO legislation around pH discharge has now been resolved, and IMO is working on a solution for uniformly addressing temporary noncompliance issues. Sludge handling issues linked with closed-loop systems are being addressed; port reception facilities are being developed and we are getting there,” he said. “Operational knowledge and experience is growing and the soundings from the IMO MEPC meeting is that the 2020 deadline is firmer than ever from IMO and EU perspectives.”

Referencing a DNV GL study, he said there are now more than 1,600 vessels with confirmed scrubber projects and he urged

“Let’s take our responsibility to make sure our industry is heading towards a sustainable future for ourselves and the next generations”

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owners to plan ahead.

But not all tanker owners are convinced that scrubbers are the answer to the global sulphur cap conundrum.

The not-for-profit group Global Maritime Forum involves 34 chief executives and industry stakeholders who believe the maritime industry needs to accelerate both technological and business-model innovation, improve operational and technical energy efficiency, and transition to zero-carbon fuels and new propulsion systems.

Among the 34 industry leaders who have signed a call for action in this regard are AP Moller–Maersk vice chief executive Claus Hemmingsen, Cargill Ocean Transportation president Jan Dieleman, Lloyd's Register chief executive Alastair Marsh, Trafigura chief executive Jeremy Weir, MISC president and group chief executive Yee Yang Chien, Maritime Strategies International managing director Adam Kent and Euronav chief executive Paddy Rodgers.

“Shipping has so far been exempt from regulations to address the issues around greenhouse gas (GHG) emissions from fuels for ships, but IMO has, after consultation, laid a pathway which requires a fundamental change in the way we fuel our ships”, explained Mr Rodgers.

“Shipping must embrace these targets so let’s take our responsibility to make sure our industry is heading towards a sustainable future for ourselves and the next generations, in line with the expectations of our global stakeholders.”

In an emotive opening address at Riviera’s Asian Sulphur Cap 2020 conference, Aurora Tankers managing director Kenny Rogers castigated the global shipowning community for its complacent attitude towards pending sulphur cap regulations.

Sparing no one's sensitivities, Mr Rogers told more than 150 delegates to “do what's right and get it done”. There was a “higher

purpose” at stake he said, referring to the more than 14M children globally suffering from asthma and breathing difficulties.

As well as cajoling the industry to act, he offered an insight into the hard-headed pragmatism that guided Aurora Tankers’ adoption of scrubber technology: “We see a two-tier system developing where charterers pay a premium for ships with scrubbers through to 2021. For anyone taking delivery of a vessel in 2023-2024, I would not advise installing scrubbers.”

Mr Rogers said Aurora Tankers had gone for open-loop scrubbers as they are “less sophisticated and offer easier maintenance versus the closed-loop variety.”

He acknowledged that open-loop scrubbers might have a limited shelf life, pointing out their use was banned in Chinese, Californian and German territorial waters.

Powered by cooking oil

However, things may be moving faster than even Mr Rogers anticipated. At the end of November 2018, the outgoing Maritime and Port Authority of Singapore chief executive Andrew Tan announced that open-loop scrubbers will be prohibited from use in its waters from 1 January 2020.

The aim is to prevent the discharge of washwater from open-loop scrubbers. Those vessels approaching the highly congested waters of Singapore will have to switch to compliant fuels or switch their hybrid scrubbers to closed-loop well in advance of entering Singapore waters.

The announcement is a huge blow to the scrubber industry and to those owners that have already fitted openloop scrubbers. However, on the same day, Tanker operator Norden and biofuel supplier GoodFuels of Rotterdam announced the successful trial of a CO2neutral biofuel used as an alternative to

1,600 vessels with confirmed scrubber projects in place

Tanker Shipping & Trade | December/January 2018/19

24 | EMISSIONS TECHNOLOGY

Global Maritime Forum’s call for action – key points

In the NYK Super Eco Ship 2050, Elomatic and NYK have produced a radical concept for carbon-neutral shipping

low-sulphur fossil fuel.

During the trial, Norden’s product tanker Nord Highlander sailed from Antwerp, burning standard fossil fuel. The main engine was inspected to create a baseline reference, then the rest of the voyage to Estonia was conducted burning a low-sulphur alternative biofuel produced from recycled cooking oil by GoodFuels of Rotterdam.

During the voyage the engine was operated at different loads for sufficiently long periods to establish stable performance. After the test, a final visual inspection of the engine was conducted, which confirmed the engine had not been negatively affected by the biofuel.

The test documented that secondgeneration CO2-neutral biofuel supplied by GoodFuels is technically and economically suitable and thereby a realistic alternative to comparable fossil fuels.

The test on board the Norden vessel documented that engine performance is not affected, meaning the full performance envelope can be delivered without restrictions.

The initiative is in line with Norden’s efforts to reduce its carbon footprint.

“Norden has come a long way in increasing fuel efficiency and has reduced CO2 emissions per tonne cargo transported on owned tanker vessels by 25% between 2007 and 2017. With the newly introduced IMO targets on CO2 reductions, however, it is evident that increased fuel efficiency alone is not enough. We need alternative solutions and with this test, Norden has shown a viable method towards reaching these targets,” said Norden chief executive Jan Rindbo.

The fuel meets the criteria to be classed as CO2 neutral: CO2-neutral biofuel is defined as tank-to-wake 100% reduction, well-to-wake 85-89% reduction.

Ecological Council senior adviser Kåre Press-Kristensen said: “We appreciate that Norden is investigating specific solutions to the climate challenge. We need actions here and now to meet the climate goals of IMO and we are proud that Norden takes action, taking a leading role in biofuels, and look forward to following the development.”

Beyond CO2 neutral fuels, the industry is also exploring carbon-neutral shipping.

For example, compared to current vessels, the NYK Super Eco Ship 2050 will reduce CO2 emissions by 100%. Elomatic was responsible for the concept’s creation and visualisation. The development of NYK Super Eco Ship 2050 is part of NYK Group’s innovations in its 'Staying Ahead 2022 with Digitalization and Green' medium-term management plan.

The resistance of the vessel was reduced by 35% by remodelling the hull to decrease water friction, by reducing the weight of the hull and by minimising air resistance.

The improvements were validated with computational fluid dynamics calculations.

Further improvements were made by introducing fuel cells for electric propulsion, relying on other highly efficient propulsion devices and generating renewable energy on board the vessel.

