Tanker Shipping & Trade June 2016 by rivieramaritimemedia

June/July 2016 www.tankershipping.com

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June/July 2016 volume 10 issue 3 Regulars 3 COMMENT 4 BEST OF THE WEB 7 CONTRACTS & COMPLETIONS 8 ANALYSIS 11 LEGAL BRIEFING 40 LAST WORD

Emergency response 12 The vessel had blazed for days and the engineroom was a total loss

Owner-charterer debate 14 Ego-driven deals are an inherent part of the business 15 Marinvest’s Lars Mossberg remembered

Ballast water management 16 The clock is ticking on ratification of the convention. Will yards, suppliers and laboratories be able to cope if IMO’s 35 per cent benchmark is passed this summer? 22 Tough talk on treatment technology 23 Lessons learned from an Aframax installation

Fuels and lubes 25 Blending-on-board is ‘ok for newer engines’ 26 Open discussion on operational issues

Sweden 28 Typically Swedish tanker owners renew their fleets every 8–10 years 29 New geometry in the gearbox cuts tank cleaning time and spend by a quarter

Cyber Security 30 Outdated software leaves tanker owners vulnerable to cyber-attack 31 Five key questions - and answers - on maritime cyber security

Hong Kong 33 The last 12 months in Hong Kong has seen new entrants, new projects and a renewed focus on tanker opportunities

Crude carriers 36 Class: High-ductile steel lowers oil spill risks from collisions 39 Markets: Heady rates for crude carriers, but where is it all heading?

June/July 2016 volume 10 issue 3 Editor: Edwin Lampert t: +44 20 8370 7017 e: edwin.lampert@rivieramm.com Sales Manager: Chris Tims t: +44 20 8370 7015 e: chris.tims@rivieramm.com Sales Manager: Paul Dowling t: +44 20 8370 7014 e: paul.dowling@rivieramm.com Head of Sales – Asia/Singapore: Kym Tan t: +65 6809 3098 e: kym.tan@rivieramm.com Production Manager: Sasha Tan t: +44 20 8370 1718 e: sasha.tan@rivieramm.com Subscriptions: Sally Church t: +44 20 8370 7018 e: sally.church@rivieramm.com Korean Representative: Chang Hwa Park Far East Marketing Inc t: +82 2730 1234 e: chpark@unitel.co.kr Japanese Representative: Shigeo Fujii Shinano Co., Ltd. t: +81 335 846 420 e: scp@bunkoh.com Chairman: John Labdon Managing Director: Steve Labdon Finance Director: Cathy Labdon Operations Director: Graham Harman Editorial Director: Steve Matthews Executive Editor: Paul Gunton Head of Production: Hamish Dickie Published by: Riviera Maritime Media Ltd Mitre House 66 Abbey Road Enfield EN1 2QN UK

Next issue Main features include: oil spill/emergency response; ballast water management; fuels, lubes and bunker management Special reports: Sweden; Hong Kong; The Netherlands Tanker type product tankers: classification, designs, operations, business, markets and trades

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Tanker Shipping & Trade | June/July 2016

Disclaimer: Although every effort has been made to ensure that the information in this publication is correct, the Author and Publisher accept no liability to any party for any inaccuracies that may occur. Any third party material included with the publication is supplied in good faith and the Publisher accepts no liability in respect of content. All rights reserved. No part of this publication may be reproduced, reprinted or stored in any electronic medium or transmitted in any form or by any means without prior written permission of the copyright owner.

A member of: Total average net circulation: 4,000 Period: January-December 2015

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COMMENT | 3

PANAMA CANAL OPENS, TANKERS LOCKED OUT OF THE BENEFITS

A Edwin Lampert, Editor

mid much fanfare, the newly enlarged Panama Canal locks will open their gates to the first tollpaying vessels on 26 June. This is a feat of engineering, to be sure – but one that will have limited impact on the tanker industry. A recent briefing by brokers EA Gibson sets the opening in context. It states that, historically, only about 5 per cent of all traffic transiting the canal has been tankers and EA Gibson does not anticipate this figure changing significantly. The maximum width of the new locks (49m) prohibits the transit of any tanker larger than a Suezmax. Furthermore, a Suezmax can only transit with a reduced draft. The economics of taking a partloaded Suezmax through the canal to discharge in the Far East, will make most moves along this route arbitrage driven, given the distance and the transit fees.

The impact of the removal of the US ban on crude exports may well be minimal in the short term. There will not be any significant increases in crude exports while domestic production is falling. Some crude movements from the US Gulf to the Far East are possible. But the current low pricing of bunker fuel will also influence decisions about whether to pay canal fees or sail via the Cape. US Gulf refiners may benefit from having the option to ship LR2 parcels to the west coast of Latin America via the canal, but port infrastructure is likely to see MRs remain the dominant players in the region. Similarly, the Jones Act will continue to limit product movements from the US Gulf to US West Coast. In short, operators of container vessels, car carriers and VLGCs stand to benefit from 26 June. For mainstream tanker trades, it is business as usual.

TANKER OWNERS: TIME TO BACK A HUMANITARIAN ZONE OFF NORTH AFRICA The International Chamber of Shipping is campaigning for the implementation of a Humanitarian Assistance Zone in the Mediterranean as a response to the migrant crisis. Tanker owners are likely to find themselves under renewed pressure as more migrants seek to make their passage to Europe as the summer months approach. But there is another way. Lawyer Michael Kingston, working in a voluntary capacity with the International Chamber of Shipping, is advocating the implementation of a Humanitarian Assistance Zone in the Mediterranean. Writing in the Irish Times, Mr Kingston says the Inter-Agency Standing Committee of the United Nations could be used to put in place a Humanitarian Assistance Zone on the north African coast. “Under UN Tanker Shipping & Trade | June/July 2016

resolution 46/182 it would be possible to process refugees and migrants in a humane and fair way. It would involve using the many ferries and hospital ships that are currently laid up around the globe. Processing refugees and migrants in a Humanitarian Assistance Zone on the north African coast is far preferable to them arriving on Europe’s shores in a dysfunctional mess by land and sea. It is no good waiting outside the jurisdiction with naval and coastguard vessels 12 miles offshore,” he writes. (Permission is needed to proceed closer to shore). “The zone needs to be activated immediately by the UN’s Inter-Agency Standing Committee and it is our duty under humanitarian law to do so.” Tanker owners have a moral duty to support Mr Kingston’s and the ICS’ clarion call. TST For more articles visit www.tankershipping.com

4 | BEST OF WEB

BEST OF THE WEB Visit tankershipping.com to keep abreast of the latest sector news. Never miss a major development by subscribing to our free weekly newsletter. On this page exerpts from five of the most read stories from the last two months

provides shipowners and managers with quality assurance and fleet performance management tools. It is web-based to enable quick analysis of vessel and fleet operations and compliance information. Chembulk Tankers expects to use the software to improve safety and quality assurance as the shipping company grows. Chembulk Tankers captain Ahmed Raza Khan said: “Q-Strata will provide niche control over our ship-managing partners, and allow us to grow our strengths toward a better and safer future for the organisation.”

It is now cheaper to build a tanker in Korea than in China

http://bit.ly/1tvYh92

China and South Korea are vying for the title of number-one holder of tanker orders, with Japan some way behind, according to data provided by mapping, ship search and valuation provider VesselsValue. Builders in South Korea only just edge out China by number, but with an orderbook of nearly US$20 billion, South Korea holds 40 per cent of the orderbook by value. Although it is difficult to compare the tanker orderbook of one country with that of another without going into great detail about the specification and compensated gross tonnage of their respective orderbooks, it is interesting to note that on a macro level, South Korea appears to be the cheapest tanker builder on an average US$/dwt basis. http://bit.ly/21mdXpM

Orion and Chembulk Tankers develop fleet software Orion Marine Concepts has launched the online Q-Strata fleet management software suite. The Indian company worked with Chembulk Tankers to develop the Q-Strata strategic intelligence software, and gained approval for its use from classification society DNV GL. The software

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206 high-risk tankers on the high seas in April International Maritime Risk Rating Agency (IMRRA) said that there were 29 tanker safety incidents in April. Overall the ratings agency said it identified 206 tankers operating with “higher risk.” IMRRA screened 11,080 tankers (51,894,446 dwt). Of these, 24 per cent were operating in line with its lowest vessel rating. IMRRA was founded in July 2013 in response to a perceived need for independent, impartial risk rating for the hydrocarbon shipping industry. In 2015, IMRRA relaunched as an independent notfor-profit organisation. The agency bases its assessment on open-source information in the public domain, and high-value subscriptionbased services. http://bit.ly/1Uuxfsh

Charter rates for shuttle tankers are holding up Investment in shuttle tankers is a measured affair because long-term charter contracts

must be concluded at least two years in advance of the newbuilding projects. There is little sign of charter rates weakening in this specialist sector, which on average attracts US$30,000 a day over a 5-10 year charter period. Five new vessels were added to the global orderbook in 2015. Leading the way was Teekay Offshore Partners, a New Yorklisted company. It committed to three DP2 Suezmax vessels with an option attached for one more likely to be exercised in due course. Each of the firm trio is locked into a 15-year charter plus optional extensions to a consortium of partners: Chevron Canada, Husky Energy, Mosbacher Operating, Murphy Oil, Nalcor Energy, Statoil and Suncor Energy. http://bit.ly/1ZQHffH

Fredriksen secures ‘giveaway deal’ on VLCCs A major talking point last week was John Fredriksen’s decision to order two VLCCs, with the option for a further two VLCCs, at China’s Jinhai Shipyard for the “giveaway price of US$78 million apiece,” reports information specialist BRL Shipping Consultants. The contract – which is at the letterof-intent stage – specifies that the two vessels will be delivered in 2018. “This most certainly is a loss-making deal for the builder and is suicidal business,” says BRL Shipping Consultants. Elsewhere, Singapore-based Ocean Tankers has firmed eight 11,000 dwt chemical tankers with two Chinese yards. Four will be built by Zhejiang Shenzhou, and four by Weihai Samjin, which successfully rehabilitated a year ago after bankruptcy in 2014. Options are attached at both yards for six more vessels, meaning a possible 20-ship order. The whole deal is valued at around US$360 million. http://bit.ly/1VZ4c1f

Tanker Shipping & Trade | June/July 2016

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Tanker Shipping & Trade

conference & awards 15-16 November 2016, London

Nominations now open www.tankershipping conference.com/awards

The Tanker Shipping & Trade Awards recognise leading companies, innovators and individuals, who have contributed to the development of technology, processes and management in the tanker industry. Shortlisted companies, as voted for by the readership of Tanker Shipping & Trade, will be invited to present at the awards ceremony.

