TANKEROperator · facility) in Ras Laffan which is expected to be operational by end 2009. Ownership of vessels to transport the associated products of LPG, sulphur and condensate

TANKEROperatorNOVEMBER/DECEMBER 2006 www.tankeroperator.com

Features:US float successesSkill shortage worriesChanging shiprepair cultureClass societies shake upBallast water edict awaitedShip managers on the map

Features:US float successesSkill shortage worriesChanging shiprepair cultureClass societies shake upBallast water edict awaitedShip managers on the map

Front cover.qxd 01/12/2006 17:34 Page 1

IFC.qxd 01/12/2006 17:38 Page 1

ShiprepairA changing culture

Classification SocietiesGL defends its corner

Technology34 Emissions trials36 Ballast Water - Systems’

type approvals a problem

November/December 2006 TANKEROperator 01

Vol 5 No 7Digital Ship Limited

213 Marsh WallLondon E14 9FJ

UKwww.tankeroperator.com

PUBLISHERStuart Fryer

EDITORIan Cochran

Tel: +44 (0)20 7510 [email protected]

ADVERTISINGDavid Jeffries


Ria Kontogeorgou(Greece-Italy-Cyprus)


MARKETINGRebecca Gee


PRODUCTIONVivian Chee


TANKEROperator ContentsIndustry news

FinanceA look at two major floats

RegulationsLifeboats and emersions suits.Are we ready?

Industry ProfileNovoship in expansivemood…..

Industry Profile…..as is InterManager

Manning & TrainingLack of expertise worryingindustry

TANK CLEANINGWe assist Tanker Operators with:

Chemical Tank Cleaning during cargo changeover from DPP to various CPP, removal of MTBE

residues, Inert Gas Soot, Dye Discolouration, CBFS to Molasses or Veg. Oil etc.

Preparation and assessment of the required tank cleaning

Tank Cleaning Advice and Recommended Tank Cleaning Procedure

Delivery of well known Marine Tank Cleaning Chemicals from stocks world wide

Delivery of chemical injection and special spraying equipment

Supervision during the cleaning At Sea by experienced Supervisors

NAVADAN · Nørre Torv 14 · P.O.Box 35 · DK-3060 Espergaerde · Denmark · www.navadan.com

Tel. +45-4917 0357 · Fax +45-4917 0657 · E-mail: [email protected]

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SUBSCRIPTION6 months (5 issues)$142 /Eur110 /£751 year (10 issues)$237/Eur185 /£1252 years (20 issues)$398/Eur310 /£210

Subscription hotline:Tel: +44 (0)20 7510 0015Fax: +44 (0)20 7510 2344

Email: [email protected]

ABC membership applied

TMSA AthensConference Report

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Front cover photo credit -Keppel Verolme & Van LeeuwenFotografie

22

20

27

31

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p1.qxd 01/12/2006 17:45 Page 1

evaluated as the industry had notsupplied the data. The vessel'sflag state, the exporting state andthe receiving state all had toagree the requirements and thensubmit them to the IMO. This hadnot happened, so the bottom linewas that the cargo could not becarried. But we guess that sensewill prevail at the 11th hour.

The International ParcelTankers Association (IPTA) hasintroduced an alternative form tothe Bill of Lading (B/L). This is avoluntary document aimed atshippers who wanted to use atrade name, rather than a propershipping name, thus helping portstate control to actually see whatis on board by scrutinising theform.

IPTA general manager JanetStrode explained; "We willencourage people to use the formand see how it goes." IPTA hasbeen actively advising itsmembership on the forthcomingchanges, speaking at variousconferences and makingsubmissions to industry.

It will be interesting to see howthe changes have affected theproducts/chemical tanker sectorcome the first quarter of 2007 andif any other anomalies crop up.

Although we are still seeingshipyards taking orders for 2010and beyond, including forproducts and chemical tankers,people are hesitant to stick theirneck out and forecast rates for thenext three years.

However, Middle East exportexpansion programmes based onincreased refinery capacity shouldkeep the chemical market firmnext year, to be followed by asoftening of rates in 2008 and asideways/firming situation come2009/2010, according to TinaGilje of Inge Steensland,speaking at the same conference.Although she did qualify herforecast by saying that externalfactors are increasing and queriedwhether demand would actuallykeep up with fleet growth.

COMMENT

TANKEROperator November/December 2006

Come 1st January willwe be calling chemicaltankers - NLS (noxiousliquid substances)carriers? Probably notimmediately, but maybein a few months' time.One thing is for certain from thatdate if you are on the wrong sideof the fence as far as thereclassification of chemicals isconcerned under the newMARPOL and IBC requirements,then your vessel will not beallowed to trade.

There is no leeway, ordispensations available. If yourNLS procedures andarrangements (P&A)manuals/certificates of fitness arenot up to speed, then you mayhave a visit from your friendlyport state control inspector whomight not let you load yourdesignated cargo.

As always, the class societieshave been urging owners,operators and managers to gettheir paperwork done andsubmitted and not to leave it untilthe last minute. Although much ofthis can be achieved online, it still

needs validating, which couldtake a few days, the classsocieties warned.

Those who have opted forconversions, reckoned to totalbetween 50-70 vessels thus far, ifthe work is not completed untilnext year, your vessel will bedeemed to be a new ship and assuch, the 75 litre strippingrequirement will apply. If the shipreturns to service followingconversion before the cut-offdate, then it will be subject to theexisting IBC Code that is,stripping to 100 litres plus a 50litre leeway.

As has been mentioned manytimes before, one of the largestgroup of vessels to be affected isthe 45 mill tonnes fleet trading invegetable oils. From 1st January,this grouping needs to be carriedin IMO 2 or possibly IMO 3double hull chemical carriers,

instead of having the option ofbeing shipped in coated productstankers.

There was concern expressedthat there will not be enoughIMO 2 tonnage around to lift thevolume of vegoils, so cargoes

will be allowed to be shipped onIMO 3 vessels as long as they aredouble bottom and double sidedand satisfy the operationalcriteria.

Biodiesel debateThere has been some debate overbiofuel blends, such as biodieselblended with mineral diesel andbio-alcohol blended with gasoline(gasohol). Interest in biodiesel isincreasing and is likely tocontinue to increase.

As a result of an informalagreement reached by the IMO'ssub-committee on bulk liquid andgases, biodiesel blends can becarried as Annex 1 cargoes if theproportion of biodiesel andbioalcohol does not exceed 15%.If they exceed the limit then theshipper is advised to seek helpfrom his or her administration onhow the cargo should be carried.

At a recent conference, concernwas expressed about the lack ofinformation on concentratedorange juice, which is carried intanks on a few specialisedvessels. Delegates were toldorange juice had not been

What is a chemical?

A classic parcel tanker – Jo Tankers 36,800 dwt Jo Selje built 1993.

02

TO

p2.qxd 01/12/2006 17:46 Page 1

NEWS

gas projects.Nakilat Agency Company, which is the exclusive agent for all ships calling at the port of Ras Laffan owning and operating tugs,pilot boats and other harbour craft in the port of Ras Laffan.Nakilat Fuji, which is a ship chandlery business providing food, provisions and stores to vessels calling at Qatari ports, and warehousing services essentially for LNGC spare parts in Ras Laffan. For its part, Stasco manages one

of the largest LNG fleets in theworld and is involved in thedelivery of more than a quarter ofall LNG cargoes. With four decadesof LNG shipping expertise, Shellprovides a comprehensive range ofservices from feasibility anddevelopment studies through toship/shore operations management,vessel acquisition and vesselmanagement.

Qatar Gas Transport Co(Nakilat) has appointedShell InternationalTrading and ShippingCompany (Stasco) tomanage its fleet of atleast 27 new LNGcarriers. Under this 25year deal, it is expectedthat operationalmanagement will betransferred back toNakilat within 12 years.The agreement will involveStasco providing a range ofshipping services to Nakilat,including shipmanagement, as well as the transfer ofknowhow and expertise to allowNakilat to develop its own LNGshipmanagement concern in Qatar.

This new fleet of LNGCs,currently under construction, willbe put into service over the nextfour years to transport product from

four of Qatar's major LNGprojects: Qatargas II (Train 5),Qatargas III (Train 6), and, subjectto the agreement of the JV partners,RasGas III (Train 7) and QatargasIV (Train 7). These vessels willhave capacities of about 215,000 cum and 265,000 cu m.

Faisal Al Suwaidi, Nakilat's vicechairman and ceo of Qatargas, said:"His Highness the Emir, SheikhHamad Bin Khalifa Al-Thani, hasset a clear strategy for thedevelopment of Qatar's natural gasresources which has positioned thecountry to become the largest LNGsupplier in the world by 2011.

"The shipping component ofthe value chain is critical to us ifwe are to meet this ambitiousplan. Our aspiration is to developa world-class centre of excellencefor LNG shipping in Qatar. Toachieve this, we knew we had topartner with a world leader in theindustry. We chose Shell because

we believe Shell has the trackrecord, knowledge and skills tohelp us reach our goal."

Nakilat was formed in June2004 and is a joint stockcompany owned 50% by itsfounding shareholders and 50%by the public as a result of anIPO issued early 2005. It ispublicly traded on the DohaSecurities Market (DSM).

In addition to owning LNGtankers, Nakilat is involved in anumber of other marine relatedventures in the State of Qatar.These include:

The design, building and operation of a state of the art shiprepair yard (drydock facility) in Ras Laffan which is expected to be operational by end 2009.Ownership of vessels to transport the associated products of LPG, sulphur and condensate produced by Qatar

Nakilat appoints Shell to manage LNGC fleet

TO

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NEWS


Ships operating in theNorth Sea will have justone year to demonstratecompliance withstringent new exhaustemission standardsfollowing the entry intoforce of new airpollution regulations on22 November 2006.The North Sea SOx EmissionControl Area (SECA) will comeinto effect on 22 November 2007,one year after the entry into forceof related amendments to AnnexVI Regulations for the Preventionof Air Pollution from Ships of theInternational Convention for the

Prevention of Pollution fromShips, 1973, as modified by theProtocol of 1978 (MARPOL73/78).

In a SECA, the sulphur contentof fuel oil used on board shipsmust not exceed 1.50% m/m.Alternatively, ships must fit anexhaust gas cleaning system.

The Baltic Sea Area hasalready been designated as aSECA under the regulations. TheBaltic Sea SECA has beenimplemented and operationalsince 19 May this year.

Other amendments to AnnexVI and the NOx Technical Code,which were adopted on 22 July

04

2005 and entered into force on 22November 2006, relate to theconduct of surveys and issuing ofcertificates.

The regulations for theprevention of air pollution fromships are currently undergoingreview by the sub-committee onbulk liquids and gases (BLG). ABLG inter-sessional workinggroup on air pollution recently metin Oslo to preparerecommendations, based on newtechnological developments, onhow further to reduce air pollutionfrom ships, focusing on thereduction of emissions of SOx,NOx, VOC and particulate matter.

North Sea SECA - a 12-month grace period

Dear Sir,

Regretably, the article on Page 6of the October issue ofTANKEROperator contains anumber of inaccuracies andalleged facts that are far from thetruth. Although, over the last fewmonths, the vessel's (ProboKoala) limited involvement in adumping of slops from roadtankers in locations aroundAbidjan has been the subject ofmisinformation andsensationalism within the ranks ofthe international media, we havebeen comforted in the knowledgethat the specialist shipping mediatook a different outlook and itsreports were closer to the truth.Furthermore, we were given theopportunity to present the realfacts before print.

We are certain that you areaware that vessel's slops are atimecharterers property andresponsibility (in this case -lengthy period charterers -Trafigura). The vessel was orderedto discharge these slops at the portof Abidjan with all legality (forexample, to a MARPOLaccredited receiver licenced by theAbidjan authorities).

The sequence of events is bynow common knowledge andappear in both Trafigura andPrime Marine media statementsin their respective websites.Prime in particular have beenavailable to all mediarepresentatives and journalistsand has also voluntarily assistedthe UNEP investigations bysending a representative to theiroffices at Geneva.

To this day, nearly three monthsafter the incident, nobody hasaccused Prime Marine of anywrong doing. Where there aredirect accusations and claims,these are directed solely againstTrafigura, as the operator of thetimechartered vessel - a verycrucial point to which your articlerather bizarrely omits anyreference.

We would just like to clear upa number of inaccuracies in yourarticle:1) Ivory Coast investigators did

not attend on board the vessel at Paldiski or at any other location.

2) The vessel has never loaded a toxic cargo. The slops discharged at Abidjan were the residues of an on board

merox-type washing operation of gasoline with caustic soda ordered by Trafigura.

3) The vessel was not arrested at Paldiski or elsewhere. Trafigura made the vessel available at Paldiski for an on board investigation by the Estonian authorities. In that time, all of the crew were interviewed and the master and chief officer were free to leave Estonia for repatriation purposes.

4) At the conclusion of the investigations, the vessel was permitted to discharge her slops (the product of cleaning her tanks following the discharge of a gasoline cargo) at an Estonian facility and the Estonian Prime Minister stated: "I can assure you that there is nothing mystical in the waste from the Probo Koala - actually, it only includes oil and oil products. There is nothing to fear - it is not some extraordinary poison, but rather only normal oil compounds."

5) The crew were physically examined at Paldiski and

found to have no untoward problems.

6) Stavros Dimas attended at Paldiski but did not visit the vessel. Instead, he grasped the political opportunity for a photo and a soundbyte on board the Greenpeace vessel.

7) During the week offshore Estonia, the vessel took the time to wash her holds, which produced the slops which were received at the facility in Estonia after the investigation.

8) Apart from the on board merox-type washing of the gasoline cargoes, no refining of petrol was carried out at sea. Nobody has provided any reference to the merox-type washing operations being illegal. Trafigura provided letters of indemnity for the commingling of the gasoline cargoes with caustic soda.

With regards,George Kouleris

Prime Marine Management

TANKEROperator is pleasedto be able to put the recordstrait - Editor

Letter to the Editor

ICE CLASSTANKERREPORT

OUT NOW!

SEE PAGE 8 for details

p3-11.qxd 01/12/2006 17:52 Page 2

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2006, the suezmax sector seemedto be under-invested as relativelyfew orders had been placed fordelivery from 2008 onwards,while vessel demand seemed setto grow substantially. Ownerswere ordering large numbers ofVLCCs and aframaxes in the firsthalf of the year, but the suezmaxsector seemed relativelyneglected. However, this situationchanged in the third quarter of theyear, with shipyards taking firmorders for about 50 vessels.


NEWS

"This now meant that theorderbook of 103 vesselsrepresented some 29% of the totalfleet and 31% of the fleet tradingin crude oil, excluding USdomestic trade. The size of theorderbook was particularlysignificant when compared to thefleet of non double-hull vessels,which comprised 67 vessels, ofwhich only seven facedmandatory phase-out under IMOregulations before 2010," thereport said.

Leading London-basedshipbroker andconsultant Galbraith'ssaid that demand forsuezmax tankers wasexpected to growstrongly in the next fiveyears in line with large-scale expansion ofcrude oil exports inthree of the four mainsuezmax markets.In a recently published report onthe suezmax market, Galbraith'snoted that 2006 had seen majorinvestment in tankernewbuildings - not least thesuezmax sector - where anestimated $4.5 bill of new vesselshad been ordered. Meanwhile,new oilfields and pipelines werebeing developed, altering thepatterns of world trade.

Galbraith's noted that WestAfrican oil production was rising,and that major growth in exportswas also predicted from the Black

Sea/Mediterranean region.Growing production from Libyaand Algeria would also contributeto Mediterranean export growth.Finally, trade from the MEG toboth India and China wouldcontinue to grow, driven byincreases in these countries'demand and their development ofsubstantial new refinery capacity.

The only major suezmax marketthat was expected to see fallingrequirements, said Galbraith's, isthe North Sea, where productionwas in relatively steep decline.However, this would lead to anoverall increase in tanker demandas refineries in northwest Europe -and, to an extent, on the US eastcoast - would have to sourcecargoes from more distant regions,such as West Africa and theMediterranean/Black Sea, thusincreasing the tonne/mile ratio.

Regarding the development ofthe fleet, the Galbraith's reportexplained, "Until the middle of

Suezmaxes on a roll?

Suezmaxes like the Besiktas Bosphorus have a bright future.

p3-11.qxd 01/12/2006 17:52 Page 4

NEWS


Under-standingThree levels of optimization go into every Alfa Laval tank

cleaning solution. One of them is our understanding,

built on more than 50 years of Gunclean Toftejorg tank

cleaning experience.

The first dimension

For one thing, we understand that tank cleaning regula-

tions are weak or even non-existent. This is why we focus

on real-life demands, rather than what looks good on

paper. For example, we recommend an effective jet

length and a 15º jet hit angle, and we account for all tank

obstructions when choosing the placement of machines.

As a result, we can provide tank cleaning solutions that

do more than just work in theory. Solutions that provide

genuine cleaning results.

To learn more, contact Alfa Laval.

I N T H R E E D I M E N S I O N STank cleaning solutions

www.alfalaval.com/marine

Sember moves to LondonABS has named WilliamJ Sember as the newpresident and chiefoperating officer for ABSEurope, effective 1stJanuary 2007. Semberwill replace ChristopherJ Wiernicki who movesto the organisation'sworldwide headquartersin Houston, to assumethe role of president andchief operating officer.Currently vice president ofenergy development and acorporate officer, Sember is a 30year ABS' veteran having joinedthe class society as a surveyorafter serving at sea as a marineengineer. Throughout his careerhe has held a number ofincreasingly senior positions,including manager of the offshoreengineering department, regionalvice president Western Europe,regional vice president MiddleEast and regional vice presidentof Eastern Europe.

Sember and his energydevelopment team were creditedwith the recent success ABS hadin securing the classificationwork for the growing number ofLNG carriers, as well as adominant share of the offshoreexploration and production unitsaround the world.

Most recently Sember was

appointed vice chairman of theboard for the Centre for MarineCNG located in St John's (NF). Itis the world's first research anddevelopment corporation forlarge-scale marine transportationof compressed natural gas (CNG).