The energy demand of the vessel was cut by approximately 70% by eliminating energy and operational waste. The reduced energy demand enables truly emissions-free operation. Instead of fossil fuels, the ship is powered by hydrogen produced from renewable energy sources. Other elements in the concept include lightweight bionic designs found in nature, 3D printing for building materials, a digital twin of the vessel and flapping foils inspired by dolphins to replace less efficient traditional propellers. TST

Tanker Shipping & Trade | December/January 2018/19

The core principles of the Global Maritime Forum’s call for action are as follows. The group says the strategy should be consistently in line with the Paris agreement’s temperature goals. ⊲ Predictable: regulations should provide long-term certainty for financiers, builders, owners and charterers to make the required investments in low-carbon technologies. ⊲ Market-oriented: emissions reduction objectives should be met at the lowest possible cost, and the industry should explore the use of carbon pricing and other mechanisms that can create economic value from GHG emission reductions. ⊲ Technology-enabling: the strategy should accelerate the use of low-carbon technologies and fuels by encouraging significant funding flows for research and development. ⊲ Urgent: certain mid- and longterm measures will require work to commence prior to 2023, including developing zero-emission fuels to enable implementation of decarbonisation solutions by 2030. ⊲ Coherent: solutions implemented should build on and reinforce existing technical, operational, and energy efficiency measures while maintaining or enhancing safety standards. In this context it is critical that all IMO environmental regulations be compatible with future 2050 regulations. ⊲ Enforceable: legally binding, enforceable actions set by IMO and enforced by member countries are required to compel the industry to shift.

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DNV GL business director tankers Catrine Vestereng welcomed delegates to the 2018 event

TST Conference Exhibition and Awards: the key issues and the big winners The 2018 Tanker Shipping & Trade Conference Exhibition and Awards offered attendees a prime opportunity to consider the latest regulatory and operational developments affecting the tanker markets

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his year’s Tanker Shipping & Trade Conference Exhibition and Awards followed the now familiar format of a preconference Intertanko members-only breakfast briefing, held under Chatham House Rules. Like the rest of the conference it was chaired by Riviera’s head of content, Edwin Lampert; the briefing was led by Intertanko’s environment director Tim Wilkins and GMS nonexecutive director Dr Nikos Mikelis, who explained the imminent introduction of the forthcoming European Regulation on ship recycling (EU SRR), an initiative being introduced by the EU. The briefing revealed that this latest EU initiative appears doomed before it even comes into force, as it fails to address the fundamental issue that ship recycling mainly takes place in Asia, not Europe (the issue is examined in detail in this issue’s Last Word).

The Intertanko briefing commenced and closed with a delegate poll on their

Tanker Shipping & Trade | December/January 2018/19

company’s attitude to ship recycling. Before the meeting, Mr Lampert confidentially polled members on the question: Do you have an end of life policy for your vessels?

After the briefing on EU SRR and other scrapping-related subjects, members were asked: Do you now plan to look into having an end of life policy for your vessels?

Nearly half the members present (42%) had no vessel end of life policy. However, after the briefing the majority of members present planned to put a policy in place.

The conference itself was opened by platinum sponsor DNV GL, whose business director tankers Catrine Vestereng detailed some of the developments the class society was undertaking.

Ardmore Shipping’s executive vice president and chief operating officer Mark Cameron gave a shipowner’s perspective on the challenges facing the industry. He expressed the view that if there was one thing the tanker industry was good at, it was planning. While there are some

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TANKER SHIPPING & TRADE CONFERENCE REVIEW | 27

“Non-compliance going forward is not going to be a rogue chief engineer or captain making a decision on their own.

This will be an owners’ or charterers’ decision”

“scary looking” projections connected with the 2020 IMO global sulphur cap, he felt that the industry should be pragmatic: “Regarding compliance, some of the numbers being thrown around are inflammatory and project shipping in a negative light. I think oil majors have a big part to play here…and they should address how they intend to deal with those (shipowners) who are deliberately noncompliant,” he told the audience.

In a reference to the approach taken by the US authorities, which involves directly prosecuting individuals on board that hold positions of responsibility for misdemeanours, Mr Cameron said: “Let’s not prosecute the ship staff. Let’s learn from the past. Any of the non-compliance going forward is not going to be a rogue chief engineer or captain making a decision on their own. This will be an owners’ or charterers’ decision. Technical shipmanagers have a big role to play in this, too.”

He said that the industry needed to move on. The regulation on low-sulphur fuel is in place and the timeline is clear, and there is no point in industry leaders continuing to criticise the legislative process. Mr Cameron said the need to be fully supportive of the process: “They should say “we are going to comply”. There are choppy waters ahead, but it is nothing we are not already used to as an industry.”

On the subject of scrubbers, he noted: “I do not think it will be a binary world of scrubbers right, scrubbers wrong”, adding that in the longer term, there will be options to fit scrubbers, if indeed that turns out to be the best solution.

One key issue Mr Cameron wanted to raise was Tier III and scrubbers. “A lot of people still have Tier II-engined ships on order. There is a problem with Tier III and SOx scrubbers,” he said.

To this end, he wanted to make the audience aware that fitting scrubbers was not just a capital cost, there was an operating cost, too. The scrubber itself needs energy to operate, and Mr Cameron conceded that on Ardmore Shipping’s tankers: “Every litre of fuel is a prisoner.

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Our captains and chief engineers can save fuel in litres – we are at that level. And it is a misnomer in the industry to think in tonnes.” In his opinion, burning extra fuel to operate a scrubber does not make environmental or financial sense.

Questioning the logic

Mr Cameron also asked the shipping industry to make a fundamental sense check: “How did we end up with 0.5%?

Where did that number come from?” he said. “Surely, if this is about lives, 0.1% would have been a better target. It would have been a straight run distillate product.”

He questioned the logic of producing 0.5% heavy fuel, and the energy required

to produce hybrid fuel alternatives, asking “where is the joined-up thinking?”

And he also called for such logic to be applied to CO2 legislation. As a company, Ardmore Shipping is a member of numerous trade bodies, all of which have a representation at IMO. “That does not make for a very efficient process,” he said, explaining that the different industry bodies need to come together in a roundtable forum to form a single long-term view on CO2 reduction, and how that can be achieved.

He added that as a public company, his shareholders do not pay the company to speculate and as such, Ardmore Shipping will be using compliant fuels.

Mr Cameron closed his presentation with a slide defining demurrage: from the old French demeurage – to linger, tarry. The intention was to speak plainly to charterers about the now-ingrained extension of demurrage payments.