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Tanker Shipping & Trade 2016 Awards: Call for Nominations There are three categories that are now open for nominations: Technical Innovation Award (sponsored by DNV GL) Presented to a company, an individual or an institution in recognition of an original product or a service that reflects an innovative approach to technology and has demonstrably raised the efficiency and economics of a tanker operation(s).

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Operational Excellence Award Presented to an individual, company or institution that has found a solution to an operational challenge or problem within the tanker industry.

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Environmental Award (sponsored by ITOPF) Presented to an individual, company or institution that has found a solution to an environmental challenge or problem within the tanker industry. awards sponsors

We will shortly announce the recipients of the Tanker Shipping & Trade Industry Leader 2016 and Tanker Shipping & Trade Lifetime Achievement Award 2016. These will also be presented at the awards ceremony on 15 November 2016. Keep up to date at www.tankershippingconference.com/keep-up-to-date To submit your nomination visit www.tankershippingconference.com or for further details on how you can get involved in this event as an exhibitor or sponsor contact Chris Tims on chris.tims@rivieramm.com

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CONTRACTS & COMPLETIONS | 7

Deliveries will outstrip orders by December T

he first five months of 2016 saw 132 vessels delivered, 79 of these in the last three months. The same period saw 205 tankers (aggregating 12,863,723 dwt) contracted, but there is little doubt that deliveries will outnumber new orders by the end of the year. This carries clear implications for the market: more vessels entering the market often leads to weaker earnings due to greater vessel availability. A close watch of the medium products sector – which virtually collapsed three years ago due to over ordering – is needed. The order backlog now stands at 1,246 vessels (118,068,188 dwt). This is down from 1,266 vessels (122,286,609 dwt) at the end of March. The quickening pace of deliveries is at least partly explained by the difficulties in the dry bulk market. The difficulties here mean that tanker orders are moving up the schedule – to typically between 2 and 6 months – as bulk carrier orders are renegotiated or delayed. In the current bullish tanker market this is of course a distinct bonus. Greek interests remain the most prolific

Buoyed by today’s freight markets, the pace of ordering activity has quickened – are historic mistakes about to be repeated? by Barry Luthwaite

investors in new tonnage. So far this year 28 tankers have been ordered. The national government has taken a robust stand against EU plans to impose new taxation on the Greek fleet. By contrast, Korean shipbuilders remain in a parlous financial position. The big three – Hyundai, Daewoo and Samsung – have billions of dollars of debt. STX Offshore and Shipbuilding looks especially vulnerable, and a decision on whether it will apply for court protection for a second time in recent years is imminent. There are four VLCCs and four Suezmaxes on order and, should court protection be sought, a judgement will be made on which contracts will be fulfilled, with preference given to the most

profitable contracts. STX Offshore and Shipbuilding’s main creditor is state-owned Korea Development Bank, a major financier of the big three. When STX Dalian in China closed two years ago, 51 vessels were abandoned. On that occasion tanker owners got off lightly, but this time the builder has an order backlog of 77 ships, 54 of which are tankers (including 20 LR1 Panamax product carriers). One apparent solution – a merger between two or more of the shipbuilding groups – has been ruled out. TST Data source: BRL Shipping Consultants as at 30 May 2016

TANKERS DELIVERED DURING 2016

Tanker Shipping & Trade | June/July 2016

Grand total 6,184,659 dwt

Medium Products 38,950 dwt

Suexmax 468,589 dwt

Small Products 24,887 dwt

Medium Chemical 27,300 dwt

Small Chemical 573,277 dwt

Panamax 38,950 dwt

VLCC 104,770 dwt

Handysize 704,799 dwt

Aframax 1,737,027 dwt

Handymax 2,466,110 dwt

35 23 23 19 08 07 06 06 03 02 132

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8 | ANALYSIS

NEW REFINERIES WILL BOOST THE PRODUCT TRADES

hina and the Middle East have dominated net refinery additions over the last few years (2013-15), and they are expected to account for around 70 per cent of net refinery additions in 2016-17. The build-up of capacity in these regions is causing major changes in the pattern of seaborne product movements. Despite rising intra-regional demand, much of the new Middle Eastern refining capacity is oriented towards export markets. As a result, its share of the European product import market rose from 6 per cent in 2009 to 10 per cent in 2015, while its share of the Asian market recovered from 16 per cent in 2011 to 18 per cent in 2015 – after several years of decline. China’s new refinery capacity has also been used to satisfy rapidly rising domestic demand, but this did not prevent it becoming a net exporter of products for the first time in 2015. Its exports have increased by 50 per cent over the last three years, with its share of the Asian product trade increasing from 4 per cent to 7 per cent. In 2015, China embarked on a major new strategy to deregulate its domestic crude oil import and product export markets. In the refinery sector, this has meant that licensed independent “teapot”

refineries (mostly clustered in Shandong Province) have been allowed to import crude and export refined products for the first time, which may lead to significant new impetus in the growth of product exports. Of course, it is not just China and the Middle East that have been active in adding extra refinery capacity in recent years. The US has also been dynamic in building up new refinery capacity, and this has allowed its exports – particularly to Latin America – to take off. New US capacity is often in the form of refinery upgrades, but it has also initiated the building of a new class of simple refineries called condensate splitters. These small-scale refineries are designed specifically to process the large volumes of condensate (ultra-light crude oil) generated by the shale revolution. Looking to the future, it is clear that China’s refining programme has further to run. In April, it was announced that Zhejiang Petrochemical has plans to build a US$15 billion mega-petrochemical complex on an island near Shanghai, in what would be the country’s first and largest energy installation to be built by a non-state investor. The project is one of the first concrete signs of Beijing’s desire to experiment with “mixed ownership” or partial privatisation,

NET GLOBAL REFINERY ADDITIONS

Net Global Refinery Additions

‘000 barrels per day

How the Middle East and China are reinventing the refined products seaborne trade writes Ian Sadler*

1200 1000 800 600

creating competition with state-owned firms such as Sinopec, to boost efficiency and drive greener growth. The complex will be built on Dayushan Island, off eastern China, near the ports of Shanghai and Ningbo. It will include a 400 Kbd refinery and a 1.4 Mta ethylene plant. No details of how the project would be funded have been released, but it is likely to start up around 2020. Saudi Arabia intends to remain on the front foot in this sector. There are signs that China too is strengthening its ties with the Middle East. Following the 2016 visit of Chinese President Xi Jinping to the JV Sinopec/Saudi Aramco Yasref refinery, it was reported that Saudi Aramco is in advanced talks with CNPC and Sinopec regarding investment opportunities in refining, marketing, and petrochemicals in China. Aramco had been in talks to acquire a stake in a CNPC refinery and retail assets, a deal estimated to be worth US$1-1.5 billion. The deal would help it sell more of its output to China amid growing competition. Saudi Aramco Chairman Khalid al-Falih says there may be opportunities for further expansion at the 400 Kbd Yasref refinery, which began operations at full capacity in July. Saudi Arabia is also continuing to evolve its engagement in the refining sector with an indication that India and Saudi Arabia are seeking greater energy cooperation. They plan to transform their buyer-seller Other Other relationship in the energy sector to one of Middledeeper East partnership focusing on investment and joint ventures in petrochemical China complexes, as well as cooperating on a Middle East joint exploration in India, Saudi Arabia and in developing countries. China

400 200 0 2014

2015

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e2016

e2017

*Ian Sadler works for UK headquartered Richardson Lawrie Associates Ltd (RLA). RLA is a firm of international maritime economists and business consultants. More information can be found at www.richardsonlawrie.com

Tanker Shipping & Trade | June/July 2016

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LEGAL BRIEFING | 11

High Court sides with P&I club over LOU dispute Ensuring clarity when it comes to letters of undertaking by Martin Hall and David Handley*

n 10 May 2016, Judge Blair delivered a judgment in the matter of (1) FSL-9 Pte Limited (2) Nordic Tankers Trading v Norwegian Hull Club [2016], a case in which there arose some controversial issues on the subject of LOUs issued by P&I clubs. These issues included whether a letter of undertaking (LOU) beneficiary had a direct right of action against the P&I club, and whether it could apply for a court order to increase the value of the security provided. In the instant case, during a loading process damage had been done to a chemical tanker, which resulted in the escape of some

Tanker Shipping & Trade | June/July 2016

cargo (no pollution incident occurred). In order to diffuse the various threats of arrest that were made by the owners against the charterers (in respect of vessels owned by a group to which the charterers belonged) and by the charterers against the owners, three LOUs were issued. One LOU, in the sum of US$3.5 million, issued by the charterers’ P&I club on behalf of their members, in favour of owners, formed the subject of the proceedings. The LOU contained the following provision: “It is agreed that both Charterers and Owners shall have liberty to apply if and to the extent the Security sum is reasonably deemed to be excessive or insufficient to adequately secure Owners’ reasonable Claims.” London arbitration was commenced, and, as the process progressed, the original sum provided under the LOU was deemed inadequate by the owners. A request for additional security was subsequently made to the charterers’ club. The request was refused, so the owners issued a summary judgment application asking the court to order the club, directly, to increase the level of security under the LOU. In turn, the club issued an application to strike out the owners’ claim for summary judgment. The High Court judge indicated that there was no dispute about the fact that the owners were in fact under-secured, though he specified that the issue revolved around whether the owners were entitled under the terms of the LOU to look to the club directly to make good the shortfall. Having reviewed the parties’ various detailed submissions, Judge Blair found the charterers’ club’s arguments more persuasive. Owners had argued that the use of the words “liberty to apply” in the LOU meant that the court had the power to require the club to vary the security. Judge Blair stated that “liberty to apply” was normally found in court orders, and it was difficult to give it a contractual meaning. Notwithstanding the difficulty, “liberty to apply” was found to mean liberty to arrest, and that liberty would not offend the prohibition provision not to arrest or re-arrest stated elsewhere within the LOU. In addition, the word “charterers” could not be read as meaning “charterers and/or their club,” especially considering that elsewhere in the LOU text “charterers” only referred to “charterers and or associated companies/entities.” The Judge went on to state that the fact that English Admiralty procedure, which would provide the mechanism sought by the owners (i.e. for applications to the court to be made), might apply between the owners and the charterers was not sufficient for it to apply against the charterers’ club, any more than it would apply against a bank, if the bank had provided a bank guarantee. The LOU stated the maximum that the club had agreed to provide, and the club’s commitment was set out. If that figure was not sufficient, the owners could ask charterers for an increase, which might be refused; but this was different from proposing that the court could order the club to give it. On the owners’ construction, the owners would be entitled to an open-ended security resulting in an open-ended financial instrument, which Judge Blair could not envisage being provided, as it might have an impact on that institution’s capital requirements. TST * Martin Hall is a Partner and Head of Marine Casualty at Clyde & Co. David Handley is a Master Mariner - Solicitor at the same law firm