He is a graduate of the USMerchant Marine Academy(USMMA) with a degree inmarine engineering and hascompleted the advancedmanagement program at HarvardBusiness School. He also holds aUSCG marine engineers licenseand is a licensed professionalengineer.

From the beginning of nextyear, Sember will be located atthe ABS Europe headquarters inLondon.

William J Sember

Will be ever see the likeagain? The majortalking point a monthor so ago in the saleand purchase marketwas the sale ofFrontline's VLCC FrontShanghai, which wasonly completed in Julythis year, said BRLShipping Consultants.She was ordered from NACKS,China in December 2003 for$72 mill for a Chinese ownerand snapped up by Frontline in

July 2004 for $79.25 mill.Recently, the vessel realised arecord $143 mill, which is morethan it costs to currently order anew VLCC today - the latterwould cost $127 mill.

Taiwan buyers are behind thepurchase, which illustrates thestrength (or madness) of thecurrent market, BRL commented.

In September, Frontline soldthe new VLCC Front Beijing for$141.5 mill, netting a $59 millprofit, according to thecompany's third quarter results.

The major talking point

p3-11.qxd 01/12/2006 17:53 Page 5


NEWS

Hamworthy invests in MEGDesigner andmanufacturer of marineand offshore fluidhandling systems,Hamworthy, opened anoffice in the Middle Eastat the beginning ofOctober.Hamworthy Middle East (HME)is based in Sharjah, UAE. It wasopened to improve thecompany's customer support tothe local market. As well asregular service and servicecontract follow-ups, HME cancarry out major maintenancejobs such as overhauling LPGcargo and reliquefactioncompressors; re-tubing heatexchangers; and refitting IG

systems and VOC plant."This latest development

increases Hamworthy's ongoingrapid growth and ensures itspresence among its key marketswithin the Middle East," said RoarOlsen, HME's general manager."We will be delighted to serve ourcustomers with plannedmaintenance, as well as urgentdelivery of service and spare parts.

"Dubai, Fujairah and Qatar arestrategic ports of call for many ofour customers. We have alsoopened this office to better servecustomers such as Qatargas,which will have many LNGcarriers delivered withHamworthy equipment andsystems over the next few years,"

ICE CLASS TANKERSThis definitive in-depth report,produced by TANKEROperatorMagazine, addresses themany issues surroundingthe trading of oil tankersand gas carriers inenvironments notnormally suited tonormal oil tanker or gas carrier operations.

Researched andwritten by a technicaljournalist with seagoingexperience, this report is amust for all those involved

in owning, managing and operating tankers and gascarriers in extreme conditions, such as those found inthe Gulf of Finland and northern Russia in winter.

Ice Class Tanker Report covers many areas, such as future challenges of trading in ice conditions, potential damage when sailing in ice, class society notations, propulsion and coatings issues, innovative ship designs,seafarer skill shortages and the future for Arctic LNG carriers and others.

Ice Class Tanker Report is available both electronically and in hardcopy for £295.00

To order your copy, complete this form and fax to +44(0)20 7510 2344

Or email [email protected] or call our Hotline on +44(0)20 7510 0015

ICE CLASS TAN

CoatingsThe correct outer hull and internal

tank coatings are imperative

Hull and tank coatings should also be taken into

careful consideration. For while traditional anti-

corrosive systems, including pure epoxy solutions,

are tried and tested in warmer climes, they are not

resistant to ice abrasion. The ice can abrade or gouge

into the paint system exposing the steel substrate,

leading to corrosion and

other problems. Joey Keasberry, Sigma

Marine and Protective

Coating's marketintelligence manager said

that in the permanently

immersed areas an

impressed current or

sacrificial anode cathodic protection system will

prevent serious pitting corrosion, but in the boot-top

belt where the surface is periodically exposed to the

marine atmosphere, pitting corrosion can occur. In

order to protect against such damage, special anti-

abrasion coatings should be used."

Sigma has its SigmaShield 1200 for ships

operating in Arctic conditions. This is a solvent-

free epoxy with special anti-abrasion pigment

which, the company claims, gives the coating

"excellent resistance" to ice damage.

"In the past, coatings for outside hulls on ice-

going ships have had to be applied by h

ed airless spray. In contra

0 can be appli

and has a long and successful track rec

specialised service," said Sigma's Keasbe

Yet while ice class vessels trading in first

do not require complete coating of the under

hull, they should, as a minimum, be coated in

'ice belt' region. Norway's Jotun Paints suggeste

that as different regions of the ships hull have

differing ice-impact experiences, "it might be

possible to make different coating specifications for

different ice class notations and regions on the ship."

Consequently, Jotun

has developed a number

of coatings for different

areas of the ice-going

vessel. These are:

Marathon IQ; M

arathon;

Jotacote Universal and

Jotamastic 87 GF; and

Safeguard Universal ES

(with an anti-fouling).

International Paint, meanwhile, has its Intershield

163 Inerta 160. This system is said to provide up to

2.5 times the impact and erosion resistance of

standard epoxies and has been specially formulated

for operation in temperatures down to -50 deg C.

International said its low frictional resistance

controls fuel costs and improves operatin

efficiency while its abrasion r

control mechanical

saving

Ice can abrade or gouge into the paint system.

a TANKEROperator reportResearched and written by Patrik Wheater

ICE CLASS TANKER RThe Challenges Ahead

Class Societies get their act together

in R&D and Technical SupportAccording to UK-based classification society

Lloyd's Register (LR), which is developing

'winterisation' guidelines and products, there is a

need for class to strengthen its capability in a

number of aspects for ship operation in Arctic

conditions.

The main challenges facing the industry are:

Ice strengthening of hull structure and rudder

Strength of shaft and propellerStrength of pods and supporting structure,

if applicable

Safety and operability under icing and

snowing conditions Hours of darkness during wintertime

Very low ambient temperatures, - 40 deg C

or lower

Increased need for engine output Avoidance of unintended stops in ice without

ice breaker assistanceOperate the ship within acceptable limits

Routeing to avoid non-acceptable heavier

ice conditions Sufficient ice br k

challenge; new operating scenarios, technolo

and trades within icy and cold environments,

must not only provide basic guidance on

compliance with minimum requirements for ice

class, but go beyond this to provide advice on

operational aspects. "We are working with industry participants,

including existing and potential owners of ice-clas

tonnage, national authorities, equipment

manufacturers and research institutes to develop

new services and to formulate meaningful guidance

to help ensure that new opportunities can be taken

advantage of while maintaining the safety of

seafarers, ships, cargo and the environment in icy

and cold operating conditions," he continued.

LR pointed out that ice and cold operation

comprises the confluence of three principal

elements: the ice and cold regime, ship operation

and the ship itself.The ice and cold regime consists of the

prevailing environmental conditions and the ice

management offered by the relevant national

authorities. Environmental information includes

temperature, ice thickness, pressure d

ridging, durati

ICE CLASS TANKER REPORT

Northern Seas

An area rich in oil and gas

In practice, the Northern Sea Route constitutes the

only possible transportation link for oil and gas and

oil transport fro

m the Arctic ports of northeast

Russia, which now amount to nearly 10 million

tonnes per year. The Northern Sea route carries the

largest volume of traffic of any Arctic seaway but the

shallowness of water

between Novaja Zemlja to

the Bering Strait means

that vessels are relatively

small at 20,000dwt. But the

volume of these transports

is expected to grow to 65-

100 million tonnes over the

coming decade, while,

possibly due to the effects

of global warming, the

northwest passage could be

opened up to shipping within the same time frame.

According the Finnish ministry of trade and

industry, gas reserves in the Arctic constitute a

future energy source that can be economically and

technically exploited thanks to the development of

gas liquefying technologies.

Indeed, the shipment of LNG is expected to

increase from the preset 170 billion cubic metres to

550 billion cubic metres in 2020. It is estimated

that in 2020, about 20 million tonnes of LNG will

be transported from the Arctic gas fields of Russia

to the US. But transportation of such a large

olume of gas, for instance from the Yamal

Peninsula, requires about 20 new LNG tankers

with icebreaking capacities.

The Finnish ministry considers co-ordination of

the requirements the most important aspect of oil

and gas transportation in Arctic regions, with ship

speed and reliability being of particular importance.

The speed of a vessel in a convoy led by an

icebreaker is only five to eight knots, w

hile the

objective of LNGC operators is a speed of about 20

knots. In addition to low speed, tim

e is often being

wasted on waiting for icebreaker assistance.

Yet the dynamics of ship operation in these most

challenging of environments is changing - ice-going

vessels are increasing in size and new players are

entering a market hitherto the domain of specialist

ship operators. There is also a dire shortage of

competent crews trained in Arctic ship operation.

Presently, the number of ships built according to

ice-class standards is 262 (4.2 mill dwt) with the

vast majority of which, nearly 80%, under

20,000dwt. Yet the fleet is set to double in both

number and size over the next decade.

By 2020, about 20 mill tonnes of LNG could be tra

nsported out of the Russian Arctic to US

terminals.

2

a TANKEROperator report

Ice Class Tankers

An in-depth survey of the

technical problems facing

Tanker Operators, Managers

and Owners trading in areas

of very low temperatures.

Researched and written by Patrik Wheater

PLEASE SEND TO ME:___ copies of Ice Class Tankers

Reportas electronic file only as bound hardcopy only

Company Details:

Name:

Job Title:

Company:

Address:

Postcode:

Email:

Phone no:

Fax no:

Payment Details: Bank Transfer (we will contact you with our account information)Please invoice my companyI enclose a cheque made out to Digital Ship Ltd.Please charge my credit card

Visa Access MasterCard American Express

Olsen explained.HME offers planned

maintenance according to anowner's requirements. Dependingon the degree of maintenanceachieved while a ship is inoperation, intervals vary betweenone and five years. Definedmaintenance intervals have beendeveloped for the best balancebetween maintenance costs andplant reliability. HME's serviceagreements include: plannedmaintenance, spare partdiscounts, free 24-hour telephoneservice, and priority when serviceis required.

Olsen said: "HME can offer a'plant condition assessment'service which involves the ship's

crew with a skilled serviceengineer in a powerfulsurveillance programme. A plant-specific maintenance plan isdeveloped in collaborationbetween Hamworthy'sengineering department, itsservice department, the ship'screw, and the equipmentmanufacturers.

"Through 'Hamworthy ProcessData Analysis' we will helpprevent systems on board breakingdown, and extend system lifetimes.In the workshop HME willoverhaul compressors, condensersand carry out other major servicejobs, and consumable parts will bestocked ready for urgent delivery,"he explained.

p3-11.qxd 01/12/2006 17:54 Page 6

NEWS

In a move that could beseen as trying to restequipment certificationfrom the class societies,the European MarineEquipment Council(EMEC), whichrepresents more than1,250 companies acrossEurope in the marineequipment sector,welcomed the draft EPTRAN committee reportfrom Luis de GrandesPascual MEP, on theEC's draft classsocieties' directive.

The amendments proposed bythe rapporteur in the TRANCommittee, particularlyamendments 26 and 27, improvethe original text proposed by theEC significantly and contributedto the achievement of the draftdirective's objectives.

It clearly sets the target forrecognised organisations, classrules and regulations, as well astheir implementation, to beprogressively harmonised. Allmarine equipment produced inEurope or installed on shipsclassified by European recognisedorganisations will be based onequivalent high standards in thefuture, EMEC said.

The report said that recognisedorganisations would introducemutual recognition of certificatesbased on equivalent standards. Inorder to do so, they should adoptthe most demanding and rigorousmodels as their reference. Thedraft report foresaw a scenariowhereby all European recognisedorganisations wouldprogressively improve theirstandards for the evaluation ofships and marine equipment. Thiswill contribute to both safety atsea and to the competitiveness ofthe marine equipment industry,resulting in only the mostefficient manufacturers andservice providers succeeding inthis market.

The proposed classificationsocieties' directive is largelybased on a self-regulatory model.With the amendments proposed inthe report, the EC would have thetask of supervising the process ofharmonisation of class rules. Inaddition, should self regulationfail to secure the expected result,it would have the duty ofproposing the appropriatemeasures.

EMEC believed that the reportonce implemented, would greatlybenefit both safety andcompetitiveness. The maritimeequipment industry stronglysupports any measure aimed atenhancing the efficiency ofclassification and, at the sametime, aimed at achieving thehighest possible standards forships and marine equipment, inorder to protect the environmentand life at sea.

The Council therefore urgedthe EP TRAN committee touphold the amendments proposedby the rapporteur and to approvethe EC's proposal.

Speaking about the ‘attack’ onthe class societies’ equipmentcertification a few weeks ago, LRchairman David Moorhousecommented that the penaltiesproposed by the directive of 10%of the total gross turnover fornegligence was totallydisproportionate to the situationshould it arise. The liabilityshould be capped as "it isludicrous to have an unlimitedliability situation, as no insurerwould cover it under thoseconditions," Moorhouse said.

He criticised the EU by sayingthat Brussels was trying to take agreater responsibility than theflag states, that is the IMO."Who will inspect it (theequipment) - one man sitting in amanufacturer's plant with arubber stamp? This is not theway to go as there would still bethe question of liability,"Moorhouse stressed.


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EMEC’s draft classificationsocieties’ directive

p3-11.qxd 01/12/2006 17:54 Page 7

Are we looking fromthe top of a bull cycle?

This was one of the more worrying titles in a presentation made by Philippe Evrard,general manager chartering, CSSA Chartering and Shipping Services,

part of the Total oil group, at Lloyd's List Event’s recent Derivatives conference.

MARKETS


scrapping, will extra tonne-milesor increased storage save theday?" Evrard asked.

Continuing the bearish theme,Rachid Bendriss, head of researchfor Carnegie said that seabornetrade has grown at twice the rateof oil demand for a little whileand this trend will certainlycontinue in 2007.

Bull runGlobal GDP growth is expectedto soften next year and unlike thisyear, no major changes in worldtrade patterns are envisaged in2007. This year saw theChaves/China effect, problems inNigeria, the closure of PrudhoeBay and inventory stocking,which all contributed to the bullrun. By the end of this year, thetonne-miles ratio was expected tohave grown by 6%.

Next year, China is forecast tostart inventories stocking, eitherby using pipelines or by sea.There is also the threat of someconsumers switching from oil tocoal due to the high oil prices. Inaddition, some 32% of today'stotal double hull tanker fleet willbe delivered from 2007 to 2010,while some 28% of the fleet willbe scrapping candidates by 2010simply by being of single hullconstruction.

Utilisation could drop belowthe magic 94% level, while ratescould fall to as low as $20,000per day for a VLCC, Carnegiesaid. However, the wildcards arean increase in FPSO conversionsand uncertainties surrounding the

The general consensus ofopinion from speakersand delegates alike was- YES WE ARE.

However, unfortunately at thesame time, shipowners' coststructures will still continue toincrease. Three reasons weregiven for this continuing rise -1) Ship values will remain

strong given the shipyards' dominant position with long order books, still rising commodity costs (iron, steel, etc) and increasing costs, such as wages.

2) Interest rates look high, but the downside was limited and widely anticipated in the future.

3) Crewing and shoreside management costs were also increasing.

The uncertainty is that forwardcurve for freight earnings looksincreasingly bearish and thetraditional selling bias (lack ofbuying interest againstshipowners' hedging) is only apartial explanation as supply anddemand expectations remainbleak and make a solid case for

pessimism, Evrard said. The 10-year rates are not

currently going up, while there isand will be a challenge to keepcosts constant. "It doesn't looktoo exciting for a buyer," he said."Oil supply demand expectationslook positive, but are theyenough?"

Next year's oil supply increaseis forecast for plus 1.8%, but theshipping supply increase is put atplus 3.7% as more newbuildingscome on stream. "Given thatthere will be not much increase inthe current very low level of

Are the good times over for VLCCs?

p3-11.qxd 01/12/2006 17:54 Page 8

level of inventories. The OECDhas forecast that the level ofinventories will increase to anaverage of 100 days, while therewill be little or no tanker storageto speak of.

In 2007, a level of Worldscale70 will be deemed a good rate asthe price of bunkers wereexpected to fall, so anybody longon Worldscale in paper trades will"get a pounding," as ABNAMRO's Barry Bedner said.

Delegates thought that nextyear, traders will possibly look atthe option of storing oil in hulls,doing deals along the lines of twomonths, plus two optional periodsof one month each. Beforedeciding to store, they will takeinto account interest rates and thepaper rate for the trades.

Next year, we might seeincreased tonne/miles forsuezmax and VLCC tonnage, butaframaxes were expected tosuffer by comparison. "Anaframax is going to be a cheapsuezmax," Evrard thought.Newbuilding resales wereforecast to come off by 10-20%.The $143 mill paid recently for anewbuilding Frontline VLCCcould be a thing of the past.

Although there are less playersin the tanker market than in itsdrybulk counterpart, these playerswere generally thought to bemore professional. However, thederivatives market movers andshakers still consider there is alack of maturity in the tankerindustry. In another 10-15 yearstime, when new faces bring in

new ideas to the boardroom, therewill be a change in the way thatthey structure the market andtheir companies, delegatesthought. "The profit and losscurve needs to be looked at everyday and questioned. Then thecompanies will be okay", onetrader thought.

Meanwhile, IMAREX, theOslo based shipping derivativesmarket and broker, which isinvolved in tanker trades hasjoined the Forward FreightAgreement Brokers' Association(FFABA). The association ismade up of 20 companies whoare members of the BalticExchange and operates within itsframework.

The FFABA promotes bestpractice in the trading of forward

freight agreements (FFAs) andworks closely with the BalticExchange in the production anddevelopment of indices andassessments for use as settlementmechanisms for shippingderivative contracts.

The Baltic Exchange onlycomparatively recentlyintroduced tanker indices basedon certain routes and the numberof routes have already beenexpanded. Others are underdiscussion.

ABN AMRO's Bednar wasrecently appointed as chairman ofthe Baltic Exchange's FreightMarket information Users' Group(FMIUG) tanker section. Hereplaced BP Shipping's BrunoBoulanger who stepped downfollowing an 18-month stint.

MARKETS


TO


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Given that there will be not much increase in the current very low level of scrapping, will extra tonne-miles or increased

storage save the day.