“What is wrong with this industry when it comes to paying the bills for the services rendered?” he asked. “This is a time of change, and if there are representatives of

“If there are representatives of our customers in the audience it is about time you woke up and realised that the practices of demurrage payment today are no longer acceptable and will be less so in a post-2020 world”

It is important to include the whole life costs when making a financial case for scrubbers (Source: DNV GL/Ardmore Shipping)

Tanker Shipping & Trade | December/January 2018/19

28 | TANKER SHIPPING & TRADE CONFERENCE REVIEW

our customers in the audience it is about time you woke up and realised that the practices of demurrage payment today are no longer acceptable and will be less so in a post-2020 world. This attitude of paying demurrage bills with a 200- or 300-day delay is just not acceptable. Come 2020 when we are all trying to make sense of the situation, tying up millions of dollars of our due revenue in the hands of our customers should not be tolerated.”

The big questions

Conference chairman Mr Lampert asked the two industry leaders present, Euronav’s chief executive officer Paddy Rogers and Ardmore Shipping’s executive vice president and chief operating officer Mark Cameron three questions: • What do you believe will be the biggest professional decision you will take in 2019?

• What do you see will be the biggest opportunity?

• If this trading year on a scale of 0 to 10 was a five, how do you assess prospects for 2019?

Mr Cameron answered first: The biggest decision Mr Cameron foresaw in 2019 centred around planning.

He saw his responsibility is 2019 as being to execute a plan that would ensure the minimal amount of heavy fuel oil remained on board any vessel in the fleet at the start of 2020. If an Ardmore Shipping vessel has heavy fuel on board, there will be a plan to remove this unwelcome product. He felt that storage tanks ashore will rapidly fill up and most of the world fleet will switch to compliant fuels. In his opinion, the options for trading heavy fuel oil will be limited. That means the fleet will switch to compliant fuel in the last quarter of 2019, and that will have an impact on the company’s earnings.

Mr Cameron felt the biggest opportunity will come after 2020, noting: “The elephant in the room here is the need for joined-up thinking on CO2”.

Finally, he said that for the trading year 2019, Ardmore Shipping is expecting an improvement, and if 2018 was a five, then 2019 may be a seven.

Mr Rogers then gave his considered answers to the three questions.

He felt that 2018 was not a good year for tanker owners, with only Q4 showing a positive performance, and he felt this would carry over into Q1 of 2019. Thereafter, there is the summer slowdown, coupled with a big year for tanker deliveries. Therefore, he said, Q1 will deliver high earnings, falling in Q2 as the loss in demand and the increase in

supply coincides. He foresaw a scramble for logistical re-organisation from the middle of 2019 onwards. By ‘logistical re-organisation’ he meant the possibility of tankers arriving at terminals only to wait while the refinery/tank farm cleans a tank of the old product to accept the new cargo of the premium low-sulphur cargo.

This re-organisation will commence with the oil producers, who have sunk costs into the refinery process for producing heavy fuel oil and who will be switching to low-sulphur fuel and/or blended fuel production. Aside from this, there will also be some de-bottlenecking of the Permian Fields, which will boost crude oil production in the US, increase exports and drive up tonne-miles.

The second half of 2019 will be a most interesting/difficult period, he said.

The driving force will be the increased segregation of bunkers across all aspects of the industry, from refineries, tank farms, bunker supplies and on-board ships as fuel and cargo. “There is not an unlimited access to new pipelines and new tanks ashore. No one is making a particular investment in them,” he said, “But ships have always been a great alternative solution for logistical management.” In that case, if 2018 was a five, then 2019 would be an eight or a nine.

Mark Cameron (Ardmore): “How did we end up with 0.5%? If this is about lives, 0.1% would have been a better target"

Intertanko Breakfast Briefing Poll: Vessel end of life policy 80% Asked at the start of the briefing: Do you have an end of life policy for your vessels?

Asked at the end of the briefing: Do you now plan to look into having an end of life policy for your vessels?

40%

Inspecting the inspectors

Before the awards ceremony there was a session on the topic of vetting. Vetting can be a contentious issue, and the Chemical Distribution Institute’ (CDI) general manager Capt Howard Snaith was quick to point out that the CDI is itself inspected by

Tanker Shipping & Trade | December/January 2018/19

0%

Yes

No

Don't Know

Nearly half the Intertanko members present (42%) had no vessel end of life policy, but most planned to implement one

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TANKER SHIPPING & TRADE CONFERENCE REVIEW | 29

the British Standards Institute and through internal ISO audits.

The CDI is very much a processdriven organisation and has a system for the inspection of inspectors. “Complaints are taken very seriously and in the last 12 months we have revoked one senior inspector’s CDI licence for non-compliance,” Capt Snaith told the conference.

In a question and answer session at the end of presentation, he was asked how best to prepare for a CDI inspection.

“There is no need to prepare for a CDI inspection. All the questions are really just looking to see if practices the vessel should be following are being done,” he replied. Many of the questions refer to statutory requirements, and if those cannot be answered or are failing to be adhered to then the vessel is in breach.

“To give an example, myself and the staff at the CDI never prepare for internal audits or the external BSI inspection. We are living and breathing the regulations and therefore we should be complying,” he said. “If the crew is well-trained and has the right attitude, it will be the same for them.

It is a little bit like doing an exam, but with the great advantage you know what questions are going to be asked and it’s an open book exam.”

“We inherited this planet, and we must ensure that we pass on this planet to the next generation in a better state than what we inherited.”

As head of the shipmanagement division of MISC, Capt Raja led the team that transformed MISC into a global leader in energy transportation, and his pioneering approach has continued as AET has embraced LNG as the fuel of the future, with Aframax tankers being given an LNG dual-fuel option. AET anticipates that up to half of its Aframax fleet and other petroleum assets, including VLCCs, will also adopt the LNG dual-fuel option over the next few years.

The Lifetime Achievement Award, sponsored by Winterhur Gas & Diesel, went to Thome Group executive chairman Olav Eek Thorstensen for a distinguished career in shipping that has spanned some 50 years.

Giving Mr Thorstensen his award, Intertanko environmental director Tim Wilkins said: “He has been a stalwart of

Intertanko’s council. It took him a short 15 years to graduate to executive of Intertanko’s council, but finally he’s gotten there.”