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12 | EMERGENCY RESPONSE

EMERGENCY RESPONSE

IN A WAR ZONE

n my professional opinion, it is always a good idea to use a search engine on the Internet before beginning to write about a certain subject in our industry, even when you have been in that line of business for more than 30 years. In other words, I love the Internet. Looking at just one site, my thoughts went astray and I found myself travelling back to one of the many emergencies that I responded to in my career. Some were very challenging, others less so. As a matter of fact, never once in my working life did I come across an Emergency Response that was down-to-earth easy. “Never a dull moment” is one of the one-liners we use in our jargon de métier. When I joined the maritime world in the mid-eighties, I was already in my twenties, with a reputation for troubleshooting on land. But what I was about to face would soon boggle my imagination to an enormous extent. In 1986, during what I still call the first Gulf War, I had only just joined MarFlex Tanker Services BV when I was summoned to Dubai to help lightering a disabled Iranian crude carrier at Siri Island by means of portable submersible pumps. Being 26 years old, I must have looked like a greenhorn in the eyes of the managing director of our customer, who had asked for the best man available. While I was still standing at his desk, I was not surprised that he called my superior and asked who had been sent out to do the job. “My best man,”

RUUD COGELS* RECALLS HIS MOST CHALLENGING EMERGENCY RESPONSE JOB: “THE VESSEL HAD BLAZED FOR DAYS AND SUBSEQUENTLY THE ENGINEROOM WAS A TOTAL LOSS”

Portable pumps were used to aid the disabled Iranian carrier

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replied my boss – much to my relief. That was the beginning of a month full of surprises, setbacks and solutions in what was to become an old-school textbook “overtop discharge operation.” Having mobilised the pumping equipment (four complete sets of diesel hydraulic-driven powerpacks and pumps) on board a supply vessel, we set off from Dubai Harbour for Sirri Island on board Tug Lamnalco 21. After 12 hours steaming we arrived at the anchorage and first saw the vessel with 180,000Mt of Iranian crude in 21 (not inerted; see my last article) cargo tanks. After being “Exocetted” by the Iraqi air force the vessel had blazed for days and subsequently the engineroom was a total loss. That week challenge number one was setting up the lightering equipment so as to avoid fireworks straight away. Can you imagine using a steamdriven derrick with an air compressor in the lifting hook in order to be able to set everything up? After that, challenge number two was to find a safe way to maximise pump output without shifting the equipment around too much. It was the beginning of May and temperatures during the day soared up to 47⁰C. Physical labour in such a microclimate is gruesome. The vessel was equipped with a pump room eductor system for stripping, and together with the C/E we came up with a plan to turn the deck area on starboard behind

Tanker Shipping & Trade | June/July 2016

EMERGENCY RESPONSE | 13

Pumps can be casualties in high pressure emergency operations. Pictured: a damaged magnetic filter on a hydralulic pump

the accommodation into a makeshift E/R, well away from the cargo deck area, where vapors were always present. From there we set up the four submersible pumps in the aft three cargo tanks and ran hydraulic hoses back to our powerpacks. We made use of free flow through the suction lines to feed crude into our aft three cargo tanks. During stripping we used the eductor for maximum results. The only setback there was that we sacrificed a 20 per cent pumping capacity to run the eductor. We still made good on time, though, because we did not have to shift the pump at all. This was by far the safest and easiest way to rig our pumping system, for each and every time we had to shift a submersible pump from one cargo tank to another we were at risk of a possible blowout. Furthermore, this method saved us a tremendous amount of time. During the next two weeks we averaged 750 Mt/hr, and lost only a couple of days on pump downtime. Challenge

number three – probably the most difficult one – was to keep the pumps running 24/7. There was another tanker alongside us, and we were in a war zone well within reach of Iraqi jets. Hydraulic powerpacks and pumps are very reliable, but anything mechanical can and will, eventually, break down. The circumstances under which this job had to be done were not only a burden for the lightering crew. The machinery in our temporary engineroom also suffered in these extreme conditions. On days when there was no wind, the temperature soared to 65⁰C under the cover of the accommodation. The shutdown temperature on our powerpacks’ hydraulics was 75⁰C, so very little margin was left. The gasoil in these circumstances is also far from perfect, and we had to regularly change filters and wash out prefilters. After about 15 days into the project major maintenance was needed, as one of the submersible pump motors

Tanker Shipping & Trade | June/July 2016

packed up. This, in turn, caused a chain reaction in the hydraulics. We were down to three pumps again, and it became clear to me that there would be no easy way to handle such extensive maintenance on board. But it had to done, and the parts were flown in. Three days later, after maximum effort, we managed to fix the broken pumps and motor, and we were running four sets again. Shifts were six on and six off, as this was the only way of doing it. Nightshifts were the best because the temperature only came down after sunset. The final stages with the stripping by eductor and our four pumps actually went quite smoothly, and we could all see the finish line ahead. The complete job took almost four weeks and a lot of improvisation. In the end the reward was customer satisfaction and champagne in a hotel-room bath filled with ice cubes. Today we face more complicated emergency response scenarios than

ever before, with even more demanding authorities and customers. Our industry has developed to such an extent that we hire complete air-freighters during mobilisation times, due to the comprehensiveness of the equipment needed for casualty response. In our warehouse in Rotterdam, the value of emergency-response material alone amounts up to €10 million. Having stock in a port like that is no longer sufficient, and locations across the world have been added to our emergencyresponse umbrella. Future challenges will include keeping emergencyresponse fleets workable, safe and greener than ever before. Given global warming, we have to set an example by doing emergency response the right way. In our field there are no second chances – if there is any lesson I have not forgotten, it is that one. TST *R M Cogels is the founder, president and owner of the MariFlex Group of Companies

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14 | OWNER-CHARTERER DEBATE

VETTING AND SIRE INSPECTIONS TOP OWNERCHARTERER DIALOGUE

panel discussion themed ‘managing business relationships’ at this year’s Intertanko Summit in Singapore highlighted the frustrations that owners and charterers face in common. The spirited discussion, which drew both pointed exchanges and lively humour, was moderated by Braemar ACM managing director Denis Petropoulos. The discussion took place under the Chatham House Rule, meaning information disclosed may be reported by those present, but that the source of that information may not be explicitly or implicitly identified. With both owners and charterers on the panel, it was inevitable that vetting and SIRE inspections were major talking points. One conclusion was that SIRE is a useful tool and one of an armoury of risk assessments that will be employed to assess a vessel’s suitability for hire. The trend is to use statistical analysis algorithms, and while a good SIRE report is a pre-requisite, if the algorithm identifies some key risk indicators, a charterer is likely to reject a ship irrespective of its SIRE report. The more than 200 crew matrix requirements with which owners have to comply is a frustration, but owners can better influence how SIRE moves ahead by banding together and speaking with one voice. This is likely to gain more traction than an internal discussion within a chartering department. Both charterers and owners find differing standards among oil companies a frustration. Common standards on vetting would make life easier for all. Another limitation discussed was that a ship might be very good but be rejected from a trade because a third party did not have a chance – for reasons of time or personnel – to vet it. Again, both owners and charterers felt the pain here. Owners missed out on a charter, while charterers missed out on the opportunity to hire a serviceable vessel. Happily, despite the onerous vetting requirements imposed on owners, a common view was that these requirements also helped

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Utilisation rates, crew matrix requirements, newer vessels versus older vessels, and what someone going on holiday can do to fixtures were issues debated in Singapore

Ego-driven deals are an inherent part of the business. Similarly, once commercial departments have achieved their targets, focus tends to shift

Tanker Shipping & Trade | June/July 2016

OWNER-CHARTERER DEBATE | 15

owners demonstrate that they were making reasonable efforts to maintain high standards – something especially useful in negotiations or a dispute. Money was also discussed, and in particular the merits of a two-tier market. Should owners that had made investments in environmental performance and high-end technology be rewarded with a premium? One view was that charterers do pay more when a vessel has the particular quality or qualities being sought, but paying more because a vessel happens to be a quality vessel was not justified. Better-quality ships, it was also argued, enjoy higher utilisation, which allowed them to build track record, which in turn increased their earning potential for owners. Newer vessels tend to get fixed on delivery, meaning that they cannot benefit

from a rising market – leaving older vessels free to capitalise. This naturally frustrates those that have made the greater investment in high-specification tonnage. A suggested strategy to overcome this apparent injustice was for owners to fix older vessels first if they want their high-technology or eco vessels to achieve greater returns. A question on how to prevent commercial departments having tunnel vision on price and bettering business, as quickly as possible, generated much debate – and humour. One answer was that, yes, ego-driven deal-making was a reality. The personality of the individual in the commercial market had to be allowed for. Some have a preference for a quick deal, while some react badly under pressure. Someone might even be motivated to make a quick – rather than the best – deal because they are going on holiday tomorrow. It was

LARS MOSSBERG COMMEMORATED AT INTERTANKO ANNUAL DINNER Industry stalwart Lars Mossberg, who passed away late last year, was commemorated at this year’s Intertanko Annual Dinner in Singapore. As CEO of Marinvest he ran an organisation dedicated to high-quality shipping and supported the development of pioneering new technologies, such as the ‘take-mehome’ device designed to help tankers return safely home if the main engine broke down. For two decades Mr Mossberg applied the same spirit to his work with Intertanko, on the Council and Executive

Committee, and as chairman of the vetting committee and European panels. A minute’s silence in memory of Mr Mossberg was impeccably observed. To honour his love of both the sea and innovation, Intertanko invited member companies to encourage their seafarers to take part in a photography competition celebrating the beauty of life at sea. Fifty outstanding entries were received, and 14 shortlisted and displayed in a wall-mounted exhibition in the Grand Ballroom’s foyer. This year’s guests voted for their favourite using ‘Pigeonhole,’ a

MARINVEST’S TAKE-ME-HOME DEVICE

This take-me-home device weighs two tonnes and has been designed for simple connection/ disconnection in the event of main engine failure

Tanker Shipping & Trade | June/July 2016

also pointed out that it is difficult to always reward a company and the individual at the same time. For example, if a company caps the commission it pays its people, once they have achieved the maximum commission they can achieve in a given year, their focus for the rest of the year is likely to shift to managing risk. It was also argued that if shipowners always knew that they were guaranteed to cover their operating expenses, it would serve as an incentive to order more ships. They would also miss out on the windfall that can follow from correctly calling the market. This brought to mind Intertanko chairman Nick Tsakos’ comments at the beginning of the day when he cautioned those present against over-ordering vessels: “Much like smoking, ordering gives you a quick fix … but it kills you in the end.”

web-based voting system, that they could access through their mobile phones. Wallem Group sponsored the competition, and the winner was announced by group chief executive officer Simon Doughty at the dinner. While opening the winner’s envelope, Mr Doughty wryly observed that ‘Blueberry,’ by Capt Gopal, came from competitor Anglo-Eastern. Other winners were ‘Raffnerie’ by Herbert Braun, and ‘Where the skies meet the earth’ by Ankit Chauhan. The evening – which was sponsored by ABS, International Registries Inc and Veritas Petroleum Services – continued in high spirits, and was lubricated by the fine vintage supplied from the wineries of tanker owner D’Amico. To power a vessel home when the engine has failed, the main engine must be disconnected from the shaft. To enable this, Marinvest Engineering patented a special disconnector and located it at a flange on the intermediate shafting. Relatively small (1,000mm diameter x 750mm long), and with a weight of about two tonnes, the disconnector allows free rotation of the intermediate shaft and propeller when the main engine is at a standstill. At the same time, propeller thrust is transmitted to the main engine thrust bearing. Thrust is transmitted by the disconnector via two spherical roller bearings. TST

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16 | BALLAST WATER MANAGEMENT

Think the ballast water convention is moribund? THINK AGAIN The clock is ticking on ratification of the convention. Will yards, suppliers and laboratories be able to cope if IMOâ&#x20AC;&#x2122;s 35 per cent benchmark is passed this summer?