Philippe Evrard,general manager chartering, CSSAChartering and Shipping Services

“

”

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Investors have held ONAV'sstock price slightly below its IPOprice of $17 per share in April,2006, during a time that thebroader NASDAQ indices haverisen by about 5%. In the sametime frame, TNP shares madeimpressive gains on the NYSE,rising to the mid $40's from lowsbelow $35 per share set in lateSpring 2006. Most of the upwardmomentum occurred afterinvestors discovered that tankerrates were rising sharply, in June.

Omega's IPO was uniquewithin the universe of dry,container and tanker companiesthat went to public marketsduring the two years starting inlate 2005. It came to marketduring April, 2006; at a timewhen many observers of the shipfinance scene felt that the IPObubble had deflated. Financialconsiderations, and the strategictanker focus, converged onONAV, resulting in the sale of itsbulk carriers to a third party.

The international nature of itsdual listing reflected the characterof shipping generally, and mappedthe likely pools of individualinvestors. It raised money in boththe US (Nasdaq market), ($148mill), and also in the Singaporemarket ($56 mill)- where theshares issued aggregated $204 millin gross proceeds. Together with abank credit lined up from HSHNordbank (one of the world'slargest ship finance banks- with aportfolio exceeding $20 bill),Omega used its the equity to repaydebt (Seller's notes tied to bulkcarriers that formed its originalbase prior to the IPO and a bankline that was refinanced) and tofund $154.5 mill (of the $294.5mill purchase price) of threevessels- two Ice Class 1Ahandymax products tankers, and

AGreek shippingveteran AnthonyComninos, uncle ofGeorge Kassiotis,

founder of Omega, one of thelisted companies, was recentlyasked "Do you plan to go into thestock markets like so many otherGreek shipowners?" His responsewas: "Going 'public' is not one ofmy priorities since I have alwaysoperated in the framework of aprivate enterprise. The youngergeneration have ampleopportunity to pursue growththrough the public markets."

The younger generation ofGreeks has successfullytransitioned to the listed markets.Among the listed tanker companystocks, Tsakos Energy Navigation(TEN), and Omega Navigation,have attracted the attention ofinvestors in capital markets inEurope, Asia, and now the US.

TEN, founded by the scion of aprivately held Greek company,was listed on the Oslo Exchangein 1993 and on the NYSE in2002; it has been profitable everyyear since, including duringdifficult years such as 2002.Omega, which launched its IPOin mid 2006, has so far declaredtwo dividends during a time thatit has been ramping up its fleet.

The companies have similarities

and differences. Notably, bothtanker specialists have beengaining a foothold in the ice classsector. TEN (New York StockExchange symbol 'TNP') is adiversified company, owning afleet comprised of crude carriers(VLCCs, suezmaxes andaframaxes) and products tankers(LR aframax, panamax, MR-handy and handy). Omega (NYSEsymbol 'ONAV') concentrates onthe products sector. TEN benefitsfrom technical managementprovided by Tsakos Shipping &Trading, tied to the founder'sfamily company, while ONAV hascontracted technical functions to

outside managers- mainly V Ships.

Sector focusOne important adaptation thatlisted companies need to make isin sector focus within the broadershipping industry. Kassiotis'family has operated a diversifiedfleet of ships - tankers, bulkcarriers and, historically, reefervessels. Likewise, NikolasTsakos, TNP chairman, grew up

around a diverse fleet of bulkcarriers, tankers and evencontainerships. Portfolio theorysays that diversification is good,yet, multiple sectors confuse theanalysts- who love to compareapples to apples, stacking onepeer company up against another.

And, from a corporate financeperspective, tankers companies inmultiple sectors have publiclylamented that "the parts are worthmore separately" and have thenended up splitting up intomultiple companies. The bestexamples have come fromTeekay, which broadened beyondtraditional aframaxes and has

now spawned Teekay LNGPartners and is now creatingTeekay Offshore. Another case inpoint is Aries Maritime, a hybrid-with its one foot in the productstanker camp complemented by afleet of smaller (and operationallyproblematical) containerships(Nasdaq:RAMS)- it has faceddifficulties in holding theattention of equities analysts afterits Summer 2005 IPO.

FINANCE


To Float, or not toFloat

Barry Parker examines the case of twoyoung Greek companies that have

benefited from a successful entry into the stock markets.

Going ‘public’ is not one of my priorities since I have always operated in the framework of a

private enterprise. The younger generation have ample opportunity to pursue growth through

the public marketsAnthony Comninos

“

”

p12-15.qxd 01/12/2006 18:04 Page 1

FINANCE


at $24,000 per day, with Omegagetting the next $1,500 (ie up to$25,500 per day rate) and ownerand charterer splitting earningsabove $25,500 per day. CFOGreg McGrath, speaking toTANKEROperator, said that "theprofit splits were based are basedon actual results- both we and thecharterers are carefully checkingresults. We are fortunate that wehave an expert broker on ourboard (MJLF's Bob Flynn) whocan provide a reality check onwhat's happening- particularly ifsub charters are involved."

Though TNP's fleet of 38 ships(as at November 2006), dwarfsthat of ONAV, it too must grapplewith balancing the earningsvisibility that investors craveagainst the ability to participate inthe market's upside. The need tobalance stability and upside iseven more accentuated afterTNP's transformative deal earlierthis year, when it acquired nineice class tankers from Russiantraders Western Petroleum for$530 mill (funded by a mixture ofbank debt and corporate cash). Ina November road show with USinvestors, TNP managementsuggested that 80% of 2007operating ship days were fixedalready, as well as 70% of thosefor 2008. TNP's charter line-upshows a combination of spotemployment, straighttimecharters, and timecharterswith profit sharing arrangementsabove minimum levels.

TNP has been able to meld itssale and purchase and charteringstrategies with the needs of itscharterers, forging closerelationships with oil companies -some of whom want little to dowith shipping. Some 49 % ofshares in companies owning its

three panamax products tankers,previously contracted by relatedcompanies in South Korean yards.

Initial sceptisismThough investors did sign up,Omega needed to overcomeinitial nervousness about itsprospects following the IPO,priced at $17 per share. Initially,it traded down, nearly touching$13 per share in late June. But, asONAV began to take deliveries ofproduct tankers, its fortunesimproved; investors pushed theprices back up to the $15- $16range. At the end of August, theClass 'A' shareholders receivedtheir first $0.50 dividend(declared in late July, with respectto 2Q 2006), with seconddividend, for 3Q 2006, wasdeclared in November.

Following the spate ofdeliveries during July and August,Omega's tanker fleet now consistsof two handysize (36,680 dwtbuilt at STX) products tankers,Ice Classed 1A, and fourpanamax LR1 products carriers(two of 71,500 dwt and two of74,999 dwt built at STX andHyundai during 2003 and 2004).All of the vessels were placed onthree year time charters, expiringin 2009. Waiting in the wings arefour additional 74,000 dwt.panamax Ice Class IA tankers,which are presently on optionfrom the STX yard.

Charters of two and three yeartenor are frequently a necessity toline up financing, particularlywhere a startup is relying onsecured bank financing (wherethe bank's collateral includes thehull, assignment of insurances,and assignment of charters). Theacquisitions of the six tankerswere all funded with IPOproceeds and funding from a newfive year $294 mill credit facilityfrom HSH Nordbank, dividedinto a term loan ($144 mill) and arevolving credit ($150 mill). Thesale of its two bulkerstransformed ONAV into a pureplayer in the very desirableinternational products sector.

In today's world of shipping

equities, cash flow- from periodemployment, and dividends - playan important role in attractinginvestors. Omega hopes to attractyield oriented investors with itsquarterly dividend, "equal to thecash flow from operations lesscash expenses and reserves." TENviews itself as a 'growth company,'paying dividends, albeit steadilyrising along with the availablecash flow, semi-annually. ONAV'ssubordination arrangement isinspired by partnership structuresthat are prevalent in the energyspace but have also crept intoshipping (Teekay LNG Partners,K-Sea Transportation Partners,and US Shipping Partners), wherelimited partners (usually outsideinvestors) are paid prior to insiders(who own the general partners).

ONAV has paid quarterlydividends of $0.50 per share- on12 mill common shares. At thesame time, TNP increased itssemi-annual dividend to $1.25 pershare, on 19.1 mill sharesoutstanding. In the first ninemonths of the year, TNP'sEBITDA (cash flow) was $193mill, versus ONAV's $22.5 mill.Like other list tanker companies,TNP has also engaged in share re-purchases buying in excess of onemillion shares on the open market(buying shares at an average priceof $37 per share that are nowworth $45 per share). As Tsakosacknowledged, "...we don't wantto negatively impact liquidity (thefloat) of shares," and he alludedto ways of increasing share floatsignificantly (a hint, perhaps, ofa stock split, which oftenstimulates activity in sharessuddenly lowered in price). Basedon recent share prices, ONAV isproviding a yield to investors(dividends per share price) of12.9% and TNP providing 5.5%.

The bifurcated structure ofOmega's equity also distinguishedit from other maritime stockissues. Dividends on the owners'shares, issued prior to the IPO,were subordinated to the new'Class A' shares that were sold toNasdaq and Singaporeshareholders. This structure

provided an added incentive toinvestors who may have beenuncomfortable with start-upOmega's pre-IPO high leverage.In practice, the holders of 'ClassB' shares (Omega's founders'families, holding 20.7% ofoutstanding shares) could onlyreceive quarterly dividends afterthe 'Class A' outsiders had firstreceived substantial dividends.

Booming marketsThe booming markets havetreated both companies well; overthe first three quarters of 2006,TNP's average TCE (across avaried fleet) was $30,290 per day,while ONAV, at the smaller endof the tanker size spectrum, sawTCE's of $25,263 per day and$20,596 per day.

Both ONAV and TNP havelistened to their investors (andbankers), who like to see tonnagefixed forward. As a result of thethree year charter terms, 'forwardearnings visibility', an importantmetric for investors, wasmeasured at 100% of operatingdays in 2007 and 2008- all arespoken for. Omega's charterersinclude Norden, which isoperating the two handy icedclass 1A vessels, Omega Princessand Omega Prince (ex: Adonisand Aris, respectively- both built2006). These vessels are on at US$21,000 per day, topped up with aprofit share of 25% of the excessabove $27,000 per day during Jan- April 2007, the three terms canbe extended, at charterer's option,at $24,000 per day. The OmegaQueen and Omega King, the71,500 dwt LR 1 tankers, are onto Torm at a straight $26,500 perday. The two 74,999 dwt., OmegaLady Sarah and Omega LadyMiriam are chartered to Glencore

Omega hopes to attract yieldoriented investors with its

quarterly dividend, “equal to thecash flow from operations less cash expenses and reserves.”

“

”

p12-15.qxd 01/12/2006 18:04 Page 2

had indicated that the vessel pricewas around $66 mill- a numberthat was ratified in the recent 3Qcall. Analysts are estimatingcharter rates on these units atbetween $25,000 and $30,000 perday; Kassiotis mentioned that athree year fixture had recentlybeen done on a similar ship at$30,000 per daily by Litasco, aRussian company, and that shipstrading during the winter season(say on six month timecharter)could earn as much as $40,000per day. He said that thepanamaxes also had the capabilityto participate in clean productstrades - for example takingnaphtha from the MEG to Japan.

Ship finance is a delicate dance- but ONAV is positioned for theoptions exercise should it choose

to do so - based on success innegotiating period charters,"ideally in advance of declaringthe options," according toKassiotis. In ONAV'sconversations with the investors,the key criterion for a decision toexercise the options is whether anaccretive charter would be firmedup- meaning that, when cashflows are sorted out, the earningsper share and cash available tofund distributions to shareholders,will increase as a result of suchcharters. At the end 3Q 2006,Omega had $53 mill ofborrowing capacity underrevolving portion of the HSHNordbank facility (notconsidering debt repayments afterthe bulker sale). In rough numbers- the $132 mill needed topurchase the first two optionvessels could be funded from acombination of approximately$50 mill cash and equivalents ($9mill at end 3Q plus extraproceeds from the bulker sale)and a further drawdown on therevolving credit, where up to $90mill would be available.

panamax products carriers Mayaand Inca (both DH, 68,467 dwt,blt 2003) were sold to Flopec-with a net gain of approximately$25 mill. The sister ship Aztec wasalso sold (100%) to Flopec,achieving a further $25 mill gain.The Ecuadorian oil company, inturn, will be taking the vessels ontimecharters at minimum rates of$15,750/day, with a profit split ontime charter earningsproportionate with shareholdings -above the floor rate. A fourth sistervessel, Andes, has been put onto afive year time charter to Flopec atthe flat rate of $15,750/day. TNPpresentation materials suggest abreakeven of approximately$14,000/day on panamaxes.

Ice class interestOn the ice class front (with 24 iceclasses ships trading or on order),close relations with Finland’s oilcompany Neste Oy, a leadingplayer in moving oil out of theBaltic, have led to charters on twohandy MR product carriers andthree aframax ice class IA vessels,all acquired from WesternPetroleum earlier in 2006. The MRvessels Apollon and Ariadne, puton three year timecharters to Nesteat $21,000/day, with a 50/50 split.The three Aframaxes, Proteas,Promitheas and Propontis, are ontwo year charters at $29,900/day(well above TNP’s approximatebreakeven of around $20,000,therefore highly accretive), with a50/50 split above the base level.

Where investors are keen tolearn about ONAV’s plans for itsoptions, TNP investors have beenmost curious about the TNP’splans for fleet expansion- includingthe disposition of its 15 vessels onorder (following an S & Pprogramme which has seendisposals of non double doubleunits including the handies Cruxand Libra - which resulted in a $13mill book gain, and the panamaxBregen, with an $6 mill gain - tobe booked in 1Q 2007). Anoriginal vessel in TNP’s fleet(when it was called “MaritimeInvestment Fund”) the 1992 builtsingle hulled Vergina II, is now

undergoing a double hullingconversion at a cost of $11 mill.According to the 3Q conferencecall, the vessel could double invalue, to above $40 mill, and TNPis in negotiation with financialinvestors, who would possibly buyit from TNP at a big gain.

According to CFO PaulDurham, the 15 newbuildings onthe books will result in: “$676mill of payments upcoming, mostof which will be ultimately fundedby debt. We have already arrangedfinancing for eight of thenewbuildings at competitive termsand have attractive proposals forthe remainder.” Durham addedthat “We expect delivery of these11 vessels in 2007 on which weshall pay $457 mill.”

In response to a question about

chartering strategies for these 11ships, Tsakos suggested that "weare studying proposals forchartering of the 11 ships beingdelivered to us in 2007". He wenton to suggest that at least halfwould be placed intotimecharters- some with profitsplits. He said that TNP probablywould keep the first twodeliveries (from Hyundai HeavyIndustries), ice capable suezmaxesArctic and Antarctic in the spotmarket, but was looking atcharters for two ice classhandysize products carriersByzantion and Bosporus, as wellas two DNA Design aframaxesslated for mid-2007 deliveriesfrom Sumitomo. The one LNGvessel on order (from Hyundai),named Neo Energy, has been thesubject of considerablespeculation; TNP hinted at plansto charter it for three to five years,with Tsakos saying, "...before theend of year vessel will probablyhave been chartered, accretively.LNG will be more significantfurther in the future...we believein this market..."

In his answer to conference callquestions, Tsakos said that vesselacquisitions being studied are:"...mainly on the newbuilding side.Secondhand tonnage may be athigh prices". When asked abouttanker rates, and their recentcorrection, he said, slightlywhimsically: "we need to put'corrections' in perspective...whatwe consider to be a rate correctionin 2006, driven by developmentsin the oil markets, still results in uslooking at a profitable and verygood market. We have purchasedmany of our vessels for prices thatare half of what they are worthtoday." Tsakos went on to stressthe strong appetite of oilcompanies to take vessels on longperiod, and said that "this appetitehas strengthened in the last three

months." Yet, between the linesand beyond LNG, there is talk ofdiversification further into energy;at its New York roadshow, Tsakosmentioned that TNP had beennegotiating on an FPSOconversion project alongside an oilmajor.

Investors and analysts areclosely following Omega'soptions on four panamax IceClass (1A) tankers underconstruction at the STX yard. Inits mid-November conferencecall, ceo McGrath suggested thathalf of the proceeds of the bulkcarrier sale would go towardsdebt reduction, with theremainder feeding the corporatetreasury. The upshot was asuggestion that Omega could useits internal resources (bolsteredby more than $40 mill of extrasales proceeds, after debtrepayment) to comfortably fundthe equity portion of at least twooption exercises, the first ofwhich would need to be declaredin late November (four monthsprior to delivery from STX). Inearly conference calls, Kassiotis

FINANCE


We have already arranged financing for eight of the newbuildings at competitive terms

Paul Durham, TNP CFO

“ ”

TO

p12-15.qxd 01/12/2006 18:04 Page 3

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p12-15.qxd 01/12/2006 18:04 Page 4

has been causing confusion andresentment ever since.

At first glance, this requirementmakes sound sense but it overlooksthe important fact that not allmaintenance contractors arecowboys. In fact some of themhave more technical expertise andexperience than the boatmanufacturers themselves andhave developed close and efficientworking relationships with shipoperators over many years. Indenying shipowners the freedom touse such contractors, the IMO hascreated an opportunity for mini-monopolies that enable lifeboatmanufacturers to control theavailability, pricing and efficiencyof the maintenance services neededfor a ship. What happens if amanufacturer's representative is notavailable when a ship needs itslifeboats maintained? Whathappens if an approved agent has acommercial dispute with amanufacturer and loses itsendorsement? What happens if anapproved agent breaks away fromthe manufacturer and starts toundercut its charges? Suchquestions indicate a potential foracrimony that this important topicdoes not need.

Some lifeboat manufacturershave been going around tellingshipowners that the changes toMSC 1206 mean that they mustnow use them to conduct theirlifeboat maintenance whetherthey like it or not. In many casesthis may not be a bad thing as theneed for proper maintenanceremains and although reputableoperators will want to followSOLAS amendments to the lettertheir commercial instincts mayalso be reassured by knowing that

But it has taken manydeaths and injuries tofocus the eyes of theIMO and the flag

states onto lifeboat operations. Theresult has been the IMO's newMaritime Safety Circularspublished on 1st July stipulatinghow lifeboats should be maintainedand operated and their users trained.When these MSCs are adopted byrelevant flag state administrationsthey will become laws that tankeroperators must obey.