Mr Thorstensen also touched on environmental regulations in his acceptance speech, saying: “The introduction of the sulphur cap, coming into force from January 2020, will be one of the biggest tests for shipping, both from a commercial, financial and a technical point of view.”

He noted: “Questions remain whether there will be enough low-sulphur fuels available at minor ports. It will most likely have a significant impact on existing tonnage. For those owners that choose the scrubber route, there are many considerations to be taken into account, yet time is rapidly running out as the 2020 deadline looms,” he said.

“We see today that more and more owners will see LNG as an alternative fuel for newbuildings, and I suspect most large vessels ordered after 2020 will have LNG or other gasses as fuel.” TST

The Awards

The event ended its first day with a gala dinner, where the tanker industry gathered to show its appreciation for the businesses and individuals driving the industry forward.

In a crowded field, nominees were shortlisted and an advisory panel of industry directors determined the winners.

AET Tankers president and chief executive Capt Rajalingam Subramaniam took home the Industry Leader Award, sponsored by Clean Marine, for his consistent leadership and pioneering role in transforming the industry. Capt Raja, as he is known, called on the industry to achieve at least the 50% reduction in greenhouse gas target set by IMO. “We all talk about the IMO 2020 [sulphur cap], but IMO 2020 is something that we will get over. And the IMO 2050 target of a 50% reduction over the 2008 baseline is something as an industry we should aspire to achieve,” he said. “Shipping on a per-tonne-mile carried basis is the most energy efficient transport in the world, and we should all be very proud that we are environmentally friendly and energy efficient.” He added:

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This year’s winners Tanker Shipping and Trade gave out seven awards: Technical Innovation Award Winner: DNV GL

Tanker Operator of the Year Sponsor: DNV GL – Winner: Euronav Tanker Safety Award Winner: Korean Register Industry Leader Award Sponsor: Clean Marine; Winner: Capt Rajalingam Subramaniam, president and chief executive of AET Tankers

Operational Excellence Award Winner: Bahri Tankers Environmental Award Sponsor: ITOPF – Winner: Teekay and Wärtsilä Marine Solutions

Lifetime Achievement Award Sponsor: Winterthur Gas & Diesel; Winner: Olav Eek Thorstensen, executive chairman, Thome Group

Tanker Shipping & Trade | December/January 2018/19

30 | HULL COATINGS

Hull coatings open up new routes; make shipping faster and greener Specialised hull coatings are opening up new waters for tanker shipping, protecting vessels from the worst of the Arctic seas while increasing fuel efficiency and reducing emissions

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educed ice coverage means that polar routes such as the Northern Sea Route and the Northwest Passage could soon become viable for transit for longer periods of the year. Meanwhile, developments such as Gazprom's Yamal megaproject, which saw its first seaborne delivery made by an icebreaking LNG tanker in December 2017, could also presage increased tanker traffic in Arctic regions But vessels sailing on these routes will need hulls capable of tackling the Arctic ice. Tanker operators considering the most appropriate hull coatings for such conditions can learn much from the experiences of specialist vessel operator Caspian Offshore Construction (COC) in this regard.

Established in 2003, COC is a provider of offshore marine fleet services in the Caspian Sea. Operating in this harsh environment, COC’s vessels have exacting maintenance requirements and must perform to a high standard in a region that sometimes lacks the latest technology.

When COC required a coating for four of its ice-class offshore support vessels (OSVs), it turned to PPG Protective and Marine Coatings for a solution that could be applied locally and was resilient enough for severe ice conditions.

PPG recommended its SIGMASHIELD 1200 coating to provide protection from the impact of ice abrasion

and accretion. Based on a very hard filler composition, the coating’s anti-abrasion properties are built on a highly crosslinked phenolic epoxy technology, further extending the service life of the coating by increasing ‘creep resistance’. This coating can also be applied by cold, single-feed airless spray equipment.

It has a track record in protecting ice-

Tanker Shipping & Trade | December/January 2018/19

going vessels, offering easy application as well as maximum abrasion resistance and damage propagation control against ice hazards on the hull's outer shell coating.

A subsequent diving survey of the vessels after operation in ice-going conditions showed that there was no damage on the coated vertical sides of the hulls as a result of ice impact.

COC’s technical management commented: “Our vessels face severe ice-going scenarios and need the most effective protection for their hulls. Once we carefully assessed PPG SIGMASHIELD 1200 and its use in similar situations, we were convinced that it would give our vessels the best protection.

Additionally, its single-layer application with standard equipment saved a great deal of time during the drydock stage.” TST

COC’s vessels face severe ice-going scenarios, requiring the most effective protection for their hulls

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HULL COATINGS | 31

MR tanker benefits from new antifouling coating An MR tanker coated with a Selektopecontaining self-polishing antifouling paint has been found to be barnacle-free, three years after the coating was applied.

The vertical sides of the IMO II chemical and products tanker were coated with a copper-free Selektope-based antifouling product, with a service life of 60 months.

Dive inspections conducted as the tanker approached the 36-month position in its drydock interval confirmed that the hull was completely free from hard fouling, with only light slime coverage. Independent third-party analysis of hydrodynamic data revealed that the tanker’s added hull resistance remains at a very low level.

These results illustrate the efficacy of Selektope coatings for a vessel engaged in active service that encounters significant exposure to severe fouling conditions and undertakes periodic idling activity.

The roughness of a ship’s hull, often caused by failure in the marine coating and subsequent biofouling, can substantially increase frictional resistance and power requirements. This in turn increases fuel consumption and greenhouse gas emissions.

By continuous monitoring and analysis, data can be collected on the performance of a ship’s hull and propeller and whether it is affected by biological fouling or not. By measuring the amount of added resistance on the hull, extrapolated from total added resistance across the hull and the propeller, the ability of the antifouling coating to prohibit biofouling growth can be identified, as can the effect of any biofouling on the resistance and effective power of a ship.

Accurate performance tracking techniques enable ship owners to make

Biofouling can substantially increase frictional resistance power requirements (credit: I-Tech)

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educated decisions about the efficiency of various coating technologies and to assess when or if treatments such as hull cleaning are required. When conducted through the application of an accurate analysis method, the measurement of changes in hull and propeller performance, although not a new practice, represents an important part of the industry’s continued journey towards enhanced hull coating performance monitoring.

“Operators must act to minimise biofouling risk to prevent vessels being refused entry to a growing number of ports”

A heavily fouled hull is extremely impactful on fuel consumption and maintenance costs. However, growing regional action against the transportation of invasive aquatic species (IAS) via biofouling on ship hulls means that operators must act to minimise biofouling risk in order to prevent vessels being refused entry to a growing number of ports.