BALLAST WATER MANAGEMENT | 17

stensibly, the ballast water management issue has not moved on. The convention still has not been ratified, and there are no United States Coast Guard (USCG)approved systems. But a closer inspection of the issues at this year’s Intertanko Tanker Summit, led by the organisation’s senior environmental manager, Tim Wilkins (who focused on IMO), and director of regulatory affairs, Joe Angelo (who focused on developments in the United States), revealed there has in fact been considerable movement. As Mr Wilkins put it: “You could go on holiday in August and find the convention has been fully ratified when you return in September!” With St Lucia ratifying the convention at the end of May, and Peru ratifying at the time of writing, 51 countries, representing 34.85 per cent of global tonnage, have now signed up. When that figure hits 35 per cent, the convention will enter into force. “There is a list of countries that have indicated that they are in the process of ratifying, with Finland, representing 0.14 per cent of global tonnage, understood to be getting pretty close,” said Mr Wilkins. Should Finland sign up, 34.99 per cent of the world’s fleet would fall under the ambit of the convention. Normally, when an IMO convention is in the ratification process, the percentage of the global fleet signed up to it is calculated annually. “In ballast water’s case, they are doing it monthly,” added Mr Wilkins. Given two of the convention’s signatories are Liberia and the Marshall Islands, a surge of new tonnage into one or both of these administrations would bring the convention into force overnight. Mr Wilkins highlighted progress Intertanko has made in getting the convention’s type-approval guidelines “reviewed, changed and made more robust” and more closely aligned with the US type-approval process. He detailed the protection in place for early adopters of ballast water management systems. The implementation schedule has been standardised and is no longer linked to size or ballast water capacity. Significant challenges remain, especially around the type-approval process. “Based on a gap analysis with the US type-approval process, we went in with a submission to the IMO identifying six areas where we thought that the IMO type-approval process should be tightened up. Following feedback from IMO member

Tanker Shipping & Trade | June/July 2016

YOU COULD GO ON HOLIDAY IN AUGUST AND FIND THE CONVENTION HAS COME INTO FORCE WHEN YOU RETURN IN SEPTEMBER

BELOW: Standing watch: The United States Coast Guard has shown flexibility. The biggest USCG issues are “getting an extension on implementation and waiting for the Coast Guard to approve ballast water systems.”

states, we emerged with 36 points!” Another abiding concern relates to the technology. Members with systems installed were reporting that they did not work in practice. “We are carrying out a through engineering review of ballast water management systems, componentby-component, and will detail both the problems and potential solutions. The findings will be incorporated in an updated version of Intertanko’s Guidance on the Selection and Installation of Ballast Water Management Systems for Tankers. Rounding out with a review of the MEPC 69, Mr Wilkins said that Intertanko and ICS came together and submitted a paper based on a Liberian Registry submission that made the case for a delay in the implementation schedule. Liberia raised concerns around the yard capacity likely to be available in 2018/2019 to install between 4,000 and 7,000 ships should the convention enter into force this year. Liberia said it had research that showed that if a vessel did two sequential ballast water exchanges, its ballast would meet the D2 discharge standard. Intertanko’s technical and environmental committees saw value in the proposal, but IMO did not take the same view. Liberia could choose to

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18 | BALLAST WATER MANAGEMENT

Intertanko’s Tim Wilkins (left) and Joe Angelo addressed both IMO and USCG issues

resubmit or amend its proposal in time for the next MEPC meeting in October. Joe Angelo updated the gathering on developments in the United States under three categories: the United States Coast Guard (USCG), the EPA and VGP, and California. He identified the two biggest USCG issues for members as “getting an extension on implementation and waiting for the Coast Guard to approve ballast water systems.” Here Intertanko and the environmental committee have done two major things to help members. They have developed a decision tree (available on the Intertanko website) that clarifies what an owner must do (according to when the vessel was built) when going to the United States. “The USCG was invited to review the tree. They did not comment, which is their way of saying it’s OK,” Mr Angelo said. Secondly, a model extension request letter has been devised. “To my knowledge every request that has been submitted using this method has been accepted,” he added. To bring clarity to deadline extensions, Intertanko made three requests of the USCG. First, Intertanko asked for a

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blanket extension from the USCG until it approved systems. Second, Intertanko requested that instead of rolling the extension over to 1 January of the following year, the date would be made that of the vessel’s next scheduled drydocking. Third, once a system has been approved anti-trust, consumer protection and monopoly issues could arise. Supply and demand would also be a concern for the market. The USCG agreed that once it had approved a system or systems, it would grant all vessels an extension up to their first scheduled drydocking to have a compliant ballast water management system installed. Existing extension letters will not be re-issued. Rather the person or shipowner that has that extension letter will have to re-submit an application and then receive a supplemental extension. The USCG was clear that the supplemental extension would not be granted automatically, as prevailing regulations require that extensions are granted based on the information available at the time of the application. In contrast, the anti-trust /monopoly issues were not seen as a USCG

matter. Intertanko took the matter to the consumer protection desk at the US Naval Trade Commission, but it did not progress as the issues raised were seen as ‘hypothetical.’ In the absence of any USCG-approved systems, the industry at large is left trying to second-guess which system to install. Presently, 34 manufacturers have gone to the Coast Guard with a letter of intent saying they intend to get Coast Guard approval. There are 58 Alternative Management Systems that the USCG will accept as interim solutions until they approve a system. This means that there are 24 AMS systems that are not currently in the running for USCG approval. “I strongly recommend that you go to the USCG website and familiarise yourself with the 34 systems that are applying for USCG approval,” said Mr Angelo. “If you have invested in a system outside this list – and intend to ballast water exchange in US waters – you may have a problem,” he said. Five independent laboratories around the world are capable of testing systems and 20 systems are understood to be going through this process at this time. Once a laboratory has completed its tests,

Tanker Shipping & Trade | June/July 2016

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a manufacturer will assess the results and determine whether it is ready to submit a formal request to the USCG to approve its system. So far two manufacturers have completed testing and are poised to apply to the USCG for type approval.: Mr Angelo said that the USCG would not commit to a timeframe for approving a system once it received an actual request, but expected that there would be approved systems by the end of this year. Almost half of the systems approved under IMO use ultra-violet technology. Four of these manufactures have submitted their test results to the USCG, but did not gain approval. The manufacturers requested that the USCG apply an equivalency standard that would allow their systems to be recognised as AMS. This was denied. The manufacturers have appealed this decision. Back in March the expectation was that a decision would be reached around May or June. In the interim, the manufacturers submitted a further 1,000 pages of data for USCG review. A final decision on the appeal will now follow “as soon practicably possible,” Mr Angelo said. He scotched rumours circulating at the end of May that the USCG had already decided to grant the appeal. Somewhat clearer are the outcomes of a USCG practicality review into the IMO discharge standards. The USCG could not identify any systems that meet more stringent standards than what it currently has in its regulations, which are also in the IMO standard. This means ballast water manufacturers are not going to have to change their systems to meet a new standard. Mr Angelo shed light on an October 2015 Federal Appeals Court decision in New York that ordered the US government “to rewrite its rules regulating the discharge of ballast water by ships.” A Reuters report at the time said the Court heard arguments from four environmental groups and said the US Environmental Protection Agency (EPA) acted “arbitrarily and capriciously” when it decided in 2013 to follow an international standard governing the discharge of harmful organisms, though technology was available to adopt a higher standard. Circuit Judge Denny Chin said the EPA, using its authority under the Clean Water Act, should have considered onshore facilities to treat ballast water rather than focus on pollution controls aboard ships, where a lack of

Tanker Shipping & Trade | June/July 2016

space might limit their effectiveness. The EPA said in its submission that it “proceeded methodically and reasonably” toward its conclusions, rather than focus on methods “destined not to play a role at the present time in redressing aquatic nuisance species in ballast water.” The US Department of Justice, which argued the EPA’s case, is reviewing the decision, its spokesman told Reuters. Mr Angelo said that a leading view in Washington was that while the environmental groups had produced science showing isolated cases where a ballast water system, in one facet of its operation, could have met a higher

standard, they had not demonstrated that a ballast water system – in all its facets of operation – was not meeting the highest possible standards. The expectation is that the EPA will now wait until the Vessel General Permit scheme is renewed in 2018 before making its next move. Concluding, Mr Angelo urged the industry to try and see the present regulatory position in a positive light. “Every day that goes by without the ballast water treaty being ratified is another day that the USCG gets to approve another system, which brings us closer to minimising this dilemma!” TST

If ballast water fails a port state control test, there is no alternative discharge option

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22 | BALLAST WATER MANAGEMENT

Tough talk on

treatment technology O perational experience with ballast water management systems (BWMSs) has not gone smoothly for one shipmanagement company that includes a large number of tankers in its fleet. Regular breakdowns, untreated water reaching ballast tanks, spare parts not arriving in time resulting in systems being idle for months, and difficulties in arranging sample testing in the USA are just some of the issues that emerged during a presentation at a seminar in London in April. Tanker Shipping & Trade has been asked not to identify the management company, but there is no doubt about the reality of its experience. Its director was clear about his expectations: “The system has to operate like a main engine, boiler, purifier or oily water separator. It should work at all times in every port.” His experience has been gathered from systems covering most treatment technologies fitted on a large number of ships. Unlike many BWMS installations fitted by other owners, which remain mostly idle, each of these is being used “if it works,” he said. One of his concerns was about type-approval of systems whose design had evolved since installation. Since that approval is based on specific components in the equipment, “if we change those parts we are concerned about the credibility of the type-approval,” he said. Those considering ordering systems for immediate installation may be in for a surprise, if this manager’s experience of lead times is any guide. “If you want to install a BWMS in the second half of 2017, you have to start now,” he asserted. When selecting a BWMS, it is also important to take account of a ship’s trading area, he said. Of the 55 systems that are currently approved by the USCG as alternate management systems, only 15 can operate in all three water types: sea, brackish and fresh. What is more, for some of them, it will be necessary to modify a tank to hold a supply of sea water for them to function in fresh water, he pointed out. His company’s commitment to its investment programme continues, though.