Seemingly countless studiesand reports have concluded thatthe lifeboats sitting benignly onyour tanker could be killers inwaiting. Swinging a heavy boatfull of people out over the side ofa ship and then lowering it aconsiderable distance into whatmay be an inhospitable sea ispossibly one of the mostprecarious things seafarers can doduring their careers. Similarly,sitting a dozen or more people inan enclosed boat and allowing itto drop freely into the sea from aconsiderable height is the sort offairground experience that peoplepay good money for on land.

The incorrect functioning of thelaunch mechanism, whether free-fall or davit can have fatalconsequences. This might becaused by poor crew training orcomponent failure due toinadequate maintenance. Whateverthe reason, it can have disastrousconsequences yet an element of theshipowning community haspersisted in treating its lifeboats aslow priority accessories thatimpede their pursuit of profit. Thechanges to SOLAS now compel allshipowners to train their crews andmaintain their lifeboats in a

systematic and competent mannerand to do their utmost to ensurethat lifeboats are available forsaving lives instead of taking them.

Maintenance disputeUnfortunately one of the firstconsequences of MSC 1206 hasbeen a dispute about who shouldbe allowed to carry-out themaintenance. Lifeboatmanufacturers have been saying,with some justification, that theydesign their boats to be safe,manufacture them carefully, install

them on board a shipprofessionally and then hearnothing more until they areinvolved in an accident. Thelifeboat manufacturers argue thatshipowners are employingmaintenance contractors who lackthe technical knowhow needed toservice their lifeboats correctly.They consequently persuaded theIMO that lifeboat maintenanceshould only be performed by theboat's manufacturer or by someoneapproved by it. This stipulationwas written into MSC 1206 and

REGULATIONS


Lifeboat accidentsaddressed, or are they?

After years of indifference and neglect, lifeboats are finally being given their15 minutes of fame, comments Paul Easthaugh.

A frightening scenario

p16-18.qxd 01/12/2006 18:05 Page 1

REGULATIONS


load release hooks, whilesatisfying the current regulations,may be inherently unsafe andtherefore not fit for purpose….We consider that the solution liesnot in training or maintenance,but in radical re-design of thehook types involved.' Taking thisopinion to its logical conclusion,it would appear that the world'sfleet needs to replace the releasehook mechanisms on nearly alldavit-launched lifeboats.

Predictably, many lifeboatmanufacturers dispute this and

they are not legally binding - atleast, not until they have beenformally adopted by their ships'flag states. Because many flagstates adopt IMO circulars as theystand - presumably assuming thatthe wise elders on the Londonembankment are infallible - theirshipowners will have to live withthe consequences. However, until

that happens the owner retains hiscommercial freedom of choice.

UK flagged ships, at least, canexpect to benefit from a soliddose of common sense thanks tothe Maritime and CoastguardAgency (MCA) putting its ownspin on the IMO's diktat. This hasbecome apparent in MSN 1803,which introduces a provision forthe MCA to approve ILSTOs(Independent Lifeboat Servicingand Testing Organisations) thatship operators can use if they donot wish to do business with thelifeboat manufacturer. ILSTOswill have to satisfy the MCA thatthey have the technicalknowledge and experience towork on the lifeboats while alsooperating an effective trainingprogramme.

One of the first companies tobenefit from these changes isAberdeen-based Survival CraftInspectorate (SCI), which is inthe unusual position of being botha lifeboat manufacturer and amaintenance contractor. Itsproducts include a range of openand enclosed lifeboats, fast rescueboats and the successful SC59FF

free fall lifeboat. However,around 50% of the company'srevenue comes from the safetymaintenance services that it hasbeen providing to major ship andoffshore platform operators forover 15 years.

IMO questionedIn that time, SCI engineersencountered a range of technicalhorrors that took them to thesame conclusion as the authors ofa newly published report.Commissioned by the MCA from

Jim Peachey and Simon Pollardof Burness Corlett Three Quaysconsultancy, the report nowquestions the basic premisebehind the IMO's SOLASamendments. After a detailedanalysis of lifeboat accidents itconcludes that while correctlifeboat maintenance is essential,the fundamental problemresponsible for the majority offatal accidents is a weakness inthe design of on-load releasemechanisms. It states; 'This studyhas found that many existing on-

A launch mechanismmalfunction can have fatalconsequences

p16-18.qxd 01/12/2006 18:05 Page 2

they realise that their budget isinadequate for their needs. Thiscan be exacerbated when theyalso encounter additional costsfor the signage needed to identifythe location of the suits.

"I think that the safety industryhas been surprised how manyowners are leaving complianceright to the bitter end," saidBillington. "Nobody ever wants tospend money before they have tobut if owners wait too long beforeordering they could have troublefinding a reputable manufacturerable to deliver in time for thesurvey. The owner could then befaced with either paying over theodds or turning to some of the lessreputable suppliers that havesprung up. In fact, we are alreadyseeing some ship operators havingto re-equip with better quality suits as those they bought frombargain suppliers have proveddefective. Poor quality zips canrender a suit useless and the lackof an established service networkcan leave the owner with no option than to spend the money allover again."

Delaying the purchase ofimmersion suits might appease the accountants but it will notbenefit a crew that is forced toabandon before a ships next safetysurvey. For this reason crewsshould have their immersion suitsnow because they might needthem tomorrow.

Some ship operatorshave failed to appreciatethe significance ofimmersion suitlegislation and aredawdling aboutcompliance. However,they will not becontravening the newSOLAS regulation aslong as they equip theirships before their nextsafety survey.Irrespective of the legal niceties,ship operators delaying theintroduction of immersion suitsmight be accused of neglecting anopportunity to protect theiremployees. Nobody can predictwhen a crew might be forced toabandon ship and if it happensbefore immersion suits have beenprovided, lives could be lost.

It is hard to over estimate theimportance of immersion suits asa live saving device. In the past,if seafarers had the misfortune tofind themselves in the water forany length of time it is unlikelythat they would have beenrecovered alive. When the humanbody is immersed in water itscore temperature ultimatelybecomes the same as that of thesurrounding water. Laboratoryexperiments have shown that incold water even Olympicswimmers become weak andhelpless and mortality hasnothing to do with competence in

the water as it is simply aquestion of physics. The rate atwhich body cools and deathoccurs depends upon the watertemperature so at higher latitudesit can happen in just a fewminutes, even in summer. Intropical waters it might nothappen at all.

When someone is wearing animmersion suit, heat loss isdramatically reduced, if notstopped altogether. The rate ofbody heat loss will depend uponthe thickness and quality of thesuit and in the case of the SOLASstandard specified for commercialshipping, insulation should bemaintained for a considerabletime. This will, again, dependupon the water temperature but ifthe victim is also wearing alifejacket, in many latitudes hecould theoretically remainfloating until hunger anddehydration take him.

If ships are operatingexclusively in tropical latitudes,established manufacturers such asInternational Safety Products cansupply suits with minimalinsulation. These are lighter andless bulky and provide theappropriate degree of protectionfor the relatively warmer waters.

Immersion suits are importanteven if the wearer never gets wet.If a crew is forced to abandonship and successfully launches itslifeboats, their chances of

survival improve dramatically.Modern enclosed lifeboatsprovide excellent protection butthey can get cold and in highlatitudes which is life threatening.Wearing an immersion suit willmean the difference betweencomparative comfort and teethchattering misery.

Worse situationIf a ship goes down and the crewtakes to the liferafts, the situationbecomes infinitely worse.Disregarding the extremediscomfort in rough seas and theirhelpless vulnerability to onshorewinds, the majority of people in aliferaft will be wet and highlyvulnerable to hypothermia. It istherefore fair to point out that theship operator has the power toprevent this happening by providingimmersion suits immediately.

Some suit manufacturers arepredicting that owners couldexperience problems if suitordering is left to the last minutewhen deliveries may not bepossible in time. Although theregulations specify the need forone suit per crew member, GeoffBillington, sales and marketingdirector at International SafetyProducts, told TANKEROperatorthat some administrations alsospecify additional suits whenliferafts are in remote locations.This has apparently taken someship operators by surprise when

REGULATIONS


TO

Taking the plunge with immersion suits

where such lifeboats are in use,every operator will now have toconsider its policy towardslifeboat safety. This may involvea reappraisal of maintenanceroutines as well as the possiblereplacement of its release hooks.Whichever course is chosen, therewill, at least, be some seafarersand their families who will havecause to be grateful that lifeboatshave finally been given theattention they deserve and thatthe numbers of lives needlesslylost will start to decline.

insist that poor maintenance is theroot cause. SCI, however, havingreached the same conclusion asthe report some four or five yearsearlier, took the initiative andaddressed the problem bydeveloping the SafeLaunch on-load hook. SCI rejected thedesign principle of the originalMills hook which is used in mostreleases and introduced a newcam mechanism along with arange of unique features.

These include an indicatorvisible from outside the boat that

shows the status of the releasecams. This means that if vibrationor ship movement has caused acam to shift so that it could beliable to release of its ownaccord, the lifeboat crew willknow not to enter the boat. Inaddition, SafeLaunch features asafety pin that is issued when theboat is being serviced or used fordrills. With the pin inserted thehook cannot accidentally openand safety is assured. By alsoeliminating materials that couldbe vulnerable to corrosion the

company believes that it hasdeveloped a product that ensuresthe safety of seafarers regardlessof how diligently they maintaintheir lifeboats. Over 700SafeLaunch systems are alreadyin use around the world by shipoperators who have recognisedthe need for change withoutwaiting to be told by the IMO.

The tanker industry is probablyfortunate in that the increasinguse of free-fall lifeboats avoidsthe problems associated withdavit-launched boats. However, TO

p16-18.qxd 01/12/2006 18:05 Page 3

INDUSTRY PROFILE - NOVOSHIP


Novoship group unified qualityand safety management system. Ithas served us well in the capacitywe have adapted it to. We monitorall new regulatory and legislativeregulations as they are announcedand we have a procedure forformulating a response, trainingpeople as necessary andimplementing the necessaryrevised or new procedures aheadof the stated deadline."

Russian trainedGroup seafarers are trained at theNovorossiysk State MarineAcademy, where the officersreceive the basic training forSTCW certificate of competency(1978 as amended) and at theNovoship Training Centre, wherethe ratings receive the basictraining for STCW. Both officersand ratings receive regularrefresher training, in compliancewith STCW. Additional trainingover and above STCW isprovided at the centre and onboard ship, as is specialist iceclass training for senior officers.

Novoship crews its managedfleets entirely with officers andseafarers from the former SovietUnion. Russian navigating,engineering and electrical cadetsplus trainee ratings are sponsoredon a regular and ongoing basis.

Vladimir Lebedev, generalmanager for Novoship (UK)concluded, "With all of theabove-mentioned plans andstrategies, whether in stages ofconception or accomplishment,the Novoship group holds onemain focus, which is the totalcommitment to providing clientswith bespoke and innovativeshipmanagement services to thehighest caliber".

Today, Novoship'scombined fleet totals62 vessels with anaverage age of 10.6

years and a total deadweight of3.80 mill tonnes. The average ageof the tanker fleet is 9.2 years. Ofthese, the London office manages34, while the Russian office locatedat Novorossiysk, manages 28.

At the end of September,Novoship signed a contract forfour more aframax productscarriers of 112,000 dwt, as part ofthe company's large fleet renewaland expansion programme, whichin addition to the above includes -two aframaxes at 105,000 dwt,four 115,000 dwt aframaxes andsix 156,000 dwt suezmaxes. Theyare all crude oil tankers. Inaddition, Novoship has on ordertwo other 40,000 dwt tankers.This amounts to an order book of18 vessels booked at SouthKorean and Chinese shipyardsand planned for delivery over thenext four years.

Valeriy K Temezhnikov, seniordeputy general manager, who isresponsible for this largenewbuilding programme said,"The requirements and highstandards of Novoship's projectsdepartment based in London, arerecognised by shipbuildersworldwide." He added, "Theprojects department is innovativeand consistently looking atdeveloping new technologies. Itworks closely with shipyards, andpioneered the electric driven deepwell cargo oil pumps forhandysize tankers and 'ON-LAND' building for aframaxtankers at HHI Offshore division.

"The latest proposal for the112,000 dwt aframax productstankers is - four cargo

segregations and a new combinedinert gas system, which hasgenerated great interest withHyundai specialists", he claimed.

In Novoship's opinion, there isno optimum size of tanker forsuch a diverse business as oiltransport. The company’s stanceon Ice Class tankers is that it is aniche market, which is adequatelycovered. Vice president, VladimirOskirko explained; "Novoship isafraid of overcapacity, which mayarise in the future due to manyorders being of a speculativenature (re-sales)."

To cope with the fleetexpansion and renewalprogramme, as well as itsmanagement goals, Novoshiprelies on an onshore team, whichincludes - technical management(based both in the UK andRussia); chartering; operations;projects; third party crewing;purchasing and safety,environmental, quality andsecurity (SEQS) departments. Thecompany was adamant that thirdparty shipmanagement concernswill not be used to manage any ofNovoship-controlled vessels.

The company said that itschartering policy is roughly 50/50split between spot andtimecharters, which gives thecompany greater flexibility to

respond to the market. Alsoincluded in Novoship's portfolioare LPG carriers.

Novoship is in the middle ofexpanding its third partymanagement services. StephenGollar, who is responsible forNovoship's third party team in theLondon office said, "Novoshiphas provided third partymanagement services to a numberof clients for many years.Initially, we focused on technicaland crew management. However,recently Novoship has taken onmore third party responsibilities,including commercialmanagement and post fixtureoperations, with plans tointroduce newbuild supervisionand consultancy functions in thenear future, thus creating a 'onestop' solution for our clients."

The Russian and UK SEQSdepartments are currently beingcombined to gain the mosteffective approach. Novoshipcompleted and submitted its firstTanker Management Self-Assessment (TMSA) audit inMarch 2005. Since then, it hasbeen updated several times.George Milburn, head at SEQS inNovoship's London office said:"Novoship are totally satisfiedwith their 90% plus compliancewith the OCIMF guidelines andhave further developed theTMSA for use as a gap analysistool to measure compliance withquality and safety standards, suchas ISO 14001, ISO 2001,OQSAS18001, the GreenFoundation certification, as wellas ISM systems."

He continued, "In addition tothis, we modified the use ofTMSA as a gap analysis tool tomonitor our building of a

Russian shipowninggiant in expansive mood

JSC Novoship and its subsidiary Novoship (UK) is a major shipowning/managementcompany, providing a variety of services to an ever changing and growing market.

Novoship has invested in moreaframaxes.

TO

p19-21.qxd 01/12/2006 18:10 Page 1

The advantage for an associatemember, is that it will give thecompany an opportunity to betterknow InterManager's members,who represent a large proportionof their clientel. "So, for a mere$2,200 per year, an associatemember can be associated withan exciting venture that willbenefit the whole industry, anddraw substantial benefits to theassociation with us. I would alsolike to add that two seats arereserved to associate memberson our executive committee",Stene said.

As for co-operation with otherorganisations, such as Intertanko -already an associate member - theanswer was an emphatic - YES."When we find out that someissues justify a common attitude,we will co-operate with associatemembers," he said.

One of the major tasks thatRajaish Bajpaee took on during histenure as president was looking atdeveloping key performanceindicators (KPIs). Stene assertedthat the KPI project is one of manyactivities that the organisationintends to introduce. "There aremany issues facing our industry,related to crew supply, quality

issues, regulatory issues, and soon. We are excited by the KPIproject because it is an efforttowards self-regulation: it willtherefore contribute to improve ourindustry and its image," Stene said.

He explained that the project will

Gone are the dayswhen InterManagerwas seen as an elitecartel of just a few of

the world's top shipmanagementcompanies where members had toadhere to a code of conduct tojoin. Today it is an organisation of54 full and associate members andthis number is set to rise.

A new secretariat is being setup under the leadership of formerISMA president, MC Shippingpresident and V Ships vicepresident Guy Morel who takesup the full time post of generalsecretary on 1st January nextyear, taking over from StephenChapman.

Former ISMA/InterManagerpresident - Eurasia's RajaishBajpaee - has also stepped downafter three years in the chair andhas been replaced by AboitizJebsens' managing director OleStene. Two vice presidents havealso been appointed - Hanseatic'sAndreas Droussiotis and BarberShip Management's GeirSekkesaeter.

In addition, the executivecommittee has grown from 10 to

17 members. The enlargedcommittee now comprises 13 fullshipmanagers, two crewingmanagers and two associatemembers.

Ole Stene outlined his aims forthe future. He said that his firstgoal is to increase themembership as fast as possible toa size, which is trulyrepresentative of the industry."The strength of our associationmostly resides in itsrepresentativeness, therefore inthe number of our members. Ourassociation is open to allpeople/firms involved in qualityship operations - shipowners andshipmanagers together."

He explained that InterManagerwas also open to all professionsdealing with shipowners/managers, mainly suppliers,service companies, brokers,international associations andregulators. "We encourage themto join as associate members",

Stene explained. While no specific market

analysis had been undertaken,Stene said he reckoned that thenumber of 'potential members' ofInterManager is as high as 1,000."Today we have 54 members andwe are lucky to have, inparticular, many of the largestfirms. But I have the ambition togrow this number substantially,and to welcome all potentialmembers, big or small, owners ormanagers," he said.

Although Stene said that hehad no specific optimum numberin mind, he would be satisfied if,at the end of his two-year term aspresident, the membershipnumber had grown to three digits.

He explained the association'sstance on associated members bysaying; "By definition, they areassociated with our members, andare facing the same issues andconcerns. By enablingInterManager to speak on behalfof a large number of associatedgroups, we will increase the

weight of our statements in theWorld's forums.

"For our members, theopportunity to mingle with theirbusiness counterparts and tojointly analyse the issues, isgreat," he explained.

INDUSTRY PROFILE - INTERMANAGER


The strength of our associationmostly resides in its

representativenes

Incoming president Ole Stene

“”

InterManager entersa new era

Shipmanagement associationInterManager is fast becoming a far cry

from its predecessor ISMA.

