19 August 2011

Phasing out of single hull vessels in Nigeria (part 2):

Impact on the economy and the consequences of languishing behind the deadline set by the United Nations

Last week, we began the series by introducing the brief history which intensified efforts by the United Nations (UN) via its International Maritime Organisation (IMO) to phase out the use of single-hull vessels for transporting oil products.

It was made clear that the rationale behind the exercise is to ensure for safer shipping and cleaner oceans by limiting the toxic waste caused by oil spill from a single hull vessel. It was also highlighted that double-hull vessels are considered to be environmentally safer because their inner hull helps protect against oil spills if the outer hull is punctured.

In order for the IMO to ensure for clarity and compliance by member nations, the IMO divided Oil tankers into 3 categories namely:

1. Category 1 oil tanker means an oil tanker of 20,000 tons deadweight and above carrying crude oil, fuel oil, heavy diesel oil or lubricating oil as cargo, and of 30,000 tons deadweight and above carrying oil other than the above.

2. Category 2 oil tanker means an oil tanker of 20,000 tons deadweight and above carrying crude oil, fuel oil, heavy diesel oil or lubricating oil as cargo, and of 30,000 tons deadweight and above carrying oil other than the above.

3. Category 3 oil tanker means an oil tanker of 5,000 tons deadweight and above but less than that specified in Category 1 or Category 2 oil tankers.

The IMO also provided a phasing out schedule to be followed depicted in the diagram.

The IMO regulation requires tanker owners from member states to stop operating single-hull vessels by the end of 2010, while vessels built with a double bottom and single sides can continue trading until 2015. However, mounting pressure by member states resulted in an amended regulation 13G (7) in the revised Annex I which entered into force on 1 January 2007) of Annex I of MARPOL, which allows these same certain single hull vessels the opportunity to trade to 2015, but only after the successful completion of a Condition Assessment Scheme (CAS) which is applicable to all single-hulls of 15 years or older.

What is a condition assessment scheme (cas)?

CAS is an inspection program designed to check and report on the vessel’s physical condition and on its past performance based on survey and IMO’s International Safety Management audit reports and port state performance records.

However, even with successful CAS certificates in place, the IMO regulation grants flag states their own rights for controlling access to its ports. Major tanker ports around the globe have already indicated that 2010 will be the final year in which they will allow single-hulls to call at their ports, regardless of a vessel’s CAS status. What this means for Nigerian ship-owners of single hull vessels with a CAS certificate is that another member nation can stop the Nigerian vessel from calling at its port to deliver its product. Nigeria also has the right to stop a single hull vessel owned by a member state from calling at its port. For instance, Togo as a signatory of the IMO convention can stop all Nigerian single hull vessels from coming to its port to deliver oil products.

Approach of certain nations to phase out single hull vessels:

The UAE has already made its stand clear that no single-hull vessels will be allowed into any of the country’s ports after 2010. The UAE way back in 2008, began streamlining regulations and have made it clear that no single-hull tankers will be allowed to trade in the UAE after the 2010 deadline.

We noted last week that the Prestige spill, involving a single-hulled tanker in the EU damaged hundreds of miles of Atlantic coastline and Spain’s fishing industry. The EU reacted by banning most single-hull tankers from hauling heavy oils to its ports. Single-hulled tankers carrying fuel oils, such as heavy fuel, tar, bitumen and heavy crude oil, were banned with immediate effect.

South Korea also declared that single-hulled tankers greater than 5,000 tons will be barred from operating in territorial waters as of 1 January 2011.

In the United States (US), ship owners have already taken out single hull vessels to meet the 2010 deadline and single hull vessels currently operating are doing so with a CAS certificate. Reports have also shown that those operating with a CAS certificate are ready to take their vessels out of service by the phase-out deadline in 2015 and would take a “wait-and-see” approach to making replacements in the future because the industry currently has more vessels than needed to meet the current shipping demand, and vessel owners said the rates they receive for shipping oil products are currently not high enough to justify investing in replacements for the future. The US however allows for Category 2 or 3 single-hulled tankers that have passed a “Condition Assessment Scheme” to operate until 2015, or until their 25th year in service, whichever is earlier.

Reports  have shown that  since January 2009, the very large crude carrier (VLCC) fleet has dropped from 96 single-hulls (19% share of the fleet) to only 36 (7% share) at present. Many member nations understand the rationale behind this phase out exercise and next week, we shall examine whether Nigeria understands the essence behind the phase out exercise? We shall also examine some legislation which I believe were passed which shows Nigeria’s seriousness to keep our waters clean and some biological effects we stand to face if we do not comply with the phase out exercise.

Source: Business Day. Kelechukwu O. Okafor. 28 July 2011

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