Unfortunately, biofouling risk is increasing globally. Average global water temperatures are increasing and intensifying so-called ‘biofouling hotspots’ across the globe. Tankers trading or laying idle in such waters, particularly

those in subtropical/tropical areas, require antifouling coatings that offer enhanced protection against biofouling. Therefore, the pressure is on coatings manufacturers to formulate antifouling coatings that can guarantee protection for all vessels, even if activity or trading patterns change.

It is for this reason that a growing number of coatings manufacturers are launching Selektope-powered products onto the market, as this antifouling technology delivers hard-fouling prevention performance for all existing and newbuild vessels pattern. TST

From hospital to ship hull An anti-bacterial coating developed for hospitals by Leibniz-Institute for New Materials (INM) in Saarbrücken, Germany, could have applications in shipping.

Nano-Care is an anti-fungal, antibacterial coating originally developed by the Leibniz-Institute for New Materials and now marketed Nano-Care Deutschland AG. It is termed a thirdgeneration ultra-thin coating, developed for transparent surface coatings (known as nano or ceramic coatings) as an alternative to PTFE and fluorocarbons.

It transforms any kind of substrate into a layer of positively charged atoms of nitrogen that attract negatively charged cell membranes of microbes.

The microbes are punctured; the nanolevel layer becomes an interception point for pathogen micro-organisms with anti-microbial effect.

In hospitals, Nano-Care is wiped onto a surface, and after curing, it can offer a self-disinfecting performance for a period ranging from several months to several years. The good news for shipping is that this innovative material could be used in the future to protect hulls.

According to Nano-Care AG chief executive Oliver Sonntag it has proven effective against algae and, in theory, could be applied to a ship’s hull. “It is the logical development of invisible nonstick coatings; self-disinfecting coatings constitute the logical and consequential next step, heralding a new era of invisible coatings,” said Mr Sonntag.

Tanker Shipping & Trade | December/January 2018/19

Every little helps towards achieving a cleaner environment

32 | HULL COATINGS

‘A small but important step’ towards environmental efficiency Hempel’s group segment manager for marine drydocking Andreas Glud discusses how hull performance can support environmental gains and energy efficiency

O

perating as efficiently as possible matters. And this coatings, should not be underestimated either. is not just the case for shipping, all industries are Hull performance and the benefits of a technologically looking for new sustainable ways to become more advanced hull coating can play a vital part in a vessel’s operational energy efficient, as are people - on a more individual efficiency, whatever the type of ship. Biofouling, both micro and level. We are now very well informed about the damage and macro, has a significant impact on the hydrodynamics of a ship. threats to our environment and the pressure is officially on, for all The growth starts with a bio film, or slime layer of bacteria, that of us, to be both cleaner and greener. begins to accumulate as soon as the vessel is in water. Once For shipping, if we are to strip it down to the very basics, established, other larger organisms can stick to the hull and grow. efficiency means using less fuel, which means less harmful emissions Macro biofouling includes hard fouling such as barnacles, molluscs are released into the atmosphere. The International Maritime and tube worms, while micro fouling covers organisms such as Organization (IMO) has been active in moving towards a seaweed, algae, slimes and sponges. greener operating environment and recently ratified a Biofouling can have a massive impact, reducing a global 0.50% sulphur cap that will enter into force on 1 hull’s hydrodynamic efficiency by up to 40%. The January 2020. The aim is to significantly reduce the increased drag means a higher fuel consumption is sulphur content of the fuel oil used by ships, and needed to move the ship through the water, which this will be beneficial to both the environment and means higher costs and increased fuel emissions. human health.

The result is an inefficient and much increased use the reduction to hull This landmark decision by IMO has been widely of energy and power, and this is much more harmful hydrodynamic efficiency debated across the industry, as it will ultimately to the environment. caused by biofouling impact more than 70,000 ships, with significant Applying an antifouling coating solution to the implications for fuel supply around the world. In April hull of a ship is not a new concept, but coatings 2018, IMO also adopted the Initial IMO Strategy on the technology has advanced greatly. reduction of greenhouse gas (GHG) emissions from ships. This Hempel has been at the forefront of coatings technology historic strategy sets out a framework to reduce the total annual GHG for more than 100 years, and in direct response to rising bunkering emissions by at least 50% by 2050 compared with 2008 levels. costs and tightening environmental regulations the company While these initiatives are ambitious to say the least, the reality launched Hempaguard in 2013. is that there are many ways to improve operational efficiency Hempaguard is an innovative fouling defence product and every little helps towards achieving a cleaner environment. containing 95% less biocide than traditional antifoulings.

Shipping is one of the most efficient means of transportation for Unlike regular hull coatings that, in general, are specified goods by volume transported, but there is plenty more potential to according to a vessel’s speed and activity profile, Hempaguard further reduce GHG and CO2 emissions. retains its effectiveness when steaming at slow or at regular Simple modifications to the design requirements for newbuilds speeds; and when alongside in port. This gives shipowners are already being implemented, and there are plenty of initiatives enhanced flexibility over their fleet utilisation. being adopted by shipowners to maximise efficiency. Slow As the industry changes and markets remain challenging, the steaming, reducing port calls and improved voyage planning focus is on securing enhanced environmental performance, while are just a few of the operational strategies being adopted, but maximising efficiencies. An advanced coating solution is one step the benefits of technology and science, such as advanced hull in the right direction for a better future. TST

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Tanker Shipping & Trade | December/January 2018/19

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34 | TANKER MARKETS

A counter-cyclical Q3 tanker market brings cheer to owners Third quarter financial reports show earnings among tanker owners were generally better than expected, and highlight positive developments in the crude oil and product tanker sectors

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ublicly-listed crude oil and product tanker owners recently released their Q3 and nine months of 2018 to-date financial results, which included some interesting commentary on the state of their respective markets.

As owners and operators of the tonnage that forms the respective markets, these companies have insight into the actual state of the market, rather than deriving opinion via intermediaries like brokers.

Euronav – which has the largest

market capitalisation of the publicly-listed tanker companies – led a bullish round of Q3 financial results reporting, with chief executive Paddy Rogers noting: “The direction of travel for the large tanker market has changed from going sideways to up. Demand for and supply of crude has continued to improve as OPEC production has increased and the dislocation from Iranian sanctions has boosted and will continue to boost commercial tanker operators. Whilst the VLCC delivery

Tanker Shipping & Trade | December/January 2018/19

schedule will remain high over the next 12 months, active recycling activity has kept net fleet growth negative so far year-to-date.”