Incoming president Ole Stene plans to increase membership

p19-21.qxd 01/12/2006 18:10 Page 2

INDUSTRY PROFILE - INTERMANAGER


on specific roles and tasks, head upworking groups, etc. Stene said:"The best way to analyse and solvethe issues facing our industry is byhaving the world's experts arounda table. We are organised incommittees and sub-committeesthat are assigned specific tasks ofanalysis and solution proposals."He concluded.

expand over several years. Theproposed project will not defineKPIs out of the blue, but willisolate criteria for the definition andmeasurement of KPIs that willestablish an unquestioned standardin the industry . This approach will solve the criticism, which isoften made that KPIs areuncomparable because they are nota consistent measure.

Stene explained thatInterManager is associated with theproject, but not leading the initiativeand as such does not receive anyfunding much of which is beingprovided by the NorwegianResearch Council (NRC) to thetune of NOK10 mill ($1.6 mill).Additional funding is also beingsought from other sources, as wellas some of the members.

MARINTEC and theUniversity of Trondheim will bethe main driving force behind theproject and will take over theday-to-day project management.But InterManager and itsmembers will contribute activelyto the development of the project.

As for the secretariat, Stenesaid that Guy Morel had beenhired as a full time generalsecretary. He will also have theresources to hire an assistant.Morel will run the day-to-daybusiness of the association, andwill be a driving force incommunicating the message tothe rest of the World. "Guy is

based in Monaco, where he willopen a representative office ofInterManager. We are alsoconsidering opening an additionalrepresentative office inSingapore," Stene said.

Stene explained thatInterManager is a non-for-profitassociation whose membershipfees are calculated so as to simply

spread the expenses equally, whichare generated by its activities. "Wehope that the increasedmembership size will generatesufficient fees to not require a feeincrease", he said. InterManagerhas also put mechanisms in placeto face situations of any revenueshortage.

Certain members already take

Guy Morel is returning to the fold

TO

p19-21.qxd 01/12/2006 18:11 Page 3

tankers. Videotel's most recent

programme is for putative ship'senvironmental officers, providingthem with an understanding ofinternational law, as well as thepractical aspects of everydayenvironmental practice. Thecourse is designed for self-learning, and comes on a CD-ROM divided into 10 modules,with individual test papers foreach module and a final overallcourse examination. It isdesigned to take the officer 40hours to complete, although thiscan be extended by projectassignments to be undertakenwithin the course structure.

The Philippine Government'stask force said the siphoning ofthe remaining oil from the sunkenSolar 1 off Guimaras may start inDecember or January when thereare no scheduled typhoons duringthat period.

Experts need at least 30 to 45days to complete the siphoningprocess. Authorities could not sayhow much oil is remaining in themotor tanker, which carried twomillion litres of oil before it sankin bad weather.

The cost of the siphoning willbe shouldered by the IOPC.Government officials earlier saidthe Philippine Government wouldbe forced to cover the siphoningcost if the IOPC refuses to paythe expenses. It is estimated thatthe siphoning process will costbetween $8 mill and $10 mill. Thetotal cost to the P&I Club couldbe as high as $30 mill.

The 2,128 dwt tankersank off Guimarasprovince in thePhilippines, on 11th

August this year, with twomembers of the crew missing,presumed dead. It was said thatoil seeping from the cargo tanks,had damaged the fishing andtourist industries, and affected thelives of more than 41,000 peoplealong the coastline.

The vessel is still lying in 630m of water, with what remains ofthe cargo of 2,000 cu m ofintermediate fuel oil. A surveyusing a Remotely OperatedVehicle (ROV) was carried outfor the International TankerOwners Pollution Federation(ITOPF), in order to locate thewreck and determine itscondition.

It was Alexander Pope, in 1709,who wrote, 'A little learning is adangerous thing...' For thecaptain of the Solar 1, thatcertainly appears to be true. Theboard said of Captain NorbertoAguro, that he had a 'disablinglack of adequate training.' Hisqualifications appear to have beena pilot's certificate for chemicaltankers, which lapsed in 2002,and he has never possessed amaster mariner's certificate for oil tankers.

Intertanko has recognised thatit must act to improve thispicture, and has launched its'Poseidon Challenge' publication,one plank of which is educationand training. Writing in thepublication on behalf of theeducators, Bill O'Neil, former

IMO secretary-general said,'Education needs, in addition toformal instruction, to keepseafarers abreast of technologicalchanges, ashore and afloat.Emphasise the priority given tothe human element and to theirskills with continuous educationand training.'

Two UK education and trainingcompanies supporting thePoseidon Challenge areSeamanship International, andVideotel Marine. Bothcompanies work towards traineesachieving STCW levelassessments, and use a variety oftraining methods that includevideo, DVD, VCD, CD-ROM,and Web-based programmes.

In an unattributed paperpublished earlier this year bySeamanship International, theauthor argued that although earlycomputer-based training (CBT)had not proved effective, changesin technology now ensure that theinformation a modern seafarerneeds can be achieved throughthis method. It is not just thetechniques of CBT that haveimproved, so too has theunderstanding of training. Itdescribed first and even secondgeneration CBT as, '...oftenlargely dull, un-engaging andirrelevant...'

The experience of SeamanshipInternational leads it to believe,'...that in the modern computerliterate age, where many youngseafarers are more at home with aGame Boy than a book, it is quitepossible to make relevant trainingmaterials that do not bore, that

are in a non-threatening way ableto test and suggest remedialactions that neither offend noravoid issues.' It suggests that byaltering the delivery or depth ofthe message it is also possible toengage the older and moreexperienced seafarer.

Concern is expressed by theauthor that many current CBTprogrammes do not distinguishbetween the requirements ofdifferent ranks, the specific needsof deckhands, and those withlimited English language ability.Providers should also recognise.'...that putting one or two visible'foreign' faces into a CBT packagedoes not make it multicultural. Itcan look very 'white' and is moreoften than not patronising.'

The author offers a finalmessage to shipowners andtraining providers. Make sure it'sinteresting and relevant totrainee's needs. Keep it snappy,it's better to have several shortmodules than one large one.Don't be patronising, over-complicated, or make itimpossible. Make sure the resultsare useful and usable.

Despite the growth in CBTprogrammes, Seamanshipretained a belief in printedmaterial. Newly published in Junethis year were two pocket safetyguides aimed at new cadetofficers and all deck seamen,especially those whose firstlanguage is not English. Theguides, issued under a jointimprint with WitherbysPublishing, are for those workingon either oil tankers, or chemical

MANNING AND TRAINING


A little bit ofknowledge...

According to a preliminary report from the Special Board of Marine Inquiryinvestigating the circumstances surrounding the sinking of the small tanker Solar 1*, thecause has been attributed to the 'incompetence' of the captain, and overloading which led

to the vessel's instability, writes Brian Warshaw.

TO

p22-26.qxd 07/12/2006 13:04 Page 1



mariners wanting to take on global officer roles.New legislation, such as the European Union's ship source pollution directive which criminalises negligence, is acting as a deterrent to those thinking of joining the industry and causing some to leave.As today's vessels become more complex and technically advanced, the skills and knowledge required to manage them need to grow accordingly.

Steve Allum, chairman of AonGlobal Marine, said: "Unlessshipowners, managers andcharterers take further action, theoutlook for the maritime industryis not good. With dilutedexperience and training amongcrews, the possibility of humanerror is significantly higher andwill inevitably lead to increasedincidents and accidents.

"Technology alone cannot beexpected to replace the loss ofskilled crew in, for example,navigating congested shippinglanes. The inevitable consequencewould be a higher cost of risk.Crew employment, training andretention policies may wellbecome part of the keyparameters which underwritersuse to establish insurance

The dwindling pool ofskilled officers in themarine industry couldresult in increasing

claims and higher premiums inthe long term, according to theleading insurance broker Aon.Marine operators need to combatthe skills shortfall through moreeffective recruitment andretention plans to ensure future

officers are fully equipped tohandle technological advancesand new trading patterns, thuspreventing claims as a result

of human error.While the shipping industry

continues to boom and thenumber of vessels is increasingyear on year, employee numbersare keeping pace. Despite a

surplus of ratings, there is anestimated shortage of around10,000 officers or about 2% ofthe total workforce, according to

the 2005 BIMCO/ISF report.With a predicted shortfall of some27,000 officers, or just fewer than6% of the total workforce, by theyear 2015, the problem couldescalate to the point whereshipping companies will have toface real operational difficulties.Furthermore, while the globalshipyard order book stands ataround 5,000 ships with a further800 vessels under construction, itis clear the industry is facing amajor challenge.

For the industry to address thisissue successfully, it must combatthe factors that are causing theskills shortage:

An ageing officer population with 50% over 40 years old.The notion that seafaring is an unsafe line of work with the threat of piracy and officer kidnapping.The shift of labour from US, Europe, Japan and other OECD countries to eastern Europe and Asia means that the lack of international experienceand cultural/ language skills are posing serious barriers to

warsash

Looming skills shortage - an insurance nightmare

Shortage of skilled officers will lead tomore insurance claims due to human error,

says a leading insurance broker.

Skills shortfall could lead to increasing insurance premiums.

p22-26.qxd 07/12/2006 13:10 Page 2

(Fla), also installed the system. "We purchased the SAfeCargo

simulators from MPRI primarily fortheir ease of use by both thestudents and the instructors," saidCraig Dalton, captain,Massachusetts Maritime Academy."The high quality of programmodeling and cost efficiency ofSAfeCargo have added to theschool's overall success in training."

SAfeCargo is a PC-basedsimulator designed to provide real-time training in all aspects ofhandling bulk liquids and gases,both onshore and afloat. Thesystem simulates thethermodynamic and fluid propertiesof liquids and gases on boardvessels and shore-based facilities.

"The leading edge trainingimprovements provided by thesimulator are essential to ourpremier training programme andwill allow us to fully assess ourstudents' comprehension," saidGreg Musk, lecturer, RTM STARCentre. "Our students learn tohandle any liquid typically foundon a commercial vessel - all in anon-hazardous environment."

The graphics displayed onSAfeCargo's typical multi-monitorconfiguration for the students andinstructors represent actual control systems found on real vessels. Witha vast model library, all on boardoperations can be conducted andpracticed, including cargo planningand tank preparation, cargoloading/unloading/heating and useof compressors; automatic andmanual gas detection facilities; andsupply of gas to boilers whereapplicable, together with fullyintegrated stress and stability.

US-based MPRI, a globalleader in maritimesimulator products,services and turnkeytraining facilities, recentsold its SAfeCargo LiquidCargo HandlingSimulators (LCHS) tosome of the world's topmaritime academies,including the first threeto facilities in the US.SAfeCargo simulators have beeninstalled in the MassachusettsMaritime Academy in BuzzardsBay, the State University of NewYork Maritime Academy in theBronx and Belgium-based AntwerpMaritime Academy. Last month, theRTM STAR Centre in Dania Beach



Several SAfeCargo simulators have been installed in trainingcentres worldwide.

TO

Liquid cargo handlingsimulators’ success

Freephone0800 005 [email protected]

MA Maritime PolicyMBA Maritime ManagementMA Maritime History

Located in the historic setting of the Old Royal NavalCollege, the Greenwich Maritime Institute offers afirst-class environment for maritime professionals togain higher qualifications. Master mariners, ships’officers, marine surveyors, managers and trade unionofficials are among those who have been awardedhigher degrees at Greenwich.

Applications are welcomed from those withappropriate professional qualifications or a good firstdegree.

knowledge but have the appropriate management skills.Establish more comprehensive ongoing and recorded training and development to underpin professionalism of industry.Work towards a comprehensive succession planning process.Take action to retain staff looking at pay, work/life balance, career pathing etc.

Nicola Mindell, director ofWater for Fish, commented: "Asexternal factors such asgovernment legislation arebeyond the control of shippingcompanies, it means that they need to take responsibilityfor what they can control - the quality of their ownemployees. Mariners mustensure they have acomprehensive and sufficientlybroad retention and recruitmentstrategy to keep and bring inexperienced officers but alsofocus on those who have thepotential to develop."

premium for marine operators."

Water for Fish, a leadingpeople and organisationconsultancy and an Aoncompany, identified howshipping companies can addressskill shortages:

Recruit mariners or identify their own ratings with the potential to develop.Introduce a more rigorous selection process for fast track scheme candidates.Look to new labour centres such as eastern Europe, India and China for skilled officers.Liaise with international maritime training institutions to attract graduates.Conduct stimulating recruitment campaigns - focusing on the positives such as the International Labour Organisation's strict new rules on working hours - to attract people outside the industry who may initially lack technical TO

p22-26.qxd 07/12/2006 13:10 Page 3

Better Qualified Seafarers?every seafarer worldwide will beable to open the correct windowand enquire about facts regardingany maritime subject, how totackle it, how to address it andhow to prepare the most suitableanswer in the on board workinglanguage.

Zellmer emphasised thatHoneycomb was a pilot project,by which the team will prove thatsuch an electronic basedcomprehensive collaborativemaritime knowledge and trainingsystem is feasible.

He said it could workeffectively providing acommercial partner, such as ashipping company, authority,international labour movementand/or shipping federation, IMOor elsewhere could realise thevalue of the pilot project anddevelop it further by investingthe necessary capital.

A two year projectaimed at finding newmethods of meeting thedemand for betterqualified seafarers wasunveiled in London atthe beginning ofNovember.Called Knowledge ManagementSystem, known simply asHoneycomb, a pilot scheme hasbeen introduced under theauspices of the Latvian NationalAgency, which is sponsored bythe EU's Leonardo da Vinciprogramme.

This scheme has beendeveloped to allow people,especially the younger generationinvolved in training, employmentor business, to master theireducation rather than beoverwhelmed by the everincreasing pace of technologicaland industrial change.

Few seafarers spend longerthan five years at sea beforeswitching to a shore job.Questions have been askedwhether this is long enough togain sufficient experience of lifeat sea and how can the industryprovide trainees and teachersalike with better access tolearning material?

Five countries have put timeand effort into this project. Theseare Cyprus, Germany, Latvia,Netherlands and the UK. Thesystem being piloted aims tocapture most if not all of thedifferent kinds of informationexisting in the maritimeprofession. The partners claimthat it is easy for seafarers tocapture, store and disseminateinformation.

The knowledge stored isaccessible to search parametersand operates in the same manner

as the human brain - that is it willcollate, organise, store andretrieve information in a fast andeffective manner, the partnersclaimed.

Project chairman Uwe Zellmerexplained that the objective ofthe pilot project was to developa tool, which can be madeavailable at any time and placeto process a specific maritimerelated subject, a procedure,regulation, or even a correctterm, as well as any legal aspect,or training field through instantaccess via electroniccommunication.

The preparation of andpresentation of documentation orevidence takes up a lot of ashipmanagement team's time, butis very necessary. TheHoneycomb pilot project wasdeveloped to provide seafarerswith a beehive like system where

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Transas simulators in demandsystem, incinerator and exhaustgas quality control.

CERONAV is the largestRomanian training providerfocused on the shipping industry.It is a public establishmentattached to the RomanianMinistry of Transport,Construction and Tourism. Itdelivers training courses to riverand seafaring personnel and toport operators.

The training academy is anestablished Transas customer and

has previously installed a suite ofsimulator products, including thenavigational simulator NTPRO4000, the GMDSS simulator(TGS), the liquid cargo handlingsimulator (LCHS), and the VTMSsimulator.

Currently Transas'development of the ship systemsrequired by MARPOLregulations has been completed,namely new auxiliary systems -oily water treatment system,incinerator and exhaust gasquality control. ERS 4000 meetsthe requirements of the STCW'95 Convention and Code and iscertified by Det Norske Veritasas a Class A Simulator.

Year by year vesselsbecome more and moreautomated and, as aconsequence, the shipstaff requirementsbecome moredemanding. That is whymaritime academies,colleges, trainingcentres and shipownersnow pay specialattention to up-to-dateeducational systems.It is vital while carrying outdangerous cargo operations onboard vessels, such as gascarriers and chemical tankers,that mistakes must be avoided.Therefore it is important toallow seafarers to train andpolish their skills and obtainship systems' operatingexperience while they arestudying onshore. It is for thispurpose that training centres areequipped with ship simulationsystems, where all kind oftechnological processes can bearranged to allow people tosimulate actual watch-keepingand emergency conditions atdifferent levels of competency,including management level.

For the past 15 years, Transashas successfully developedsimulators to meet and moreimportantly, to exceedinternational conventionrequirements. Offering a largerange of professional simulationsystems, Transas specialiststailor-make a training package tocustomer requirements. In eachcase, the delivered simulatorwill be brought up to therequired operating standardbased on the customer's shipmodel, enabling the trainees tobe introduced to the systems thatwill be found on board the shipsthey are to serve on.

For example, one of therecent major projects was thedelivery of a state-of-the-artDNV-certified engine roomsimulator for Akademi LautMalaysia (ALAM), Melakka,

which included an ERS 4000full mission simulator and ERSclass room (general cargo,tanker LCC, ro-ro). Tocorrespond with customerdemands, the following itemswere developed to fit a specificship type: ERS steam turbineKawasaki UA-400 propulsion,auxiliary machinery and electricpower supply modules forPetronas' Puteri Intanmembrane type LNGC, to carryout joint training with LCHS

4000 Transas team; ERSWärtsilä Sulzer two-stroke, lowspeed diesel engine model,which included propulsion plantelectrical power and auxiliarymachinery modules.

Transas also recently won acontract to install a full missionengine room simulator atCERONAV, the RomanianMaritime Training Centre. Thisproject comprised ERS 4000software, monitors, computers,network equipment, consoles,projectors and a training classconsisting of three places.

The base system - the ERS4000 - is claimed to create aprofessional environment for the

following types of engineer-based training - familiarisationand education, standardoperation and watchkeeping,advanced operation and troubleshooting.

In addition, the productincludes the 3D engine roommodule and a 42-inch plasmamonitor. By using this module,trainees will become familiarwith the engine roomcompartments, the machinerylayout, plus the realism of a ship's

environment. Manually controlledvalves and levers can also besimulated. Transas claimed thatthis set up provided moreeffective training for students andhelped problem solving, reactiontimes, and preparation for theirfuture employment.