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There can be difficulties getting samples tested in the US, one manager claims (credit: USCG)

Tanker Shipping & Trade | June/July 2016

BALLAST WATER MANAGEMENT | 23

TANKERS FACE BIG BWMS POWER DEMANDS Ballast treatment poses a big electrical problem for large tankers, according to Lennart Hansson, business sector leader in the ballast water treatment department at Sweden’s KraftPowercon. This is not only because the volume of ballast to be treated is vast, he said. It is also because they face a very tight loading and discharging schedule, so reliability and quality of the power supply is important. For example, Mr Hansson said, a VLCC might have a ballast capacity of 80,000-100,000m3 and a pumping rate of 8,00010,000 m3/hr, “so a reliable power supply for the ballast treatment system must be designed to match those rates,” he said. The hazardous nature of tankers’ cargo also makes power reliability important, he added. KraftPowercon offers such a supply system: its modular Power Care Solution. It has a number of security measures that secure power at all times during ballasting, Mr Hansson said. Even if a module were to fail, the ballast treatment could continue and the faulty module block could be replaced within minutes by the ship’s electrician when ballasting is finished.

A reliable power supply is essential for a tanker’s ballast treatment (credit: KraftPowercon)

LESSONS LEARNED FROM AN AFRAMAX INSTALLATION SunRui Marine Environment Engineering Co of China has been involved in a project with a tanker shipowner to install a BalClor ballast water management system (BWMS). The operator has a large tanker fleet, mainly consisting of VLCC, Suezmax and Aframax tonnage. Its first installation, on an Aframax

tanker, served as a pilot project ahead of deciding its broader strategy. Not only was the job a new venture for the owner, it was also an initiation for the yard and system designer. A BalClor system was chosen because of its manufacturer’s 30-plus years of experience in electrolysis

SunRui’s BalClor BWMS ready for installation on an Aframax tanker (credit: SunRui)

Tanker Shipping & Trade | June/July 2016

technology and its reliable treatment system, which uses side-stream electrolysis technology, the Chinese supplier said. With the benefit of hindsight, SunRui offered some advice for others considering a similar project. At the start of the work, a third-party designing company appointed by owner conducted the onboard scanning, designing and class approval work. This required a lot of communication among that contractor, the BWMS maker and designer. SunRui suggested that to improve efficiency, it would be better if BWMS makers tackled all the 3D design work. This modelling revealed an important problem: the pump room was too small to install a whole treatment system. “Limited space is always the biggest obstacle to installing BWMSs on tankers,” SunRui has found, but its BalClor only requires its filters to be installed in the pump room. They were a number of

challenges, even though SunRui’s supervision engineers were present to provide technical support to the yard. Since this was the first project of its type for the designer, there were some design mistakes. For example, the feeding pipe and dosing pipe to/from the electrolysis unit were misconnected on the detail drawings. SunRui’s supervision engineers worked with the owner and redesigned the two pipes. Secondly, many yard workers were involved in handling, lifting and installing the equipment and some small components were misplaced. This caused some headaches, but could easily be avoided by the yard arranging for one person to be in charge. In addition, only a few workers at the Turkish yard could understand English, which cost SunRui’s supervision engineers a lot of time in explaining details. This reduced the planned five days for commissioning and training to just two. TST

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FUELS & LUBES | 25

Jens Byrgesen (Maersk Fluid Technology): Blending-on-board can save fuel (credit: MFT)

BLENDING-ONBOARD IS OK FOR NEWER ENGINES

MAN DIESEL & TURBO HAS CONFIRMED THAT BLENDING-ON-BOARD LUBRICATION IS ACCEPTABLE IN ITS CURRENT ENGINE MODELS IF THE VISCOSITY IS RIGHT

AN Diesel & Turbo does not object to lube oil produced by Maersk Fluid Technology’s blending-on-board (BOB) process being used in its newer Mark 8 and Mark 9 engine models, Henrik Rolsted, senior research engineer in MAN Diesel & Turbo’s operations department for two-stroke engines, told a seminar last autumn organised by Chevron Marine Lubricants. But he identified viscosity as a key parameter for that approval, telling sister magazine Marine Propulsion that the cylinder oil had to meet SAE50 requirements. Marine Propulsion had earlier reported (see the December/January issue) that the enginebuilder had concerns about BOB’s use on its newer models, but Mr Rolsted explained the importance of meeting the viscosity requirement, saying that the company’s designers calculate oil film thickness and piston ring dimensions to suit that specification. “If it is not SAE50, we get a different oil film thickness and increase the risk on modern engines,” he said. Maersk Line is the biggest user of BOB. For eight years, it has been using the technology across its fleet on ships powered by earlier models of MAN Diesel & Turbo engines and by engines supplied by Wärtsilä, which has already approved BOB across its engine range. But the ship operator also has a number of vessels fitted with more recent MAN Diesel & Turbo engine models, and this acknowledgement opens up the possibility of these vessels, too, benefitting from BOB use.

Tanker Shipping & Trade | June/July 2016

The lube oil is produced on board by blending recycled used system oil with a high base number (BN) cylinder oil to produce “fit for purpose” cylinder oil, Maersk Fluid Technology managing director Jens Byrgesen said in a presentation to Marine Propulsion’s European Marine Engineering Conference (EMEC) in April. This allows cylinder oil to be provided across a range of BNs, which offers an alternative approach to dealing with high sulphur fuel oils to the common approach of increasing the lube oil feed rate to match high-sulphur fuels. Maersk Fluid Technology has found that – based on its experience with over 200 ships – increasing the feed rate does not increase its effectiveness proportionally, as much of the additional oil is immediately scraped off by the piston rings. When using BOB lubrication, the feed rate is kept constant but the oil’s BN is controlled. “We can blend any BN,” Mr Byrgesen told Marine Propulsion, but for practical purposes would not blend to below 70BN to comply with SAE50, he added. Mr Rolsted had mentioned the same limitation, but said that lower BNs also decrease the oil’s detergency. In his EMEC presentation, Mr Byrgesen said that using BOB reduces system and cylinder lube oil consumption by up to 40 per cent, while its effect of reducing over-lubrication improved engine performance. There were “documented fuel savings of 0.5-1.5 per cent,” stemming from the use of optimised system oil viscosity as a result of BOB, he told delegates. Mr Byrgesen highlighted other advantages, including enhanced system oil performance, engine cleanliness and reduced environmental footprint. Mr Byrgesen had previously spoken about the impact of BOB on the amount of oil being discharged to the sludge tank. Running with cleaner oils when using BOB – due to the regular replenishment of system oil – reduces the amount of oil ending up in the sludge tank, he told Marine Propulsion. Sludge oil itself is not being recycled for blending because it contains a mix of different waste oils. TST

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26 | FUELS & LUBES

Joint forum explores fuel and lube issues TOTAL LUBMARINE’S SHIPPING COMMUNITY EVENT, ORGANISED JOINTLY WITH RIVIERA MARITIME MEDIA, COVERED A RANGE OF TOPICS AFFECTING THE FUEL AND LUBRICANT SECTOR, WRITES PAUL GUNTON

he first speaker at the Shipping Community event was International Bunker Industry Association (IBIA) chief executive Peter Hall. Capt Hall addressed the question of compliance with sulphur emissions regulations and fuel quality. With regard to emissions, he pointed out the major problem facing shipowners: “Ships are currently responsible for sulphur compliance, but have no control over what they receive from their suppliers.” Capt Hall argued that the problem is further complicated by the fact that there is a fundamental conflict between commercial and statutory sulphur verification procedures. The industry generally opts to follow International Organization for Standardization (ISO) testing, which has a different definition to IMO’s test as laid out in Marpol Annex VI. He pointed out that there is a variance in any fuel testing that cannot be eliminated, but this fact is not reflected in IMO’s testing procedures. Capt Hall said: “There is no absolute. There is always variance, but IMO’s approach treats testing as an absolute. That is moving the goalpost too far for our industry.” Capt Hall acknowledged IMO’s position – “IMO does not want to see any apparent watering down of emissions standards, never mind what the reality has been” – but conceded that manufacturers and suppliers had sometimes blended products to create low sulphur fuels, which had had the unfortunate effect of allowing impurities to creep in. With regard to the impending 0.5 per cent global sulphur cap, Capt Hall stated his belief that it was likely to come into effect in 2020, as the European Union and the United States were pushing hard. He said: “With that kind of weight behind it, you are looking

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at 2020.” That said, Capt Hall argued that the refining base would take a while to catch up, which would probably mean what he described as a soft start in 2020. The next session of the Shipping Community meeting involved Kjeld Aabo, head of marine and offshore sales at MAN Diesel & Turbo, and Konrad Räss, materials and tribology research and development senior manager at Winterthur Gas & Diesel (WinGD). They discussed the number of changes in engine design and their effect with regard to lubrication. Addressing the issue of cold corrosion, Mr Aabo explained that the tuning of modern engines enables higher pressure at part loads, improving fuel efficiency and cutting NOx emissions, but also contributing to cold corrosion, where sulphuric acid caused by low temperatures and high pressure causes wear on the cylinder liners. Mr Aabo said using the right base number (BN) cylinder oil at the right feed rate remains a crucial factor in preventing cold corrosion, as the alkalinity provided by a high BN oil is effective in tackling the acidic build up that causes the problem. MAN Diesel & Turbo recommends a BN70 oil on older engines unless they are optimised for improved fuel consumption, in which case a BN up to 100 may be needed. For newer engines, Mr Aabo recommends BN100, with a BN of between 15 and 40 ideal for low sulphur fuels. Mr Räss recommended using BN100 oils for high sulphur fuels, but said he would like to see ships using BN100 lubricant even when running on low sulphur fuels in emission control areas (ECAs). Switching to a low BN oil could mean that when vessels switch back to high sulphur fuels, engines