Suezmax operator NAT felt that the sector was enjoying a favourable period in the tanker cycle: “At this time (start of Q4) spot contract indexes for two out of five Suezmax routes for our 1M barrel tankers are above US$50,000 per day, compared with the first nine months of 2018, when the freight indexes showed about US$6,000 per day. This is a good illustration of the volatility in freight rates and the potential for earnings in the tanker industry when the tanker market turns. We believe there could be much more to come.”

An equally upbeat tone was evident in Teekay Tankers’ financial report.

“Crude tanker rates strengthened counterseasonally during the third quarter of 2018, which is typically the weakest quarter of the year, and exceeded our results from

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TANKER MARKETS | 35

The product tanker market appears to be thawing

last quarter,” commented Teekay Tankers’ president and chief executive Kevin Mackay.

“In the fourth quarter to-date, crude tanker rates have continued to strengthen, driven primarily by very low fleet growth as a result of high scrapping activity and higher oil production from OPEC, Russia and the United States. Higher oil production in the United States is also positive for mid-size tanker demand, due to direct exports to Europe on Suezmax and Aframax tankers and reverse lightering demand in the US Gulf. Looking ahead, we are very encouraged by the recent strength in crude tanker rates, and we believe that we are at the beginning of a more sustained recovery in the tanker market.”

Team Tankers could be forgiven for restricting its comments to its progress with its strategy; chief executive and former Stolt man Hans Feringa, commented “Despite a challenging freight market, Team Tankers focused on optimising its shoreside operations through the final integration of the Team and Laurin Shipping platforms.

During the quarter, we exited operations in Sweden and consolidated vessel management in the Americas into our Houston office. In addition, we grew our in-house technicallymanaged fleet by shifting two vessels away

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from third-party managers and three more will follow soon. We are confident that our integrated platform will allow Team to deliver high quality transportation services at competitive total costs."

There was also a feeling of mild optimism for the progress of the product tanker sector so far this year. The largest public company in the sector is Scorpio Tankers, which has released results, but while the company is prolific with its mandatory SEC announcements on its latest short-term financial tactics, its commentary on the product tanker market was limited to one sentence: “The spot market for product tankers continues to face adverse market conditions as a result of an unfavourable global supply and demand imbalance, resulting primarily from weaker global refining margins, a lack of arbitrage opportunities, and the continued absorption of an influx of prior year newbuilding deliveries.”

Fellow product tanker operator Torm plc had far more to say on the state of the product tanker market in the first nine months of 2018.

“The product tanker market reached historically low levels in the third quarter, impacted by a decrease in demand growth and shorter sailing distances,” explained Torm executive director Jacob Meldgaard.

He continued: “I am nonetheless pleased that Torm continues to perform well in a difficult market…We believe product tanker freight rates have bottomed out in the third quarter, and in the fourth quarter we have experienced firmer product tanker freight rates, driven by increasing export activity in the US Gulf and a stronger crude tanker market. We maintain an optimistic view of the long-term prospects of the product tanker market.

Anglo Ardmore Shipping chief executive Anthony Gurnee also felt that product tanker markets prospects were bullish, commenting: "During the third quarter, we focused on optimising our operational and commercial performance under weak charter market conditions. MR charter rates bottomed out early in the third quarter as the market experienced significant downward pressure from Atlantic Basin local market issues that initially presented themselves in the latter part of the second quarter. Nevertheless, MR rates are now trending upwards, driven by increased cargo volumes and a significantly improved crude tanker market that is reducing the encroachment of larger tankers on MR trades.

"Despite the challenging market environment, we believe the MR tonnemile demand outlook remains very positive, supported by continued strong underlying oil consumption growth of 1.4mbd for 2018 and 2019 and ongoing refinery expansion in export-oriented locations. Meanwhile, a record low orderbook, combined with scrapping that has accelerated during the recent market downturn, should result in net fleet growth of close to zero in 2018 and around 1% in 2019.

In addition, we believe that the fundamental reshaping of the global petroleum supply chain related to the IMO 2020 marine fuel switch should significantly heighten MR demand from mid-2019 onward.”

Diverse fleet operator, but prominent in the product tanker sector, d'Amico International Shipping prefaced its results with the announcement that Marco Fiori was stepping down as chief executive at the end of the year, with his role being added to that of the company chairman Paolo d’Amico, who almost simultaneously was announced as the new chairman of Intertanko. It will be a busy 2019 for Mr d’Amico.

The outgoing d'Amico International Shipping chief executive pointed to refinery maintenance during the summer as one factor contributing to the weakness of rates over the summer. However, he stated that “the longterm fundamentals are all extremely positive, showing a growing world demand for oilrefined products and limited net fleet growth expected for the next few years.” TST

Tanker Shipping & Trade | December/January 2018/19

Asian Tanker Conference

26-27 February 2019, Singapore

Challenging times: How is Asia responding?

Market uncertainties, trade wars, regulatory compliance issues and the digital transformation of the industry are a challenge for tanker owners globally. But developments in refining, emerging trade lanes, and the changing face of trading and chartering in Singapore are additional challenges the region faces.

Is Asia prepared to meet these challenges and is Singapore ready to step up to the mark as the centre of the tanker world?

Key topics for 2019:

Early Bird Ends 4 January

• Market Outlook for 2020 • The evolution and consolidation of the tanker sector • Dealing with the commercial challenges of compliance • Ship recycling regulations • TMSA and VIQ 2018 • Responding to digital disruption challenges • Key learnings from recent cyber attacks on maritime assets • Countering problems with contaminated fuel oil

MCF Training Grant is available for eligible particpants

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LEGAL BRIEFING | 37

Oil pollution - which limitation regime applies?

AKD partner Vivian van der Kuil highlights the importance of being aware of the liability inherent in different oil pollution conventions

Vivian van der Kuil (AKD): Assessing the various limitation regimes and the differences between them can save much time and money

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T

he position of a party seeking to limit liability in the event of an oil spill at sea is not straightforward. The limits of liability, as well as the claims to which limitation may apply, can vary greatly, and it is important to be aware of the liability regime created by the applicable conventions.