This contract called for a 70-day installation period. Theproject management, installation,commissioning and training wascarried out by Transas Ukraineand Transas Black Sea.

Currently Transas' developmentof the ship systems required byMARPOL regulations has beencompleted, namely new auxiliarysystems - oily water treatment

An impression of the Romanian ERS 4000 full mission engine room simulator

TO

p22-26.qxd 07/12/2006 13:10 Page 5

the view that, by using sub-contractors a repair yard wasresorting to cheap labour, also needsaddressing. He explained that yardstraditionally used sub-contractors toovercome the peaks and troughs inshiprepair. There is no point in fully

year primarily aimed at technicalschools, an exercise that willprobably be repeated in 2007.

Shiprepair's image came underthe spotlight as the traditional ideathat shiprepair was a 'dirty business'needs to change, Ardelius said. Also

SHIPREPAIR

Speaking at the recentShiprepair andConversion conferencein Amsterdam

Francisco Arderius, chairman of theCommunity of European Shipyards'Associations (CESA) shipmaintenance, repair and conversiongroup said that in CESA and itspredecessor AWES, the main topicof conversation for 10 years wascompetition, or how to break downthe veil of secrecy that hadsurrounded the shiprepair industry.

This has now dramaticallychanged to a debate on the lack of

skilled technicians coming into theshipyards. Initiatives are underwayinvolving the EuropeanCommission, shiprepair companiesand unions to try to halt the drainof skilled staff. CESA was able togive input into the EC's work onsocial dialogue, which is a scheme whereby developments canbe tracked sector by sector onhuman resources.

Taking Holland as an example,the yards will have to replace 20%of an ageing workforce in the nextthree or four years. A 'shipyardweek' was held in the country this Lisnave has embarked on a training programme.

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p27-30.qxd 01/12/2006 18:23 Page 1

SHIPREPAIR


repairing and converting shipscould also have their say. Hehighlighted the flag state report onthe Prestige sinking to the IMO,which said that not enough wasknown about the consequences ofjoining new steel to old.

The group was also making thenew Environmental Agency awareof the impact on yards of the newrules to reduce solvent emissions."When painting and coating isprobably the highest value singleitem of work that maintenanceyards do, it would be madness ifthere was no input to the processfrom the industry sector," he said.

Arderius also criticised ITsystems by saying that manyshiprepair yards were soldsystems purely designed fornewbuilding yards. "They were,bluntly, worse than useless."

For 2007, the group hasearmarked ways of improving thedelivery of predictive maintenancefor ships.

"We are well into the 21stcentury and we should be lookingat up-to-date services we canprovide, not hanging on to therelationships with shipowners thatwas established almost in pre-history," Arderius concluded.

As well as wearing his CESAhat, Francisco FernándezArderius, is managing director ofBoluda's Unión Naval Barcelona(UNB) yard.

Due to neighbour yachtrepairer Marina 92 moving intoits Barcelona facility, which isvery close to the city centre, thecompany is to invest Eur90 millin a new 30,000 sq m yard to theeast of the port under a 35-yearconcession.

The new facility will have twofloating docks of 250 m and 180 min length respectively and will beoperational by the end of 2010. Thetwo floating docks will probably bebuilt in China, but no deal had beenstruck by the time thatTANKEROperator went to press.

UNB will repair medium-sizedferries, merchant vessels and cruiseships. Larger ships will be repairedat UNB's Marseille yard, whichwas purchased earlier this year.

employing workers when work wasslack, he said.

One plus point was that following40 years of neglect, apprenticeschools had started to reappear insome shipyards, most notably atLloyd Werft, Blohm + Voss andMarseille (since taken over by theBoluda group and coming under thewing of Barcelona).

Portuguese shiprepair yardLisnave has already giventechnical assistance to 250 young

people living in the Setubal areaaged between 18 and 25 andlooking for a first job, the yardsaid. Training courses were heldon the following skills:

Naval and mechanical fitters. Pumpmen/firemen; Crane drivers and lift operators; Machine tools operators.

Arderius also said that researchwas being undertaken into doublehull tankers, which he claimedhad not demonstrated that they

are the solution. Cracks haveappeared and there was a certainreluctance among ships' crew topay attention to the double hullspacing, due to the difficulty ofgaining access to the area.Lisnave had submitted a report toCESA on the subject, he said.

Disasters, such as the sinkings ofthe Erika and Prestige had provedthat it was not only shipowners thatneeded to join the debate on quality,but those involved in maintaining,

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SHIPREPAIR


Additionally, the warehouses willalso provide security againstweather related damage. Detailedproject planning and research,coupled with the most efficientmethods of construction, arebeing undertaken to ensure thatthe maritime related companieshave access to state-of-the-artfacilities including road networkscreated especially for industrialand maritime use.

Dubai Maritime City, thevast maritime complexlocated between PortRashid and DubaiDrydocks, announced atthe beginning ofNovember that it hadbegun the constructionof industrial workshopsand warehouses.Several industrial workshops andwarehouses will be built, whichwill form a vital part of therelocation of Jadaf Dubai to theMaritime City. Jadaf Dubai -- oneof the oldest shiprepair yards inthe MEG, which is currently sitedat Dubai Creek -- will berelocated in the industrial sectionof the Dubai Maritime City,occupying just under half of its2.4 mill sq m total area.

Dubai Maritime City said itwas also going full steam aheadwith setting up the new shipliftfacilities. Construction of the

support structures for the newfacilities is currently underway.

Amer Ali, project manager,Dubai Maritime City, said: "Asthe process gathers pace, we haveinitiated the construction phase ofthe warehouses and workshops inthe industrial section, which willfacilitate better use of supportinfrastructure."

He added: "Dubai Maritimecity will be technologicallyadvanced, environment-friendlyand less labour-intensive. Nowwith the workshops, warehousesand the other supportinfrastructure beingcommissioned, we are confidentthat we will be able to give ourexisting and new members vastlyimproved services, both in termsof technology and facilities. Thiswill allow companies operationalat Dubai Maritime City to expandtheir operations. With the directaccess to sea, vessels calling at

Dubai Maritime City will not belimited by size."

The multi-purpose industrialwarehouses and workshopsconstructed will offer a widerange of facilities and spaces forthe maritime industry. Theconstructed buildings will adhereto the highest fire safetystandards as set by the universallyacknowledged National FireProtection Association (NFPA). TO

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Workshops and warehouses take shape off Dubai

Jadaf Dubai repair complex will relocate to Dubai Maritime City.

p27-30.qxd 01/12/2006 18:23 Page 3

LNG fleet. This November, the jvwas to drydock two ShellLNGCs, one at Sembawang andthe other at Sobrena.

Among the owners/operators/managers using Nico MitsuiBabcock jv services are BP andShell, QatarGas, Golar Barber,Golar Thome LNG, NGSCo,MOL, NYK, K line and MISC.Golar recently split its technicalmanagement between GolarBarber Atlantic LNG and GolarThome based in Singapore.

Aitken explained that the jvnegotiates directly with theowner/operator, or acts on behalfof a shipyard. Yards that havetaken advantage of the serviceinclude Dubai Drydocks, KeppelBenoi, Sembawang, Lisnave andSobrena.

For over 100 years, the nameBabcock has been considered aworld leader in the supply ofsteam related products andservices. Mitsui Engineering &Shipbuilding bought Babcock's

energy division in 1995. The jvhas offices in Dubai, Singaporeand the UK. The UAE acts as theheadquarters for all Nico/MitsuiBabcock's marine business.

Due to the increase innatural gas exportsfrom theMediterranean and

the Middle East heading for thewestern hemisphere, whendeciding on LNG carrier repairsthere has been a definite swing tothe Atlantic Basin from the more

traditional Asian repair yards. One example of this switch is

Nigeria LNG's signing of a longterm agreement with the Frenchyard Sobrena, located at Brest ashas Shell.

John Aitken, manager of thejoint venture (jv) concern NicoMitsui Babcock, based in Dubai,said that thus far, 2006 had beena record year for the jv, whichoffers specialist LNG boilertechnical services, primarily mainboiler condition assessment. Tothe end of October, the jointventure has supplied a range oftechnical and maintenanceservices to 18 LNGCs this year,Aitken claimed.

He called the service anextension of the conditionassessment programme and said itwas not restricted to just Mitsuiboilers, as it had beensuccessfully employed on othermanufacturers' boilers, such as

Mitsubishi, Kawasaki and FosterWheeler. Life assessments arenormally carried out on oldervessels, while newer LNGCs takeadvantage of a guarantee type

contract, prior to the boilerwarranty expiring, as well asbenchmarking the results forfuture inspections.

One of the largest projects todate was the replacing of thesuperheaters on a fleet of fourLNGCs at Dubai Drydocks. Thisoperation took just seven weeksduring April and May this year.As a result of an engineeringstudy, which was undertaken in2004, the replacementsuperheaters were upgraded to9% CR material, instead of thestandard 2.5% CR content. "Thisproject was undoubtedly one ofthe largest marine boiler projectsundertaken anywhere in the worldthis year", Aitken claimed.

The engineering study andresultant upgrade was approvedby the OEM, plus the classsociety. Aitken said that thisturnkey approach fromengineering through to project

execution demonstrated thestrength in depth of the specialistresources available to the jv in-house.

Another interesting projectcurrently on the go is the firstphase condition assessment andremnant life assessment of theLNGC Golar Spirit. Golar Spirithad been chosen as the donorvessel for the world's first FRSU(floating regasification andstorage unit).

The vessel has undergone theinitial phase inspection and willreturn to Keppel Benoi forconversion in the new year.

Aitken explained that theboilers would need a certainamount of servicing and upgradeprior to entering long termservice in the proposed field.

Other jobs of note undertakenthis year include Golar LNGCsHilli at Lisnave and the BP

managed quartet Al Khaznah,Gasha, Ish and Shahamah, all ofwhich were docked at DubaiDrydocks. Also completed werethree drydockings for QatarGas'

Four LNGCs enjoy a well earned rest at Dubai Drydocks

Boiler repairertargets gas tankers

Joint venture concern ideally placed tobenefit from LNGC boom

The LNGC Ish was one of the gas tankers handled at Dubai

SHIPREPAIR


TO

p27-30.qxd 01/12/2006 18:24 Page 4

over 100 new ships of more than2.1 mill gt were commissioned inOctober with GL class. Theseinclude containerships, tankers,bulk carriers, passenger ships andother types of vessels. Therecord-breaking month has seenthe highest intake of new ordersthus far in 2006. As at the end ofOctober, the orders on handtotalled 1,116 ships of 19.6 millgt. This monthly order intake wasequivalent to the total orderintake for the whole of 1995.Atthe SMM trade fair in lateSeptember, GL announced that ithad broken a record of thenumber of vessels in service.Over 6,000 ships of more than 60mill gt were inspected by GL fortechnical safety. Since SMM twoyears earlier, the fleet in servicehad increased significantly, withan extra 700 ships (+13.1%) witha total of 15.8 mill gt (+34.1%)being added. This growth levelhad been sustained for some time."On the basis of this intake ofnew orders, we are againexpecting a growth in turnover indouble figures for 2006," saidRainer Schöndube.

design support office held clientawareness seminars andpresentations on the implicationsof the new structural rules fortankers. Members of theYokohama team, together withother experts from Busan,visited owners in Malaysia,Singapore, Kuwait, Dubai, UK,Greece, Belgium and Italy to

Fiscal year 2005/2006saw over 11 mill gtadded to Lloyd'sRegister (LR) class,comprising nearly 700vessels. During the year,LR's classed fleetreached a record 127mill gt.LR said that it gained particular

success in South Korea winningmore than 25% by gt of all thenewbuilding orders placedduring the 12 month period,which represented 6 mill gt,including the class for sevenFinnish/ Swedish ice class 1Aoil/chemical tankers to be built by STX for PrimorskShipping Corp.

The specifications includedwinterisation, which will allowthe tankers to operate intemperatures as low as - 25 degC. In addition, LR secured theclass for the first LPG ships to beordered at Hyundai Mipo forMaersk and Zodiac.

During the year, structuralspecialists from the Yokohama

CLASSIFICATION SOCIETIES


TO

Mergers andacquisitions?

Leading French class society Bureau Veritas (BV) shook the normally staid world of classification recently by making an audacious bid for

German rival Germanischer Lloyd (GL).

However, this is notthe first time thatGL has beencourted as DNV

came calling a few years ago,but without success. If thecurrent bid is successful, it isenvisaged that BV's marineoperations would move toHamburg. Both have dedicatedtanker and gas carrier teams.

However, BV’s approach wasroundly rebuffed by GL and DNVhas since offered its services as a‘white knight’. “We do not needBV. On the contrary: a hostiletakeover would jeopardise thecontinuation of our businesssuccess thus far,” asserted RainerSchöndube, executive boardmember.

By the end of this year, BVwill have close to 55 mill gtentered representing over 7,400ships. BV's orderbook is close to1,300 ships totalling 17.4 mill gt.New orders gained this year up tothe middle of Novemberamounted to 8.2 mill gt,representing more than 11%market share with 640 vesselsunder construction.

Recently, BV was appointedto class a coastal 7,500 cu mcapacity LNGC being built atthe Remontowa Shipbuildingyard in Gdansk for Rotterdam-based Anthony Veder. The vesselwill be chartered long term toNorwegian LNG distributorGasnor.

The vessel, to be delivered in2008, will be particularlyenvironmentally friendly as it willuse LNG as fuel, which willsignificantly reduce emissions,such as CO2, BV claimed. Shewill be 120 m long and 17 mwide and will be fitted with twoseparate propulsion systems intwo engine rooms, one using100% LNG and the other 100%heavy fuel oil.

In a separate move, BV hasawarded Rolls-Royce basicconcept approval to the MT30gas turbine power plant inconjunction with electric drive forLNGCs. Fred Venner, BV'smanager for tankers and gascarriers told TANKEROperatorthat an order would be placedsoon without going into details.

Another innovative tanker

classed by BV this year was the4,440 dwt Bergen Star. She wasdelivered earlier this year byRMK Marine in Turkey toBergen Tankers. The tanker,designated NVC 604 PT, was thefirst to be delivered of the NVC-Design by Rolls-Royce featuringtwo Azipull thrusters, which aremechanically attached to themain engines with shaftgenerators fitted to the sameshort shaft line, givingpropulsion redundancy and theability to supply power for cargopumps and ship services usingjust one engine while in port.

She is on a long term charter toStatoil. One of the advantagesover a single screw productstanker is the ability to carry morecargo as, by fitting azimuththrusters systems, the engineroom bulkhead has been movedfurther aft. Rolls-Royce claimedthat depending on the size ofvessel, the increase in cargovolume is between 5-7%, whichhelps to offset the slightly higherconstruction costs.

Meanwhile as for takeovertarget Germanischer Lloyd (GL),

LR announces record year

p31-33.qxd 01/12/2006 18:26 Page 1



(CSR) for tankers. A classification contract was

also signed between LR and theShanghai Waigaoqiao Shipyard(SWS) for three 316,000 dwtVLCCs to be constructed forSingapore-based Ocean Tankers.These will be the first VLCCsbuilt by SWS and will be amongthe first VLCCs to be built inaccordance with the CSR fortankers. Teekay also took up twooptions attached to an earliertwo-ship order at Bohai for159,000 dwt suezmaxes, whichrepresented Teekay's first forayinto the Chinese shipyards.

Conversions were alsooverseen, including TankerPacific's major single to doublehull conversion of the 300,000dwt VLCC Sunlight Jewel at theHuaran Shipyard at Shanghai.

In the LNG sector, LR won theclass for nine Q-Max LNGCs tobe built at Samsung and Daewoo,having a capacity of 265,000 cum each.

LR launched 'Hull Integrity' inJune 2006, which comprised ofthree elements. These are:- 1) Training on how to carry out

inspections. 2) Ship specific hull inspection

guides.3) Hull integrity software for

recording and analysis. As for port state control, LR hasintroduced a plan whereby theregister submitted its detainedships to a stringent survey andaudit regime intended to improveits PSC record, which nowoperates on a 'three strikes andyour out' philosophy.

It claimed it was the leadingsociety providing 'GreenPassports', which contains aninventory of all the materials onboard a ship that require carefulhandling or special awareness.This record stays with the shipthroughout its life and is updatedas necessary.

Together with Shell, LRclaimed to have led the way inapplying and adopting 'GreenPassports' and this year the finalLNGC in Shell's fleet was issuedwith its passport.

explain the new rules and howthey will affect the design,construction and maintenance ofthe next generation of vessels.

LR also re-established apresence on Cyprus where adedicated training centre was setup. LR classed 21 of Unicom'smanaged fleet, adding three

products tankers during the year.LR also claimed it was theleading class society in Greecewhere its market share was 27%.Strong growth was recorded inthe Middle East where contractswere won to class six VLCCs tobe built at Daewoo for Vela.

China's growing influence

continued as the number of LRvessels on order or underconstruction increased from 4mill gt to 5.5 mill gt by June thisyear. LR expanded its planapproval office in Shanghai toinclude design support servicesto deal with new rules such as the common structural rules

TO

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forward. The benefits faroutweigh the costs."Improvement should be seen as acompetitive advantagecommercially in that the vesselgets chartered to an oil major andalso internally in that a companyhas less incidents to deal with,such as oil spills, or danger to lifeand/or the vessel, which couldcost money.

By and large, Ho thought thatthird party shipmanagementcompanies had come up to speedin implementing TMSA and itwas obviously in their interests todo so.

Fellow DNV consultantStephen Bligh thought that acompany's KPIs should be kept toa minimum of say eight to 10 intotal and should have a proactiveslant rather than a reactive look."They should focus on theobjective," he said, explainingthat a company should find KPIsthat are relevant to themselves,which stick to principals and nothave KPIs which do not reflecton a company's business.

DNV's maritime solutions armwas formed in 2001 and operatesworldwide from offices inLondon, Singapore, New Yorkand Oslo. The London officelooks after more than 20 clientswith TMSA-related needs in theEMEA region. Over 80 people situnder the gaze of SouthwarkCathedral, a number which willrise to more than 100 by themiddle of next year. Anotherbranch will be opened in theMiddle East soon to cater for thephenomenal growth in tankeroperations in that region.