Capt Peter Hall (IBIA): No watering down of emissions standards

have insufficient BN to neutralise the acidic build up in the cylinders. The next speaker was Total Lubmarine technical director Jean-Philippe Roman, who offered an overview of innovation in cylinder lubricants. He pointed out that emissions regulation deadlines were “the root cause of change.” He noted that this had resulted in a number of technological responses from engine manufacturers, including dual-fuel engines. These responses had generated their own unique set of problems, of which cold corrosion was one. This, he explained, required lubricant manufacturers to adapt and develop new solutions for the new sets of circumstances in which their products were required to operate. TST *A version of this and the preceding article originally appeared in sister magazine Marine Propulsion & Auxiliary Machinery

Tanker Shipping & Trade | June/July 2016

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Marine Propulsion magazine, 90 x 130 mm – NW&F – 22.06.2016_V02

28 | SWEDEN

Swedish tanker owners in expansive mood Typically, Swedish tanker owners renew their fleets every 8–10 years by Barry Luthwaite*

he directly owned Swedish tanker fleet is at an all-time high. It now numbers 142 vessels, representing 4,119,252 dwt. Twenty newbuildings are on order (product and chemical tonnage), totalling 576,900 dwt. A year ago, the number of newbuildings on order stood at 16. Swedish owners have added 11 tankers to the global orderbook in the last year. Delivery highlights include three 50,000 dwt Handymax product carriers that entered the Stena and Concordia Maritime fleets. Stena Bulk has followed up with an order for a further three vessels (with an option for two more) for delivery from CSSC Offshore & Marine Engineering, formerly known as Guangzhou International Shipyard. The first vessel is scheduled for delivery at the end of 2017. Gothia Tanker Alliance has confirmed an order at China’s Avic Dingheng shipyard for four ice class 1A 16,300 dwt dual-fuel product carriers. The first of these vessels will enter Gothia Tanker Alliance’s current (15-vessel) fleet from 2019. The new vessels will be operated by Furetank Rederi (two tankers), Alvtank (one tanker), and Erik Thun (one tanker). The tankers have all been built to FKAB Marine Designs. Tier III engines with LNG provision have been specified. Uddevalla-based FKAB is well known for its pioneering designs, and also benefits from having a design office in Dalian.

Elsewhere, Ektank ordered its first newbuildings since 2002 with an order for two 18,600 dwt chemical tankers from Chengxi Shipyard, China, for delivery from 2018. The contract includes an option for a further two vessels. Donsotank, Furetank, Brostrom, Stoc Tankers and Marinvest have been active in the secondhand market. Between them they have acquired seven chemical and product carriers over the last 12 months. In March, Donso-headquartered Terntank took delivery of Ternsund and Ternfjord, the first two LNG-powered product tankers in a series of four 15,000 dwt ones on order at Avic Dingheng. Terntank states that the combination of a large propeller and a large main engine means the engines only need to run at 65 per cent of their capacity to reach a service speed of 14.5 knots. Fuel consumption will average between 13.5 and 14 tonnes per day, in contrast with 22 tonnes for comparable vessels in service today. This is due to the optimised underwater hull design and LNG’s 10 to 15 per cent better energy value compared with marine gasoil. Terntank vice chairman Trygve Müller said that ordering the vessels was “like ordering a car before anyone had established a gas station,” but that once the company had ordered the vessels it was able to talk and secure charters from the likes of Swedish oil company Preem, Finnish oil company NEOT and Norsk Gas. He added that the operating profile of the vessels means that refuelling is not a major issue, although he acknowledged such sophisticated vessels naturally come at a premium. To offset this, Terntank is working with other participants in the Zero Vision Tool programme, led by Swedish research and model testing facility SSPA, to secure up to 90 per cent reductions in port costs and fairway dues. TST *Data source: BRL Shipping Consultants as at 1 June 2016

TANKERS ON ORDER CSSC O & M E (Guangzhou)

AVIC Dingheng

Chengxi Shipyard

Hyundai Mipo

350,000 dwt

65,200 dwt

37,200 dwt

74,000 dwt

RMK Marine

Treci Maj

Akdeniz Shipyard

Grand total

18,800 dwt

30,000 dwt

1,700 dwt

576,900 dwt

SWEDEN | 29

Kokum’s deep approach to tank cleaning

or years the gantry crane at Kokum’s shipyard in Malmö, Sweden, was something of an icon. Visible for miles around, it symbolised a proud maritime heritage characterised by bold innovation. While the crane has long since left Swedish shores, Kockumation Group’s commitment to innovation continues, and has found recent expression in the e-sea Eco Efficiency Line, which includes what Kockumation says is a revolutionary approach to tanker cleaning. Most tank cleaning machines have been designed for a fixed cleaning pattern without regard for the tank design. Conventionally, the nozzle of a tank cleaning machine sits somewhere between two and four metres down in a tank that will usually range between 10m and 20m deep. The tank cleaning machine is

A TANK CLEANING SYSTEM WITH NEW GEOMETRY IN THE GEARBOX CUTS CLEANING TIME AND SPEND BY A QUARTER

therefore closer to the top of the tank than to the bottom. The operator will set the machine’s pitch according to how rigorous a clean of the bottom part of the tank is needed. Typically, this will result in an uneven dispersal of the cleaning media and an ‘over-cleaning’ of the upper part of the tank. The guiding precept for the Polar Jet Eco tank cleaning system is the idea that the cleaning media is

CONVENTIONAL TANK CLEANING

Tanker Shipping & Trade | June/July 2016

spread equally inside the tank. “What we have done, using clever geometry in the gear box, is accelerated the nozzle rotation at the top of the cleaning cycle and slowed it down at the bottom,” says Kokumation vice president of sales Mats Marklund. “This means we can complete a tank cleaning operation in 75 per cent of the time of a normal clean and therefore use 25 per cent less time, slop and heating and

chemicals,” he explains. He admits that uptake has been slow in a market so used to “pre-cleaning for two hours, doing the main clean for four hours, and then postcleaning for two hours.” But a leading northern European product tanker company has bought into the product and philosophy, and is reporting favourable results. There are two models in the range – Polar Jet PJ15 Eco and PJ 30 Eco – and they also link with the new Washmaster software. This has been designed to monitor and report on tank cleaning processes as they take place, as well as to generate posttank cleaning reports. Polar Jet Eco and Washmaster are two of the six product lines that form the newly introduced e-sea Eco Efficiency Line. The others are FuelSaver, Boiler Management, Heatplan and Sonic Cleaning. TST

POLARMARINE NEW TECHNIQUE

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30 | CYBER SECURITY

Outdated software leaves tanker owners vulnerable to cyber-attack Tankers are carrying outdated software that was not designed with cyber security in mind, according to new research

perators could easily mitigate the risk of cyber-attacks by updating security systems, improving ship design and providing better training for crews, a study led by Plymouth University’s Maritime Cyber Threats Research Group suggests. Traditionally, attacks on marine vessels have included piracy, boarding, theft, and/ or destruction, and although these attacks have often been successful and continue, they are well understood. The study says that in contrast, cyberattacks are much more stealthy, and have a range of potential implications including business disruption, financial loss, damage to reputation, damage to goods and the environment, incident response cost, fines and/or legal issues. Professor Kevin Jones, executive dean of science and engineering, is lead author of the study, which also involved Dr Maria Papadaki, lecturer in network security at Plymouth University, and staff from the Security and Management Lab at HP Enterprise in Bristol. Prof

Jones said: “In an increasingly connected and technologically dependent world, new areas of vulnerability are emerging. However, this dependency increases the vessel’s presence in the cyber domain, increasing its chances of being targeted and offering new vectors for such attacks. Longer term, there needs to be a fundamentally different approach to security of the entire maritime infrastructure, meaning there is great need for specific cyber-security research programmes focused on the maritime sector.” The study – published in Engineering & Technology Reference – suggests maritime cyber-attacks would most likely target systems responsible for navigation, propulsion, and cargo-related functions, with many incentives for attackers given that over 90 per cent of world trade occurs via the oceans. The study also illustrates the potential severity of the problem by providing scenarios to demonstrate possible attacks, and examples of where successful cyber-attacks have been launched. But it says there

are easy steps to help prevent attacks: increasing awareness and good practice in the industry, and enabling the crew and providing them with the necessary tools to prevent and stop some attacks. The paper adds: “As things stand, there are fundamental issues with securing the technology used in the maritime industry and the sector is probably the most vulnerable aspect of critical national infrastructure. Security firms and hackers have found both general flaws and specific, real-world flaws within the navigation systems of ships, and it seems plausible that similar outdated systems for propulsion and cargo handling may also be compromised and abused by cyber-attackers.” The Maritime Cyber Threats Research Group at Plymouth University has been formed to bring together leading-edge multidisciplinary research and practical expertise. It includes experts in cyber security and maritime operations, psychology, maritime law and policy, to investigate the marine cyber threat at all levels from theory through to practice. TST

REAL AND CURRENT THREAT OF CYBER-ATTACK

US$3 90% trillion

cost of a cyber-attack to the world economy

of crew had never received any cyber security training or guidance

For more articles visit www.tankershipping.com

43%

95%

of crew have sailed on a vessel that had been compromised by a cyber incident

of breaches were caused by human error

Tanker Shipping & Trade | June/July 2016

CYBER SECURITY | 31

Would you agree that regulators have woken up to the threat and are going to introduce and botch legislation?

Is the maritime industry slumbering when it comes to cyber security and the cyber threat? Yes, like much of the industrial world, the security of SCADA and control networks on board ships is generally poor. Until recently though, ships had air-gaps around their networks. Now ships are becoming Internet connected, and passengers and crew expect to have Internet access. Combine that with legacy systems (most ships have a 30-year-plus lifetime, and difficulties updating software on a continuously moving target), and you have a perfect storm for security issues.

Would you agree that the biggest threat to a maritime company’s systems is not external, but rather its staff? Certainly staff are one of the biggest threats, whether they are malicious or simply victims. Phishing attacks, malware, ransomware etc could all hit a ship or shipping company hard. Consider a staff member bringing in a USB key, perhaps with the honourable intention of updating a system to the latest software version. That key contains some hidden malware. The ship control systems become infected.

While regulation can help improve security, it is not going to solve all problems. Ships last a long time, and regulation is unlikely to apply to both existing ships and newbuilds. That leaves older ships open to issues. Security is constantly evolving, and regulation can rarely keep up. Look at Payment Card Industry regulation – by their very nature, written standards will always lag real-world threats and best practice by some time.