The Convention on Limitation of Liability for Maritime Claims 1976 and protocol of 1996 (LLMC 1976) provides the general legal framework for limitation of liability. It allows a shipowner and certain other parties closely connected to the operation of the vessel to limit liability for a wide variety of claims, most importantly for claims in respect of loss of life or personal injury, or loss of or damage to property occurring on board or in direct connection with the operation of the ship, or with salvage operations, and consequential loss resulting therefrom.

In order to be able to rely on limitation of liability, a shipowner has to file a request and then constitute a so-called limitation fund, either by putting up a guarantee or cash payment, depending on the jurisdiction where the fund is established, for the amount of the limited liability, which is calculated on the basis of the gross tonnage of the vessel.

LLMC 1976 stipulates that the rules of the convention do not apply to claims for oil pollution damage within the meaning of the International Convention on Civil Liability for Oil Pollution Damage1969 (CLC), or of any amendment or protocol thereto. The Civil Liability Convention 1969 and subsequent 1976 and 1992 protocols introduced the system of strict liability for owners of seagoing vessels constructed or adapted for the carriage of oil in bulk as cargo, but only when the vessel is actually carrying oil in bulk as cargo, or following such carriage unless it has proved that it has no residues of such carriage of oil in bulk on board.

The International Convention on Civil Liability for Bunker Oil Pollution Damage (Bunker Convention) 2001, meanwhile, is modelled on the CLC Convention and deals

with damage caused by spills of oil when carried as ships' bunkers. Both conventions determine that the registered owner of a vessel is to maintain compulsory insurance cover and have the possibility of direct action which allows a claim for compensation for pollution damage to be brought directly against an insurer.

A recent decision by the Rotterdam Court (9 November 2018, ECLI: RBROT:2018:9174) in a case involving a major oil spill in June 2018 in the port of Rotterdam, caused by the vessel Bow Jubail, emphasises the importance of assessing at an early stage which limitation regime applies.

The owner of the Bow Jubail, a seagoing vessel designed to carry oil and other cargoes in bulk, filed a request to limit liability on the basis of LLMC 1976 and the Bunker Convention. The Rotterdam Court asked the owner to clarify why the CLC Convention was not applicable, even though the vessel qualified as a ship as described under the CLC Convention, ie designed to carry oil in bulk as cargo.

According to the owner, the Bow Jubail was at the time of the incident not carrying oil and had no residues of oil in bulk on board.

But the Rotterdam Court decided that, based on the information available, it could not be established that the Bow Jubail had no residues of oil in bulk on board, especially since the vessel’s previous cargo had consisted of various so-called persistent oils. In addition, the Court emphasised that, in procedures concerning limitation of liability, it is the responsibility of the party seeking to rely on limitation to provide all the information available at an early stage.

The result was that the request filed by the owner of the Bow Jubail was denied, resulting in unlimited liability, at least until a new request based on the CLC Convention was filed and decided upon. This could all have been avoided if an assessment had been made of the various limitation regimes and the differences between them. TST

Tanker Shipping & Trade | December/January 2018/19

38 | CONTRACTS AND COMPLETIONS

Where did all the sales go?

A large number of sales indicates a healthy sector, as those who bought low look to sell high. An absence of sales however usually means the market is flat, and there are very few sales to speak of right now

D

espite glimmers of hope in the VLCC market - Clarkson’s reported VLCC freight rates were close to averaging US$11,000/day in September - there were only nine sales during September and October 2018.

There comprised two Greek sales; Astro Chorus was sold by Pantheon Tankers to Chinese buyers for a reported US$21.2M for conversion. The Greek operator has two newbuildings due for delivery in 2020.

Meanwhile, Greek owner Chandris also sold a 2002-built VLCC which had been part of the fleet from the day of launch.

The 304,700 dwt Britanis was sold for an undisclosed price to Modec, which operates 19 FPSOs, which is what this vessel will likely end up as.

Three VLCCs were sold out of the German DS Tankersmanaged fleet and as the company has no newbuildings on order or VLCCs due to join the fleet, this could indicate the company is slowly exiting the VLCC sector. The seven-year old DS Venture and DS Vision were sold to Minsheng Financial Leasing of China for US$56M in what is almost certainly a sale and leaseback deal and will remain under DS Tankers’ control.

The only outright sale was the 15-year old DS Vida which was sold to NGM Energy for further trading for USD21.8M. This leaves DS Tankers (the management arm of Dr Peters) with one 2000-built VLCC on its books. That vessel, DS Commodore, is currently valued at demolition by VesselsValue.

Greek players were far more active in the Suezmax sector

Sales of VLCCs were flat in September and October 2018

Tanker Shipping & Trade | December/January 2018/19

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CONTRACTS AND COMPLETIONS | 39

Following its arrest, CV Stealth sat idle for three years before being towed to Trinidad and sold under “as is” terms

during September and October 2018, with a hand in all seven sales. Avin International (Vardinoyiannis family) purchased the Teekay LNG, 2003-built African Spirit for a reported US$13M with Special Survey due (the cost of completing this could be around US$2M). This is the third Suezmax tanker Avin has bought this year.

Another Greek buyer was Polembros Shipping which bought two newbuilding resales from Central Mare (Evangelos Pistiolis) for a reported US$63M. The value of the original contract has not been reported, but VesselsValue indicates a level of around US$53M, which after financing costs represents a tidy profit for the Evangelos Pistiolis company.

Capital Product Partners (the public Marinakis family company) sold the 2001-built Amore Mio II for a reported US$11.5M to Fareast Ship Management for further trading. In 2007, this vessel was purchased by Capital Maritime and Trading (the private company of the Marinakis family) from Centrofin for US$89M. Six months later, under the name Amore Mio 2, the Suezmax tanker was sold to Capital Product Partners for US$95M, or US$594/dwt. Despite this very firm price, this was not in fact peak for Suezmax values, which reached US$695/dwt in June 2008. Since then values have tumbled; to put this into perspective, a 17-year old Suezmax like the Amore Mio II would have been worth around US$52M in 2007.

Or approximately the same as the three nearly new Suezmax tankers snapped up at US$52M each by Zodiac Maritime (an Eyal Ofer family company) from banks looking to sell off the Toisa fleet.

This firesale also saw Zodiac Maritime pick up a nearly new Aframax tanker for US$40M. However, this was a sideshow to the eight Aframax tankers (pre-fixed “British”) sold by oil major BP Shipping. These are part of a series of 11 crude oil (12 tanks and pumproom) Aframax tankers built at Samsung to an ice class 1A design, featuring MAN B&W 7S60MCC7 15,820 kW propulsion.