The lack of resourceswas one of thereasons often quoted.Many companies,

especially smaller ones, did notrealise that dedicated resourceswere needed to look at riskassessment and otherrequirements within TMSA.

Meanwhile, the largercompanies found that they alsoneeded greater resources, due tothe size of their operations, bothafloat and ashore. "It is a biggermonster to bigger companies",explained DNV MaritimeSolutions' EMEA seniorconsultant Pui Ling Ho. Forexample, to help with qualitativerisk assessment tasks, DNV will

come in and undertake trainingworkshops, set theowners/managers examples andthen critically analyse the results.

The question of 'managementof change' was also found to bean alien concept to manycompanies both onshore and atsea. Several thought it was justan audit trail involving copiousamount of paperwork, ratherthan a tool to put processes inplace to manage the risks. Themany suits of software availablewill only work if they areimplemented correctly. "Adefinite change of attitude iscalled for", Ho thought.

Ships' officers now have tokeep a record of their actions,

instead of having the attitude,'I've been running my ship thisway for 20 years successfully,why do I have to change'?

How to train the shipboardstaff often means a mindset andculture change.

It was found that riskassessments took the form ofreactions to an incident, ratherthan being a proactive conceptwhereby risks can be foreseenand thus almost eliminated.

Corporate responsibilitytowards life, property and theenvironment is on most peoples'lips. Here, the right type ofdocumentation needs to be inplace to demonstrate acompany's commitment to try toeliminate an incident that couldaffect life, property and theenvironment.

It is not only the shipowningand management companies thathave to sit down and get to gripswith TMSA. Oil majors’ vettinginspectors might have nocomprehension of continuousimprovement as such. DNVthought that the industry ingeneral is suffering from a lackof knowledge, due to thedifficulty in recruitingexperienced personnel; acrossthe board, resulting in a futureproblem if the knowledge andexperience currently in companyvetting departments continued toshrink.

Costs are often brought upwhen discussing TMSA, ISM andKPIs. Les Chapman, DNV'sEMEA maritime solutionsmanager retorted, "People wholook at the costs are not looking TO

Risk assessment helpis at hand

Since it started to offer TMSA-related services, DNV Maritime Solutions found that oneof the major problems was that shipowners and managers had failed to carry out any

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p31-33.qxd 01/12/2006 18:26 Page 3

Heated sample probe (in exhaust duct penetration).Heated sample line (clipped to tray work)MariNOx central control cabinet in the engine control room comprising NOx, CO2 and SOx analysers and a gas conditioning system.Touch screen user interface.Engine condition sensors.Ambient condition sensors.

All of these are mandatorysystem components underMARPOL.

The heated sample probe wasinstalled in the engine exhaustduct with the penetration beingcarried out while the vessel wasin port and the main engine out ofservice. All the other componentswere installed while the tankerwas on passage during normalvessel operations. The entireinstallation was effected in fivedays without any disruption to thevessel's operations, Martekclaimed. Once installed, thesystem was commissioned by aMartek engineer and inspected tothe satisfaction of the chiefengineer.

Once the system had beencommissioned, the main engine's

This involved thefitting of MartekMarine's MariNOxemissions monitor on

board the 318,692 dwt Metrostarmanaged Crude Star. The VLCCwas monitored for five dayswhile transiting the Persian Gulf.

MariNOx has been designed tocomply with MARPOL Annex VIRegulation 13, the NOx TechnicalCode and MEPC.103(49). Thesystem has been type approvedby LR and also holds an MCAcertificate. After four yearsdevelopment followed byextensive testing, both on boardvessels and on engine test beds, asystem was fitted on board theCrude Star.

Martek claimed that the systemwas designed to enable operatorsto optimise their vessels' engineperformance by monitoring NOx,CO2 and SOx emissions todeliver major fuel savings.

Historically, engines were fittedtuned to operate with the lowestfuel consumption in 'economy

mode' with no restriction on NOxemissions. However since 1999,following the introduction of theIMO's NOx control regulations,engines were required to be de-tuned to what is known as 'low

NOx mode' to reduce emissions. Fuel combustion is less

efficient in this particular modewith the result that vessels burnmore fuel - around 4-5%,according to enginemanufacturer's data. By fittingMariNOx, vessels' engines can bere-tuned back towards 'economymode' within the allowableemissions limits thus saving fuel.

Fuel savingThe purpose of this particulartrial was to prove the fuel savingcapability of on board engineoptimisation by fitting Martek'ssystem by delivering anindependently audited set ofresults showing the fuel savingachieved.

Fitted on board the Crude Starwas a MariNOx NOx/CO2/SOxemissions monitoring system tooptimise the performance of theVLCC's main MAN B&W6S90MC-C diesel engine,comprising the followingcomponents:

TECHNOLOGY PROFILE - MARTEK


Successful engineemissions monitoring

trials carried outIn July of this year trials were held on

board a VLCC in the form of an engineoptimisation project.

Results: The four independent expended fuel trialresults were validated by the superintendent.

Parameter Pre-optimisation Post-optimisation Fuel consumption SFOC (l/min) 74.29 72.47Reduction in SFOC (%) - 2.45%SFOC reduction (tonnes/day) - 2.45Specific NOx output (g/kWh) 12.3 13.8Average rev/min 72 72

Crude Star anchored off Fujairah.

p34-41.qxd 07/12/2006 12:59 Page 1

TECHNOLOGY PROFILE – MARTEK


graphical indication that theengine's performance had beenimproved. The completeoptimisation task was completedin four hours.

specific NOx output (g/kWh) wasmeasured in accordance withprocedures defined inMEPC.103(49) - Guidelines forUsing Direct Measurement andMonitoring.

Additional checks were madeon the engine to verify that all theoperating parameters wereadjusted in accordance with theallowable values for NOxcompliance as contained in theengine's technical file.

While the vessel was on a longtransit of 12 hours or more withthe load as constant as practicable,the fuel consumption measurementand engine optimisation routinewas started. Independent fuelmeasurement systems were usedas dual verification to ensureaccurate audited results. With thevessel and her engine operating atsteady conditions, the fuelconsumption was accuratelymeasured over a four hour period.The chief engineer alsoindependently confirmed theaccuracy of the fuel measurementtaken.

Engine optimisationThe range of permissible engineadjustments was determined andagreed addressing all possiblesetting adjustments with referenceto the original engine settingschecks and by talking with MANB&W.

Under the supervision ofMartek's marine projectengineers, the superintendent andthe chief engineer made theagreed adjustments to restore theoperating efficiency of the engineto its maximum allowable withreference to the measured NOxand CO2 levels on the MariNOxsystem and the engine's upperoperating limits. Theseadjustments were made in smallsteps to ensure that the engine'sphysical limit conditions were notapproached.

When all the settings hadbeen adjusted to the pre-agreedlimits, a further engine checkwas performed, whichconfirmed that the engine wasoperating well and within safelimits. With reference to the

cylinder pressure combustioncurves, it was confirmed thatthe cylinder combustion hadbeen significantly enhanced,which provided a clear

MariNOx central control cabinet.

TO

Enraf

TanksystemEnraf

p34-41.qxd 07/12/2006 13:00 Page 2

Work is ongoing to identifymicro-organisms that couldbehave differently when exposedto strange environments, such asa change of water temperature, orto various chemical treatments.BMT explained that micro-organisms could respond to achemical treatment. However, thechemical treatment itself couldharm the outside environment.

One area of risk assessment isto try to identify what type ofmicro-organisms are likely to becarried in ballast tanks of vesselsarriving from overseas and whatwould be the correct form of

treatment for each type. Work isongoing in Canada and elsewhereon the problem of developingcomprehensive data on thespecies and their possiblereaction.

Various US authorities haveissued veiled threats that the StLawrence Seaway could bepermanently closed, which wouldresult in only 'lakers' sailing inthe Great Lakes, while deepseavessels would be banned fromsailing above Montreal.

The MEPC tried toidentify anyimpediments to theentry into force

provisions to the application ofthe biological standard containedin regulation D2, applicable tovessels with a ballast capacity of+5,000 cu m that are to be built in2009 and beyond.

This review was supposed tobe completed at this session thusenabling the three year period tokick in when the industry canprepare for the fitting of ballastwater (BW) treatment equipmentand or systems for vessels due tobe constructed by the due date.

According to class societyABS, the most serious problemencountered thus far has been thelack of availability of BWtreatment systems, which havebeen tested and type approved inaccordance with the G8guidelines.

ABS said that this wasunderstandable as the extremelyrobust G10 guidelines were onlyadopted seven or eight monthsago. The specific difficultiesnoted included:

Achieving the biological efficacy required under regulation D2 of the BWM Convention.Producing the requisite test water (biological soup) to type approve the systems under the G8 guidelines.Whether or not by-products created by the treatment systems, including those that may occur naturally, need to be treated as active substances and therefore reviewed under the G9 guidelines contained in the MEPC resolution.

Although the committeeconcluded that BW treatmentsystems would probably be

available for installation onvessels prior to 2009, this wasunacceptable to many and inparticular to the shipownerassociations who made the pleathat certainty needs to beestablished immediately and notat the next MEPC sessionscheduled for July 2007.

By waiting until next year, extracosts and possibly delivery delayswould be incurred in modifyingships already contracted, mainly inretrofitting systems, should theybecome available.

Several delegations alsothought that the currentunavailability of treatmenttechnologies maybe adisincentive to governments toratify the convention.

In the light of the above, thediscussions proceeded on how thefirst tranche of vessels could gaindispensation. Three options wereanalysed, but as the conventionhad not entered force, the firsttwo presented legal difficulties.They were-

Issuing exemption certificates.Development of an instrument postponing the compliance for vessels built in 2009. Governments that ratify the Convention may declare a reservation on regulation B-3 (3).

In all, 14 treatment technologieswere submitted to MEPC 55. Anupdate on these and any newtreatment technology is to bereported at the next meeting inJuly.

Two alternative BWmanagement concepts were also

taken into consideration and weredeemed to have some promise.These were the flow-throughsystem concept developed by VelaInternational and the JapaneseNOBS system (see page 40).

The October meeting alsonoted that, to date, only sixcountries representing 0.62% ofthe world's tonnage had become

contracting states to the BWMConvention and once again urgedmember states to ratify it at theearliest possible opportunity.

BMT studyA consultancy heavily involvedin the study of invasive speciesbeing released in ballast watertanks is Ottawa-based BMTFleet Technology. BMT isinvolved in risk analysis and thedevelopment of new tools tosupport decision making.

TECHNOLOGY - BALLAST WATER


Type approved BWsystems scarce

At the 55th session of the IMO MarineEnvironment Protection Committee

(MEPC) held in London during October,the Ballast Water Management (BWM)

Resolution 4 review continued.

De-oxenisation tests were undertaken in BMT Fleet Technology’s labs.

p34-41.qxd 07/12/2006 13:00 Page 3

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facilities to perform the full-scaleland-based tests, but NIVA isexpanding its operations bybuilding four new tanks of over200 cu m. Alfa Laval, which hasworked closely with NIVA on theballast water issue, chose theinstitute to perform its pilotstudies.

Alfa Laval's PureBallast systemis based on AOT, which is achemical-free process similar tothat used in many of today's'smart products'. In both pilot andon board tests, the highlyadvanced method has proved tobe effective in meeting the IMOrequirements.

Depending on a ship's ballastwater volume, PureBallastinvolves one or more AOT units,which treat the water duringballasting and deballastingoperations. These units containtitanium dioxide catalysts, whichgenerate radicals when hit bylight. The radicals, whose lifetimeis only a few milliseconds, breakdown the cell membrane ofmicroorganisms - without the useof chemicals or the creation ofharmful residuals.

PureBallast has met thestringent IMO ballastwater requirements inpilot tests supervised

by DNV and is well underwaywith the year-long officialapproval process. It is a chemical-free system for removingpotentially invasive species fromballast water.

Pilot tests of the system,performed by the NorwegianInstitute for Water Research(NIVA), confirmed thatPureBallast will meet the IMOdischarge standards. The testswere performed under thesupervision of DNV and in

accordance with the adopted IMOguidelines.

PureBallast incorporatespatented Wallenius AOT(Advanced Oxidation Technology).The system has been developed byAlfa Laval in co-operation withWallenius Water.

"The release of PureBallast isa turning point in a long struggleto stop the spread of invasive

species via ballast water," saidPeter Carlberg, general managerof Alfa Laval Marine and Diesel.

The procedures defined byIMO for approval testingrepresent a very comprehensive12 month process. Not only arethey highly stringent, they alsoinvolve full-scale testing on landand at sea. At present there are nowell-established marine testing

was "nothing had been proven towork under all conditions, orwithout adverse side-effects". Asfor the costs involved of fittingsuch equipment when a standardis eventually issued, he saidobviously the cost of fittingequipment on newbuildingswould be very much less thanretrofitting an existing ballasttank together with its pumpingand piping systems.

BMT is also actively talkingwith operators about future shipdesigns, especially given theIMO's 15-year ballast tankcoatings scheme, which mightreact to certain chemicals.

BMT has carried out severalindependent assessments for shipoperators, suppliers andregulators, including specifictests, focusing on the efficacy ofmechanical, biocidal andbiological approaches to controlof invasive species, as well as de-oxygenation and chemicaltreatment systems on vessels'structural integrity.

For example, internal ballasttank coatings could be adverselyaffected by some of the suggestedchemicals in certain conditions.Also, most test protocols assumetemperatures of 20-25 deg C andnot colder conditions, which

affect performance both in termsof efficacy and persistence.

One of the problems isexamining the micro-organismsthat survive in the sediment of aballast tank. It is obviously mucheasier to take samples from arelatively full tank, but thiscannot assess the level of risk forships arriving with 'no ballast onboard'. Other research centres onwhat are indigenous to the regionand what are not. "There is stilllittle known at microbial level",Andrew Kendrick, vice presidentoperations, BMT FleetTechnology said.

Equipment for sampling and

inspection procedures needed tobe first developed and thenengineered. For example,Kendrick said that the waste heatmethod to boil the 'bugs' wasfound not to be a viable optiondue to the quantities involved.

He warned that the US washighly likely to take a unilateralstand, which could mean banningships arriving in US waters fromcertain areas of the world, unlessthe IMO moves relatively quicklyon the issue.

Talking of the varioustreatment initiatives that havecome onto the market recently,Kendrick said that the problem

Ballast water treatmentsystem unveiled

Having been at the forefront of researchinto ballast water treatment, Alfa Laval is

to launch its chemical-free PureBallastsystem in December.



Wallenius AOT UV technology

UV 254 nm

Radicals

Cell Cell

Cell Destruction of DNA Destruction of cell

membrane

PureBallast is a chemical-free system.

TO

TO

p34-41.qxd 07/12/2006 13:01 Page 5

futureevents

DIGITAL SHIP/TANKEROPERATOR CYPRUSSan Raphael Hotel, Limassol, Cyprus, 29-31 January 2007

Digital Ship Cyprus, 30-31 January 2007TANKEROperator TMSA plus Workshops, 31 January 2007

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TANKEROperator TMSA, 18 April 2007

DIGITAL SHIP/TANKEROPERATOR OSLOConferences at Nor-Shipping, 12-15 June, 2007

Satcoms, Navigation, Ship Systems, etc

TANKEROperator&

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e: [email protected]

Tanker Operator/Digital Ship Ltd213 Marsh Wall, London, E14 9FJ, UK


p34-41.qxd 07/12/2006 13:02 Page 6

5-7% power saving for suezmaxtankers and a 6-7% powersaving for VLCCs, SRC said.Due to the increased breadth andthus bending moment of theNOBS there is a corresponding4,500 tonne increase of hullweight, resulting in a $5.2 millship price increase for suezmaxtankers and a 5,600 tonne ($6.5mill) increase for VLCCs.However, this increased cost isexpected to be recovered within15 years - a period that willreduce with further R&D, SRCstressed.

With the NOB's seaworthiness,seakeeping and manoeuvrabilityperformance all within IMOlimits, the design is a seriouscontender for the future of vesseldesign, SRC said.

A revolutionary newconcept was recentlylaunched at a series ofseminars held inLondon. This was theNon Ballast Water Ship(NOBS) designdeveloped by theShipbuilding ResearchCenter of Japan (SRC).The NOBS project tackles theproblem of how to prevent thespread of non-indigenous speciesin ballast water from acompletely new perspective.While many companies andresearch centres are tackling theproblem through solutions suchas UV exposure/ biochemicaltreatment/ oxygen deprivationthrough the use of ozone/ electro-

ionisation treatment/ cyclonicseparation/ hydrodynamiccavitation and pulsed filtration ofthe ballast water itself, the NOBSsystem removes the need forballast water. However, two small

redundant ballast tanks areincorporated for trimming andextreme sea passage.

It is claimed to eliminate theneed for expensive treatmentsystems and their correspondingoperational costs by increasingthe vessel breadth andincorporating a transversely rakedbottom design, which allows asufficient draught to bemaintained even when in ballast.

Tankers require ballast water tolower the vessel when the ship isempty of cargo in order tomaintain the required draught forsafe, controlled navigation bymaintaining the ships structuralintegrity, thus avoiding slammingat the forward bottom and racingof the propeller.

The International Conventionfor the Control and Managementof Ship's Ballast Water andSediments was adopted at IMO inFebruary 2004. The conventionrequires that a ship's ballast water

is either exchanged in the opensea, or that a treatment system isinstalled on board to prevent thespread of non-indigenous species.

Exchanging ballast water at seais impractical, time consumingand dangerous as heavy listingcan occur when the ship's balanceis altered, claimed SRC. Themany treatment systems presentlyawaiting IMO approval mostlyinvolve expensive installation andrunning costs, and are inefficientin that the ship is carrying thenon-profitable weighty cargo ofsea water.

Although a slight increase inpower is required with NOBSwhen loaded, a dramatic powersaving would be seen when avessel is in an unladencondition, resulting in an overall


The Ultimate Solution? - Non Ballast Water Ship

No ballast water needed?