Five key questions – and answers – on maritime cyber security* * Answers via Ken Munro of Pen Test Partners

Where are the greatest maritime cyber security vulnerabilities? It is hard to say, but fixing the root causes and providing defence-in-depth strategies mean that you can protect against many threats, even ones you may not currently be aware of. Build in layers of defence and ensure you can spot a breach of the outermost layer quickly. Segregate your networks, making sure that systems only have the bare minimum of network (and Internet) access explicitly required to function. Any extra connections increase the attack surface available to the hacker. As always, people are going to be the biggest threat to any system.

When it comes to cyber security and the maritime industry, where is it all heading and why? Ships present unique challenges given long life in service, hundreds of complex interconnected systems, with generally few dedicated IT staff on board. Very rarely are ship control system experts on board. It is important to convince shipping companies that there is a real risk – before anything bad happens. Manufacturers need to integrate security from the design stage onwards. Systems need to be secure and stay secure – currently we are not very good at doing that with industrial systems. Many things we thought secure 10 years ago no longer are.

Tanker Shipping & Trade | June/July 2016

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4-7 October 2016, Resorts World Sentosa, Singapore

19th

SINGAPORE INTERNATIONAL BUNKERING

Organised by: Maritime and Port Authority of Singapore

Managed by: IBC Asia (S) Pte Ltd

Conference and Exhibition

THE JOURNEY TOWARDS CLEANER MARINE FUELS

PARTICIPANTS

KEYNOTE ADDRESSES

COUNTRIES

Goh Swee Chen Chairperson Shell Singapore

50+

SPEAKERS

SPONSORS AND EXHIBITORS

Andy Milnes CEO, Integrated Supply & Trading Eastern Hemisphere BP

RMM1-SC2016

1600+

HONG KONG | 33

THE HONG KONG TANKER HUB BLENDS NEW AND ESTABLISHED OPERATORS THE LAST 12 MONTHS IN HONG KONG HAS SEEN NEW ENTRANTS, NEW PROJECTS AND A RENEWED FOCUS ON TANKER OPPORTUNITIES

he major talking point at the end of last year was the merger of Univan Ship Management with Anglo-Eastern Ship Management. The two concerns have been rebranded as AngloEastern Univan Group, which operates a global fleet of some 600 vessels of all types. Anglo-Eastern itself operates most of its tanker fleet out of Singapore as the hub attraction. But the two companies established that more owners would prefer Hong Kong when examining cost factors. Univan has been tasked with establishing a bigger tanker management division out of Hong Kong and day-to-day responsibility will reside with Surendra Dutt who transfers there from Singapore.

Speaking to Tanker Shipping & Trade earlier this year Mr Dutt said that he expected the total number of tankers within Anglo-Eastern-Univan group to number around the 180 mark by the end of the year. In moving to Hong Kong Mr Dutt will be co-locating with chief executive Bjørn Højgaard who says that the combined Anglo-Eastern and Univan fleets now represent about 5 per cent of the third-party shipmanagement industry. “It’s going well,” says Capt Højgaard. “Combining forces gives us more horsepower to be able to do more of the same. The priorities in the next year are to get the integration to settle down in the right way, and to make sure that the engineroom gives that good humming sound so that you know things are working well and can concentrate on some of the projects we are going to attack. Then the challenge will be twofold: making sure that we keep a close watch on cash flow and money.” Over the next 18 months, Anglo-Eastern Univan Group will take on

LEFT: Surendra Dutt (A-EU) 180 tankers by the end of the year. RIGHT: Bjørn Højgaard (A-EU): “Combining gives us more horsepower”

Tanker Shipping & Trade | June/July 2016

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34 | HONG KONG

about 80 ships from existing clients: about half are tankers, and of those about half are gas and half are wet. Hong Kong of course has been home to the headquarters for the world’s third largest shipmanager, Fleet Management Limited (FML), since its inception in 2011. Led by its amiable founder Kishore Rajvanshy, the company will have a renewed focus on the tanker market in the year ahead. At the beginning of the year FML had 350 vessels. Of these, 130 were tankers, including 55 chemical carriers. The focus on tankers has at least two drivers. One is the parlous state of the bulk carrier market (FML has 180 dry bulk carriers under management) and the other is the success of FML’s newbuilding team. Set up in 2011, it has overseen nearly 70 newbuilding projects in Korea, China and Japan. This performance gives Mr Rajvanshy the confidence that the company is well placed to serve the requirements of the current tanker newbuilding orderbook. A hallmark of the current orderbook has been the volume of VLCC orders placed. Wallem is emerging as one of the largest third party managers of VLCC tonnage having secured a contract to manage 11 new VLCCs from Gener8. Six of these vessels entered the Wallem fleet at the beginning of the year. Wallem’s history of managing VLCCs goes back almost four decades. The first VLCC to enter the fleet was South Sun owned by Sweden’s Salen Tankers back in 1977.

Kenneth Koo (TCC): We believe this is a game changing solution

For more articles visit www.tankershipping.com

Under the leadership of the redoubtable Sabrina Chao, Wah Kwong is pursuing an ambition and expansive agenda. The company has three VLCCs on the water and a newbuilding orderbook comprising seven vessels: four Aframaxes and three VLCCs. It’s vetting and TMSA department is led by Capt Sanjeev Verma. Ms Chao is also chairman of the Hong Kong Shipowners Association, having succeeded Kingsley Koo at the end of last year. Mr Koo is a scion of the Koo family which owns and operates both Tai Chong Cheang Steamship Co. (TCC) and the Valles Ship Company. At the end of last year TCC and the University of Southern California’s Viterbi School of Engineering announced a significant research breakthrough aimed at tackling harmful ship-source emissions today. The research was conducted as part of a research program focused on improving marine diesel combustion efficiency and the reduction of exhaust gases via the application of nanosecond pulsed generation technology. With the support of TCC, researchers at USC Viterbi’s Pulsed Power Research and Combustion and Fuels Research Laboratories have for the past five years focused upon improving combustion efficiency in vessel diesel engines. The aim of the research is to cut emissions of unburned hydrocarbons with concurrent plasma ignition and significantly lower fuel consumption while, at the same time, reduce the release of nitrogen oxide (NOx) and particulate matter. The technology uses tailored electrical nano-pulses to change the underlying chemistry, either at the point of exhaust or during combustion. The group’s experiments both in laboratories, and via a series of recent “sea trials,” consistently cut nitrogen oxide emissions at the point of exhaust by almost 90 percent and reduced particulate matter by up to 75 percent. This dramatic improvement in efficiency was achieved utilising the radically different and more cost effective approach of nano-pulse power, compared to the standard “scrubbers” typically used on vessels that require training for crews and maintenance. The researchers have also conducted substantial tests, using the same technology towards improving the

Kishore Rajvanshy (FML): Newbuilding experience is a competitive advantage

combustion efficiency in marine diesel engines, so that they can operate at their optimal continuous rating output. The current nano-pulse power R&D is now in the final phases of development. It is being conducted by a team of researchers in the Ming Hsieh Department of Electrical Engineering and in the Department of Aerospace and Mechanical Engineering at USC, including Martin Gundersen, Andreas Kuthi, William Schroeder and Fokion N. Egolfopoulos. Mr. Koo said, ”We believe that this game-changing solution will allow owners and managers to unshackle themselves from the present constraint of slow steaming as the only means to realise lower fuel consumption. I believe this research and its culmination announced today could have fundamental long- term implications for the global shipping industry.” Classification society ABS has been invited by TCC to review and assist with certification of the emission remediation technology and improved combustion technology for use on ships. Completing our Hong Kong focus is private equity company Pacific Alliance Group (PAG) which has made its first foray into the tanker market and is expected to recommend third-party management to investors with Hong Kong as first choice. TST

Tanker Shipping & Trade | June/July 2016

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36 | CRUDE CLASS

High-ductile steel lowers oil

lassNK has supported research into the potential use of high-ductile steel (HDS) in crude carrier construction to reduce the risk of oil spills from oblique vessel collisions. It worked with the Japanese National Maritime Research Institute, Nippon Steel & Sumitomo Metal Corp, and Imabari Shipbuilding Co to quantify the extent to which ships featuring HDS would offer better protection against shell rupture. HDS is already available under the NSafe-Hull brand, and Imabari Shipbuilding Co used it to build a Mitsui OSK Lines bulk carrier. But HDS has not yet been used for crude tankers. The characteristics of HDS are especially significant for tankers, where conventional steel plate is used for doublehulled ships. The joint industry research entailed a series of finite element simulations involving the collision of two very large crude carriers (VLCCs). Running the same incident scenarios, ships constructed using conventional steel plate were compared with those built with HDS. Both the

ClassNK has supported research into high-ductile steel and VLCC collisions, while Bureau Veritas and SDARI have tested new modelling software on Suezmax and Aframax designs by Martyn Wingrove

striking ship’s speed and the angle of collision were varied in the research. The collision scenario assumed that the striking ship collides with the midship section of the other vessel, where damage is the most severe. The simulations compared the energy absorbed at a variety of angles of incidence, and the way the critical striking velocity changed. This would cause the maximum impact that could be sustained without the ship’s inner shell being ruptured. Three types of

conventional steel were used to better simulate real-world factors: a mild steel for the bow and side stringer, HT32 (high tensile strength steel 32 kn/mm2) for the outer and inner shell, and HT36 for the upper deck and bottom shell. The simulation directly compared different collision scenarios for these steels and their corresponding HDS. An example of the normalised nominal stressstrain relationships between the two steel types is offered for HT32 and HDS32. In this case, HDS offers elongation

one and a half times that offered by high tensile strength steel. This elasticity has a significant bearing on energy absorption. An investigation of critical striking velocity in the case of an oblique collision with HDS shows that rupture of the outer shell and the inner shell does not occur if the impact force is less than 12 knots, even if the collision occurs at a 90-degree angle. In the case of conventional steels, the ‘rupture limit curve’ model suggests that a 90-degree collision generating as little as 3 knots would penetrate the outer shell, with the inner shell being penetrated if the impact velocity was just under 6 knots. If the angle of incidence were 60 degrees, a striking velocity of 7.5 knots would still be large enough to breach both skins. The study’s findings are that if the collision angle is 30 degrees or 150 degrees, the striking ship would slip against the struck ship and the two ships float apart from each other, consequently avoiding severe penetration. But if the angle of incidence is above 45 degrees, no such ‘slip condition’ occurs. For

The joint industry research entailed a series of simulations involving two very large crude carriers