As such, they are reputed to have a higher fuel consumption compared to non-ice class counterparts, which seems to have dampened enthusiasm in the marketplace.

The eight tankers were sold in two tranches with Capital Trade and Transport (Marinakis – see above) taking three vessels en bloc at US$13.7M each. British tanker operator Union

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Maritime purchased the other five at a reported US$12.3M to US$13.3M each.

On the demolition side, five VLCCs were sold for recycling during September and October. The firmest price was realised by New Shipping (Adam Polembros) which achieved US$450/ldt. This VLCC had a stereotypical working life of 15 years with a Japanese shipping company before being sold to a Greek operator. In this case New Shipping purchased the VLCC for US$26.5M in March 2015, and enjoyed trading in an initially firm market before selling for scrap at US$16M. Another VLCC sold for recycling was the Ramlah, which appears to have been under the control of the Saudi Arabian crude oil exporting shipping company Bahri since delivery in 1996. Ramlah was one of five Mitsubishi Heavy Industries 1990s built VLCCs in the Bahri fleet. Bahri ordered a raft of VLCCs in 2015 that are entering the fleet, rendering these 20+ year veterans redundant. At 48,100 ldt Ramlah is the largest vessel sold for scrap so far in 2018 and the four sister-ship candidates are likely to be assessed by surveyors at around the same ldt.

The only Suezmax sale for demolition of note in the two-month period was of the Teekay and Stena jointly owned Stena Spirit, a 2001-built Suezmax shuttle tanker. In its 2017 annual report, Teekay Shuttle Tanker LLC noted that the “carrying value of the Nordic Spirit and Stena Spirit shuttle tankers were written down to their estimated fair values, using appraised values.

“As notice of redelivery was received by the company in April 2018, the vessels are expected to redeliver from their charterer after completing their bareboat charter contracts in June 2018 and the company has adjusted its expectations for the vessels’ future opportunities. The write-down related to these vessels is US$28.5M, of which US$14.2M is included in a 50%-owned subsidiary of the company.”

Which means that although the scrap price for the sale of the Stena Spirit was not disclosed, it would seem that Teekay Shuttle Tanker LLC was not left out of pocket from the disposal.

CV Stealth was arrested in Venezuela in 2014, with the charterer accused of trying to lift a stolen national oil company cargo using forged documents

Six Aframax tankers were sold for scrap in the two-month period, with the stand-out sale being that of the 2005-built CV Stealth. As well as being only 13-years old at the time of the sale, the reported price was only US$193/ldt. This was due to the circumstances surrounding the sale; it is reported that Stealth Maritime (Vafias family company) had chartered out the tanker to third parties to load a cargo in Venezuela. The vessel was arrested in Venezuela in 2014, with the charterer accused of trying to lift a stolen national oil company cargo using forged documents.

The vessel was idle for three years, during which time the ship suffered significant damage. Once released, now out of class and with a broken main engine, the renamed CV Stealth was towed to Trinidad and sold under “as is” terms. The case remains under litigation. TST

Tanker Shipping & Trade | December/January 2018/19

40 | LAST WORD

How to resolve the regulatory conundrum of EU ship recycling

D Dr Nikos Mikelis (GMS): The EU is failing to take the next step to implement a workable EU shipping recycling regulation

r Nikos Mikelis, non-executive director GMS considers the sometimes-conflicting requirements of regulatory bodies and shipowning nations The history of ship recycling regulation in the EU can be traced back to 1992, when the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal (Basel Convention) entered into force.

From 1993, the EU implemented the Basel Convention as EU law. In 2006 the EU amended its existing law with the European Waste Shipments Regulation (WSR), which now includes an amendment to the Basel Convention that has still not entered into force internationally and which forbids the export of hazardous wastes to non-OECD countries (this is the “Ban Amendment”).

From the end of the 1990s international efforts were made to regulate the recycling of ships through the Basel Convention.

For several (predictable) reasons this was not successful and led to problem cases. In 2004, the governing body of the Basel Convention requested IMO to develop a new international convention to regulate safety and environmental protection during the recycling of ships.

This was the Hong Kong Convention (HKC), which was adopted in May 2009, but this is still not in force. A realistic estimation is that it will probably take four to five more years for HKC’s entry into force.

In the meantime, the EU has been implementing (with varying degrees of conviction) the WSR to the recycling of ships.

However, in 2011 the Commission concluded that the WSR was not effective, as its study showed that 91% of the ships that should be controlled by the WSR had evaded its provisions (presumably the remaining 9% being mostly small ships and government-owned ships).

The EU therefore decided to develop a new regulation specific to ship recycling (instead of waiting for HKC’s entry into force) and on 30 December 2013, the EU brought into force

Tanker Shipping & Trade | December/January 2018/19

the European Regulation on Ship Recycling (EU SRR). The provisions of the Regulation did not take effect immediately, but instead the Regulation specifies a schedule of application, whereby the first version of the European List of approved yards would be published by the European Commission not later than 31 December 2016.

The next most important deadline is only days away. From 31 December 2018, EU-flagged ships will have to: have an Inventory of Hazardous Materials; be surveyed; be certificated; and be recycled in yards that are listed in the European List of approved yards.

The European Commission, as the authority that implements (and interprets) European legislation, has published the list, the current version of which includes 23 yards located in EU countries, plus two yards in Turkey and one yard in the USA. However, the desire to contain ship recycling within Europe is unrealistic. In 2013 all European yards together recycled just 65,000 LDT (mainly of small, domestic and inland waterways ships), which was the maximum in the most recent years. This hardly equates to the LDT of two large VLCCs. In the first 10 months of 2018, 33 VLCCs have been sold for recycling; of these 19 were sold by Greek and German owners. None of these VLCCs were sailing under their owners’ home flags.

Thus, the EU SRR seems doomed to failure and will be by-passed by the commercial realities of the shipping business. Meanwhile, more than half of the yards in India have upgraded their infrastructure, training and working procedures and have obtained Statements of Compliance with HKC by IACS societies, in the expectation of demand from shipowners for safe and environmentally friendly ship recycling. If these yards were to be included in the European list of approved yards, then EU SRR would have a chance of being relevant. TST

“The desire to contain ship recycling within Europe is unrealistic”

Dr Mikelis is an independent consultant, a nonexecutive director of GMS, and a non-executive director of QACE

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