TO

The NOBS project tackles the problem of how to prevent the spread of non-indigenous

species in ballast water from acompletely new perspective.

“

”


p34-41.qxd 07/12/2006 13:02 Page 7

bed is reduced, and thehydrocarbons are desorbed andreleased, freeing the vessel foruse during the next cycle.

Compared to the otherEuropean MVRSs, Mongstad willbe the largest. The vapour flowrate at Norsk Hydro's system atSture, Europe's first installation, is22,000 cu m per hour; BP's HoundPoint in Scotland is 34,000 cu mper hour, and the ConocoPhillipsplant at Teesside will handle16,000 cu m per hour of vapour.

The ConocoPhilipsmarine vapourrecovery system(MVRS) at Seal

Sands in the UK will beoperational, as will be therecently announced system forthe Mongstad crude oil terminalnear Bergen, in Norway.

The Mongstad terminalreceives crude oil deliveries fromthe Troll Oil Pipelines I and II,amounting to around 400,000barrels per day, transhipped oilapproximating to 240,000 barrelsper day from Heidrun field, andalso by shuttle tankers from theGullfaks, Norne and Åsgardfields. It has six rock cavernswhich can store up to 9.4 millbarrels of oil. About one-third ofall the crude oil produced by theNorwegian state and Statoil fromthe North Sea is stored andexported from the terminal.

In terms of tonnage, the port atMongstad is the largest in Norway,and in Europe, is second only toRotterdam. It has two jetties, eachable to handle crude oil carriers ofup to 380,000 dwt and one ship-to-ship transfer jetty that can acceptvessels of up to 440,000 dwt.Annually, some 450 tankers call at

the crude oil export terminal.Statoil has chosen a

conventional carbon bedabsorption technology for itsMVRS, and has awarded aNOK115 mill contract for thisequipment to Aker Kvaerner CoolSorption of Denmark.

According to Tomm Lund ofCool Sorption, while no newtechnology is involved, the sheerphysical size has necessitatedsome new thinking, including anengineering focus on noisesuppression from the largevacuum pump sets. The vapourrecovery units will occupy an areaof about 40 m x 38 m, and theeight carbon bed vessels will stand15 m high against the skylinewhen they are installed next year.

The export system has beendesigned to handle thesimultaneous loading to twotankers at a total of 30,000 cu m

per hour of crude oil.The recovery processhas the capacity to treathigh alpha values ofvapour at a flow rate of36,000 cu m per hour. Ithas an environmentaltarget to recover aminimum of 90% ofnon-methane VOC at alltimes, with a systemavailability of 95%.

Recovered VOC vapour will bereabsorbed back into the crude oilbeing exported.

The principle employed incarbon bed absorption technologyis that the crude oil vapourgenerated during loading into thetanker's cargo tanks is ventedthrough a vapour arm, and blown

along a pipeline to the carbon bedabsorption vessels. As the VOCvapour passes through the bed, itis filtered by the activated carbon.The hydrocarbons are absorbedon the surface; but the pure airand methane are vented throughthe filter to atmosphere. Whenthe carbon bed becomessaturated, the vapour is divertedto an alternative absorptionvessel, and the saturated one isregenerated. By using a vacuumpump, the pressure in the carbon

More VOC recoverysystems

By the end of next year, the number of marine loading terminals in Europe with facilities to collect and recover volatile organic compounds (VOC)

from crude oil will have risen from two to four.

TECHNOLOGY - VAPOUR CONTROL


Norway’s Mongstad terminal

TO

p34-41.qxd 07/12/2006 13:03 Page 8

Holm said he did not think itwas possible to run a shippingcompany on paper any more."We are getting to the pointwhere seafarers spend most oftheir time doing administrationwork," he said.

"We use ShipNet foraccounting and purchasing,Synergi for quality, and Ulyssesfor documentation and control ofour ISM system.

"We believe - if you want to bein this business, you need to betransparent," he said. "Webelieve in the long run this paysoff, even if you have to pay someheavy prices in between.

Customer care is aboutinformation and transparency."

Holm's gripe was that oilcompanies were not offeringinformation about what scoresother tanker companies aresubmitting, which is ratherhypocritical when benchmarkingagainst other companies is citedin TMSA itself.

Another gripe was how oilmajors are still rejecting ships forsmall documentary mistakes,which seems unnecessary whenthey are gathering so much in-depth information about the ships."It's strange," he said.

Seafarers and how thecompany treats them, is the mainfactor in how well the wholecompany performs, he said."What is the most important partof shipmanagement? I thinkeverybody is in agreement,quality crew is hard to get."

Holm was very sceptical aboutthe quality of seafarer comfort onboard vessels being built today,which includes sit-down toiletswithout cubicles for privacy, and

“Suddenly it'snot a matterof bringingcargo from A

to B - it's how you do it, and howyou document how you do it,"said Claus Holm, Tesma's directorof safety and quality, talking atTANKEROperator's one dayTMSA conference in Athens.

TMSA is not about whether ornot your safety systems are goodenough; it is about the oilcompanies telling you what kindof safety systems they want to see,and they will use their marketpower to get it. Whatever wasgood enough in the past might notbe good enough in future.

TMSA is also about gettingsenior management, particularlyshipping commercial people, tofocus more on safety issues,because they have a bigger threatof having their ships expensivelyidle if they won't.

"It focuses management'sattention more than any documentI've ever seen," said CaptainDavid Stockley, chief operatingofficer, Stealth Maritime,previously operations director ofGeneral Maritime ShipManagement.

Meanwhile, there seems to besome convergence of opinion,according to conference chairmanDimitris Lyras, that getting tostage 2 is a good place to be.

Apparently several oil majorsoriginally decided that vessels fortimecharter would have to be atlevel 4, but since lowered theirexpectations to level 2, when theyrealised that they would beunable to find any shipsotherwise.

Captain Panos Hatzikyriakos,

head of safety, quality andenvironment with tanker giantOSG, echoed probably thefrustrations of many tankercompany safety managers, askingwhy it was necessary for him, ascompany safety manager, to fly toNew York because an oilcompany wanted to do a TMSAaudit there, rather than the NewYork staff being able to handle itby themselves.

And many companies stillhave a long way to go in findingorganised ways to resolve goalconflicts which frequently arisebetween safety and commercialdepartments - one example beingif the vessel had to rush to get toa shipyard on time to meet a slot,which might entailcompromising safety.

Holm seemed to have a way ofsorting out the problem. "I feel likeI'm from another planet when Isay, I don't care what it costs, youhave to do it, he said. "If it takesthree days, so be it, let thecommercial people scream at you."

TMSA should keep theindustry occupied for many yearstrying to improve. "If everyone isin compliance with level 2, then itwill go to level 3, then level 4,"said Holm. Which, of course, wasprecisely the aim of TMSA'sinventors.

"The oil companies have everyright to have requirements in howwe operate our vessels," saidLyras. "But our core interest hereis to drive this initiativeourselves, to steer it in a directionwhere it is less prescriptive, sowe can operate vessels safely andat a profit.

"I think we can try to drive thisin a direction that provides a

differentiation and rewards thecompanies with an economic andsustainable way to exceed theexpectations of our clients."

The best idea at the conferencecame from Captain Tony Field,marine management systemsmanager, Piraeus, Lloyd'sRegister, of a plannedmaintenance system for seafarers.

Imagine - treating seafarerswith the same loving care thatmost shipping companies treattheir machinery - with a computersystem to make sure that everyseafarer gets adequate lubrication,nutrition, exercise, sleep, time athome, social activity, privatetime, privacy, health checks, andtraining.

TESMA's Claus HolmHolm was interested in exploringthe issue of whether TMSA was amessage from oil companies[improve or your ships go idle], oran improvement tool. TESMA isusing it as an improvement tool.

To help things along, it hasmade a decision to opt fortransparency in everything it does.

TMSA ATHENS CONFERENCE REPORT


TMSA - Oil majorsinconsistent

TANKEROperator's Athens conference found many questions unanswered as it is still early days on the long road to self-assessment

TESMA's Claus Holm

p42-44.qxd 01/12/2006 18:33 Page 1



tankers, 40 more than Exxon had- fully trained and vetted. Theoffices were always subject toISPS audits, flag audits, PSCinspection. Now I had somethingelse coming up. I walked awaymystified.

"I decided, as usual, you can'tbeat the system, let's read thebook. We asked, do we do it now,must we do it now, do we need itnow, do we want it now, whatdoes it involve, how much is itgoing to cost."

"Within days of this book, I gotcalls from experts - class andconsultants. They wanted to teachus how to do TMSA. They offercourses, procedures so we'd allsuddenly become compliant.

"A new industry seemed to beevolving. I wondered how theywere going to teach us how tomanage ships. This is one of thedangers - everybody is an expert.The difficult thing is decidingwhich experts can help you.

Stockley said he had beeninvolved in two implementations,working as operations director ofGeneral Maritime Management,managing one of the world'slargest tanker fleets, and then aschief operating officer withStealth Maritime, which has fouraframaxes and one VLCC, with afurther 28 LPG vessels undercommercial management.

"In General Maritime the safetymanagement system is fullyevolved. It was a matter ofanswering the questions anddeciding where we want to go,"he said.

"In Stealth we had a newcompany. We wanted to bring ourships in house and reduce ourmanagement ships by 50%. Wehad to build a completeinfrastructure to manage thenumber of ships."

On working out your approachto TMSA, Stockley said that thefirst step is to decide what yourcompany is. "Don't let Exxon tellyou who you are," he said. "Ifyou are a four ship companydoing a good job in Piraeus, youare not Interorient or TESMA.Setting a target is one thing,

double cabins. "Some countrieshave higher demand for standardsof prison cells," he said. "Whydoesn't someone do somethingabout that?"

"Recently the InternationalLabour Organisation (ILO) cameup with a big huge report on newlegislation. It had no demandsabout accommodation," he said.

"But why is it so difficult for ajunior officer to get a job if hehas no sailing experience? We seeofficers going to sea training asapprentices. How many of youwould you advise your kids to goto sea? Hardly any. Is there amessage there somehow?

"Are we just asking thesequestions - or are we going toreally do something to change it?"

Holm was unhappy about thelevel if inconsistency in howTMSA is being applied by oilcompanies. "I think TMSA willhelp when everyone agrees to alevel of TMSA and all oil majorshave the same approach to it," hesaid. "I don't think it will helpunless you have a dialogueongoing with your customers."

Marco Ahrens,Interorient Navigation

Marco Ahrens, marine manager,Interorient Navigation, sawTMSA principally as abenchmarking tool. "We seeTMSA as a way to improve andmeasure our standards comparedto the industry average," he said."It has not proved to be a hugelycostly affair to date."

Interorient owns and managesabout 130 vessels, including 50under full management. Thecompany's approach to TMSAhas been to sit down, go throughit, and identify gaps.

"We complied with 70% of theKPIs. But we did not and do notaim to reach a certain level by acertain date," he said.

Since then, the company hasworked particularly hard onenvironmental management,reliability and maintenancestandards, he said. The companyruns in-house office seminars, itdevelops its own in-house

software, and has a continuousprocess of trying to improve it.

Interorient's TMSA effortsstarted in August 2004, when thecompany general manager andquality managers visited London,in connection with the launch ofTMSA.

The £25 fee was submitted toOCIMF in October 2004, and thefirst TMSA form submitted inDecember 2004, in response to arequest from a timechartercustomer. Interorient submittedupdated TMSAs in August 2005,July 2005 and November 2005,and had its first audit inNovember 2005.

Since December 2005, it hassubmitted quarterly updates. Thesecond oil major TMSA auditwas in July 2006.

Captain David Stockley,Stealth Maritime

"But assume every oil major caresabout TMSA," Stockley noted."When you have orders, TMSAgets dropped very fast. One USchemical company spent a lot oftime inspecting a ship, then theysaid, you have to reduce the crewby 50% because you havemulticultural crew on board."

The key to getting the best outof TMSA is in how it isimplemented. "If it's implementedproperly, we need it. But if it's ameans to an end, eg procedureput in place withoutinfrastructure, commitment andknowledge, then it doesn't help."

"You can treat TMSA as a

regulation or a guideline," hestressed. "I would prefer thatcommon sense is used. We needit as a tool to improve rather thanforcing it on people."

Captain Stockley noted that hewas master of a VLCC beforeISM, ISPS and TMSA camealong, and thought at the time hecommanded a good ship with anexcellent shore team.

"Most people still at sea wouldconsider themselves sceptics," hesaid. "We've been burdened bybureaucratic processes, spellingout what we used to call goodseamanlike practises. I wouldsay, for each change, there hasbeen a cost, and I don't thinkonly a financial one. Now we arebreeding a new breed ofseafarers who have stoppedusing common sense".

Stockley said that one time,when working as an oil companyvetting inspector, he went onboard a ship, which had achecklist on the bridge ready forthe inspector called 'checklist forrunning aground'.

"This is an example of how theindustry has gone stark ravingbonkers," he said. "It should havesaid 'captain don't do it.""

Stockley said he had initiallybeen highly sceptical aboutTMSA. "I participated in the firstseminars run by Exxon. I listenedto them and read the book andasked questions."

"Here I was, running 50

Marco Ahrens, marine manager,Interorient Navigation

Captain David Stockley, chiefoperating officer, StealthMaritime

p42-44.qxd 01/12/2006 18:33 Page 2

about six months with ABS. Thegap analysis took two months.Preparing and revising procedurestook three months. Softwareselection took four months."

As a result of the work, "weare more aware of our criticalprocesses," he said.

Capt Tony Field,Lloyd's Register,

Capt Tony Field, marinemanagement systems manager,Piraeus, Lloyd's Register, gavesome suggestions about howcompanies could improveseafarers’ performance.

Shipping companies couldform seafarers into teams whichalways work together, one teamon and one team off, so they getto know each other better.

Multinational crews don't helpencourage teamwork, he said.Also teamwork could beimproved between the officeand crew.

It might be good to look at thelevel of diversity in the teams."People say, if you get moresimilar people, you will get afaster decision, but perhaps it'snot the best decision. On a ship -an engineering department isbetter with a mixture of timeserved engineers and cadets."

Seafarers are motivated bymoney, but they also want a goodlifestyle, development prospects,job satisfaction, and to feel partof the company," he said. "Its notrocket science - but we have todo things."

alone in this problem. This is theproblem of all modern shippingcompanies," he said.

Haris G Giantzikis,Arcadia

ShipmanagementHaris Giantzikis, technicalmanager of ArcadiaShipmanagement said we have aKPI on the software which tellsus the number of jobs that arescheduled to be done. We reducedthe number of jobs to be donefrom 10% to 2.5%.

Altogether the company isscoring itself on TMSA 2.86."We're trying to see which level oflevel 3s we can work out," he said."Areas we can improve includeidentifying critical equipment,management of spare parts, riskassessment, best practises andbenchmarking," he said.

"We asked the question - wheredo we start, what do we do," hesaid. "We are 40 peoplealtogether, together with theshipowners," he said. "There aresix of us in the technicaldepartment."

Giantzikis talked about thecompany's efforts on maintenanceand reliability (TMSA element 4).

"Commitment came from allof our departments. The riskmanagers tried to do what theycould. We were formally helpedby DNV, and risk assessmentwas running with the assistanceof ABS."

"The risk assessment took



TO

we have the time to do the day today work," he said.

There is a very tough formalinduction process for newseafarers. "The companyencourages and supportspersonnel taking higher educationcourses to improve their value tothe company and their possibilityfor promotion within theorganisation," he said.

OSG spends "an eight digitnumber" [over $10 mill] everyyear on crew training. "Theamount of training I got in fouryears is the same amount today'sseafarers get in two years," he said.

The company is alsopioneering efforts to developsoftware to measure seafarers'competence.

OSG has two or three seafarersworking in the company office atany time, as specified in TMSA."The knowledge they pass whenthey go back to the vessel is sovaluable," he said. "It's one of thebest things that the TMSAintroduces." OSG is currentlylooking at different software toolsfor root cause analysis. "There's alot in the market," he said.

On the issue of riskassessment, OSG initially wasnot receiving enough riskassessments, but now it has somany risk assessments it doesn'tknow what to do with them.

One gripe is that safety is oftenconsidered to be the safetymanager's responsibility, not thewhole company's responsibility."Sometimes I feel that we are

producing is another," he said. Talking of workload, Stockley

said: "If your company did nothave an environmental policy,and they want to be level 2, Idefy anyone to say there is noextra workload.

"I would like to know anyquality department that has notgrown in the last 2 years. There'snot a lot of change out of$300,000 and it could havebeen more."

The concept of KPIs is oftenmisunderstood, he said. "They area useful tool to measure andimprove. If you do think about it,KPIs are a good tool. But youneed to think, do we really want todo this, or is it a bureaucraticexercise without any benefit at all.A lot of KPIs put in place havebeen done for the sake of it."

"We have an industry thatrelies more on manuals, and Idon't know what the end is. If amaster runs a ship aground,would he know what to dowithout picking up a checklist? Idon't know, but I don't see thingsbeing answered by software andchecklists."

Stockley said he did notbelieve that training could solvethe problem of a lack ofexperienced seafarers. "Trainingwithout experience is nothing.You can train my grandmotherbut she can't drive a ship. It's avery small element," he said.

Capt PanosHatzikyriakos, OSG

OSG's Hatzikyriakos said withreference to the TMSA indicator,"management commitment isclearly defined in documentationthat includes mission statements,policies and procedures", OSG'sceo and head of shippingregularly visits the vessels."That's a huge task - we have 130vessels," he said.

The company also has a DVDexplaining what the companywants to achieve.

"We need excellence," he said.It also has a large number ofsafety meetings. "We have somany meetings I never know how

Capt Panos Hatzikyriakos,OSG's head of safety, qualityand environment

Haris G Giantzikis, technicalmanager, ArcadiaShipmanagement

Capt Tony Field, marinemanagement systems manager,Piraeus, Lloyd's Register,

p42-44.qxd 01/12/2006 18:33 Page 3

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TANKEROperator · facility) in Ras Laffan which is expected to be operational by end 2009. Ownership of vessels to transport the associated products of LPG, sulphur and condensate