60 deg

For more articles visit www.tankershipping.com

90 deg

120 deg

Tanker Shipping & Trade | June/July 2016

CRUDE CLASS | 37

spill risks from collisions the ship built using high tensile strength steel, then, the critical collision angle is somewhere between the two. But, ClassNK stated, “for the ship built using HDS struck by another with a velocity of 12 knots, there would be no critical collision angle at all. With the practical application of HDS in vessel designs, expectations are high for helping shape a safer future.” Bureau Veritas has incorporated Dassault Systèmes’ 3DXperience platform for ship design into its Veristar tools for structural calculations. That means BV can review 3D models of crude tankers to ensure they comply with harmonised common structural rule (CSR) requirements. BV director of development at the marine and offshore division Christophe Chauviere said the advancement was needed because shipyards were demanding quicker response times from class. “At the start of a newbuilding project, we receive the 2D drawings and we start the computation and in-depth structural and hydrodynamic analysis,” he explained. “But

shipyards do not want any delay at the first stage of the project, so we needed to reduce the computational time from months to weeks. So we looked at the market to find software to improve the modelling time.” BV uses Veristar for hull analysis and automatic checking of designs against the class rules. The 3DXperience platform enables BV to model the hull, especially complex fore and aft sections, to check the designs against CSRs. The model can then be transferred into other calculation tools. “This way, we can accelerate the time for design review, as we get the final results of the calculation and full chain of analysis using Dassault tools,” Mr Chauviere said. “We use one model for all the calculations including stability, structural and hydrodynamics, so we do not need to do the modelling job more than once.” To test the system, BV worked with Chinese design institute SDARI on 3D modelling of Aframax and Suezmax tankers. “We created the calculation model for finite element modelling (FEM), and translated this

into Veristar for analysis,” said Mr Chauviere. “At the end we estimated a saving of 20 per cent on creating the 3D model, and another 20 per cent to create the FEM model. SDARI was impressed and saw this was a powerful modelling tool.” BV plans to develop the 3DExperience modelling for other uses, as well as for the time when shipyards deliver 3D models for approval, instead of the current practice of submitting 2D drawings. DNV GL worked with China’s Dalian Shipbuilding Industry Co to approve LNGfuelled VLCC designs. It approved in principle Dalian’s VLCC design, which is based on DNV GL’s LNG-fuelled VLCC concept Triality. The design uses deck-mounted type C fuel tanks that do not affect the cargo capacity, and provide enough fuel for a complete round trip from the Middle East to the USA. The design includes dual-fuel engines that meet IMO’s Tier III requirements in the gas fuel mode. This eliminates particulates, SOx and NOx gases, and significantly reduces CO2 emissions.

Hyundai has installed the world’s first IMO-certified Tier III two-stroke engines, as well as NOx control and exhaust gas recirculation systems, on Suezmax tankers. The engines and associated systems were delivered by MAN Diesel & Turbo for two tankers the South Korean company is building for Turkish shipowner Ditas Shipping. These ships will each be powered by MAN B&W 6G70ME-C9.5 twostroke main engines. The tankers will be compliant for operating in areas of Tier III emission restrictions, including around North America and in the Caribbean. An electrically driven blower drives exhaust gases through a scrubber, cooler, and water mist catcher. It raises the pressure of the exhaust gas, which is then mixed with the charge air before entering the main engine coolers. The exhaust gas is washed with water in the scrubber, and sodium hydroxide is added to neutralise the acidic scrubber water. This goes through a water treatment system to remove particulate matter into a sludge tank on the vessel. TST

Collision angle (deg) Critical striking velocity (kt)

15 12

slip

HDS-Full (oS,IS) HDS-Partial (OS,IS)

Conv. (IS) 6

Conv. (OS)

3 0

105

MAN supplied B&W 6G70ME-C9.5 two-stroke main engines for two Suezmax tankers Tanker Shipping & Trade | June/July 2016

120

135

150

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CRUDE MARKETS | 39

Heady rates for crude carriers, but where is it all heading? The Suezmax market could face some tough challenges over the next few years and not just from the threat of the newbuildings*

oday’s Suezmax fleet has 89 units over 15 years of age (18 per cent of the current fleet), giving it a similar profile to the VLCC fleet. Unlike VLCCs, many older Suezmaxes are able to enjoy a second lease of life as shuttle tankers, where age is not so much of an obstacle. In fact, 60 per cent of the current Suezmax shuttle fleet is over 15 years old. Older conventional tankers continue to find employment east of Suez, typically loading Middle East cargoes for India or Singapore. Between 2014 and 2015, huge investment in new Suezmax tonnage took the orderbook profile as a percentage of the existing fleet to 24 per cent, the highest figure among all the tanker newbuilding sectors. Almost all of these newbuilds are scheduled to be delivered over the next 24 months. But given that there appears to be little

chance of any withdrawals from the fleet, how are these newbuilds going to be absorbed? The 49 orders since last May suggest difficulties to come. Geopolitical events have a huge influence on the Suezmax market (more so than on other sectors of the tanker market) and the short-term prospects appear to be very much under threat. The loss of West African barrels to the US (TD5) over recent years (although there has been a recent renaissance) has been substituted with WAF-UKC (TD20) as the crisis in Libyan production continues. This situation is likely to continue for the foreseeable future, but we should assume that Libya will one day return to pre-crisis levels in the same way that Iraqi production has returned. Iraqi production since 2006 has supported Suezmax demand, with the largest jump in output from 3.3 million

b/d (2014) to 4.0 million b/d recorded last year (including Kurdish exports through Ceyhan). There is a view, though, that Iraqi production has reached a plateau and may even decline in the short term. The loss of revenues from the low oil price has limited the government’s ability to pay oil companies, which in turn are not making the investments in

Iraq’s infrastructure needed to expand crude exports. The recent supply disruptions in Nigeria represent another threat to the Suezmax market. Some industry experts are forecasting a sharp drop in the nation’s oil output over the next decade. * Source: Gibson’s Shipbrokers 27 May 2016 Weekly Report

Suezmax fleet: age profile 160 140 120 100 80 60 40 20 0

Deliveries 2016/18

0-5 yrs

6-10 yrs

11-15 yrs

16-20 yrs

21-25 yrs

ARE WE STORING UP DIFFICULTIES FOR VLCCS? The spot market for VLCCs is around US$50,000/day. Suezmaxes are enjoying average rates of around US$40,000/day. Secondhand trading values have strengthened. Brokers Lorentzen & Stemoco report that Frontline is believed to have bought the 297,000 dwt Jiangnan-built New Coral (2010) and the 297,000 dwt Jiangnan-built New Medal (2009) for an en bloc price of US$117.5million. The 300,000 dwt Front Vanguard (1998) and the 311,000 dwt DS Chief (1999) are said to have sold for US$24.3 and US$25.5 million respectively These positive developments need to be set against 9 per cent of the approximately 600-vessel global VLCC fleet being tied up for storage. Around 40 of these vessels are lying off Singapore

Tanker Shipping & Trade | June/July 2016

fully laden with crude. Typically these vessels will be on 2–4 month contracts, meaning a spike in the oil price could see a wave of oil re-enter the market. With the number of newbuilding vessels entering the market in 2017 set to eclipse the number on order, there is an emerging risk of a return to overcapacity. Newbuilding prices are low: in China some business is being booked at just under US$90million. Vessel scrapping is at low levels, although prices are now creeping past the US$300 per ldt mark. This could persuade some owners to trade in VLCCs, Suezmaxes and uncoated Aframaxes. TST

By Barry Luthwaite, director, BRL Shipping Consulting

For more articles visit www.tankershipping.com

40 | LAST WORD

The recycling business is mainstream business

Anil Sharma (GMS): “The Hong Kong Convention is not against beaching”

“For the first time in a generation, tankers being sent for scrap are older than bulkers”

he exterior of the new Athens office of ship recycler Global Marketing Systems (GMS) is unremarkable. But inside, the office is state-of-the-art and full of valuable assets. It’s a metaphor that could also usefully apply to the vessels that the company helps recycle. “Did you know yards on the Indian subcontinent recycle 97 per cent of the vessel?” asks the company’s genial president and CEO Anil Sharma. “The streets leading up to the yards are lined with shops selling glassware, napkins and even toilets seats coming off 20-year-old vessels.” GMS is the world’s largest cash buyer of ships for recycling. The Greece office is the latest in a string of offices designed to bring the company closer to shipowning clusters. Greek owners are the world’s leading orderers of tanker tonnage and significant buyers of secondhand tonnage, having purchased three times the number of vessels as the next buyer. The upshot of today’s positive tanker markets is that there is little appetite to scrap. “For the first time in my 23 years in the business the tankers that are being scrapped are much older than the dry bulk vessels,” says Dr Sharma. While the market for tanker recycling might be static, the question of where to recycle remains highly charged. “There is a myth that responsible ship recycling can only be done in Turkey, China or in the western world. Then there is another myth: if you beach a vessel it can’t be considered responsible recycling,” says Dr Sharma. “Turkey also beaches vessels. The Hong Kong Convention is not against beaching. It says responsible recycling can be done in various ways: drydock, alongside or beaching.” In contrast the European Union is creating a shortlist of approved yards for recycling European-flagged tonnage and is using criteria likely to exclude beaching yards. Dr Sharma says that GMS – as the market leader – has to be in the vanguard of correcting these misconceptions. “The ship recycling industry does not have an international trade association that can represent it in any organised way. We would love one,” he says.

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Dr Sharma welcomes ClassNK’s statement of compliance scheme, which has so far accredited nine yards: four in China, four in India and one in Japan. There are perhaps 15 yards in India applying, although no Turkish ones, as they feel they do not need this additional verification. “So in a way you can say we are seeing a two-tier market,” says Dr Sharma. “But we are not going to argue that the certificates do not mean anything. Other class societies have come in, including RINA, which has issued its first statement of compliance for a facility in India. Do these certificates mean that these are the only yards that can do responsible recycling? No. But it is a way for a yard to tell the world that in addition to carrying the certificates required under the Hong Kong Convention, it has gone the extra mile to underline that it is a responsible option.” GMS is encouraging Pakistani yards – a favoured destination for tankers because of their gas-freeing capabilities – to apply for statements of compliance, but accepts that their location in Belugistan close to Taliban strongholds is an issue for auditors. To bring greater visibility to their practices some yards are installing cameras that allow their practices to be seen anywhere in the world via an iPhone. “Owners have been receptive, but their lawyers tend to be less keen on having recycling operations filmed!” Ultimately GMS sees itself as being in the service industry. “My job is to guide our customers. It is the seller’s decision where the vessel goes.” He acknowledges that a lot of people pay lip service to wanting their vessels to be responsibly scrapped, but in practice fixate on price. “About five years ago, 50 in every 1,000 enquiries would include an explicit responsible recycling requirement.” That said, in 10 years’ time, Dr Sharma believes ‘responsible recycling’ will be the norm. GMS wants to position itself as an endto-end service provider. Proving the point, the company has just sold a stake it held in a shipping company. “We are now part of the mainstream” TST

Tanker Shipping & Trade | June/July 2016

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