Phasing out of single hull vessels in Nigeria (part 1):

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

The Nigeria oil and gas sector which is the main stay of the economy requires huge shipping and logistics services for its smooth operation. Oil tankers transport some 1,800 million metric tons of crude oil around the world by sea. Statistics indicate that average cargo traffic of 152 million metric tons worth over $5billion in freight earnings are generated in Nigeria annually. As at today, over ninety percent of these incomes are earned by foreign shipping companies.

In an attempt to gradually boost the Nigerian citizen’s capacity and improve national economic performance through indigenous participation in the shipping and logistics services, the promulgation of several laws have occurred , specifically noting the Coastal and Inland Shipping Act 2003 (Cabotage Law) and Nigerian Oil & Gas Industry Content Development Act (Local Content Act).  The importance of a healthy global oil tanker market is undisputed. About 60% of all oil that is produced is traded and roughly 2/3 of the world’s oil trade moves by tanker. The market for tanker transport capacity is just as much a commodity as the crude oil that is transported, which makes it a very competitive market.

After seven years of attempted cabotage implementation, many of us have questioned whether it will ever work and the Nigerian Maritime Administration and Safety Agency (NIMASA) has struggled despite their slightly commendable attempts which in my opinion has been marred by a lack of consistent leadership at the helm of NIMASA; a result of politicking at the Federal government at the peril of the maritime industry already on its knees.

This article is not aimed at analysing the implementation of the Cabotage law. It is aimed at discussing the current trend sweeping across the world as member states of the United Nations (UN) and signatories to the MARPOL 73/78 convention are steadfastly implementing the directive to phase out single hull vessels. A positive practice which has seen great implementation in an attempt to meet the 2010 deadline.  We will examine in this series, the current trend in Nigeria and the economic cost to our Indigenous ship owners who on the one hand are major owners of single hull vessels and on other hand are sought to be encouraged by the Cabotage Act regime and the Local Content Act. We would also consider whether the the attempts of the Federal Government are effective considering the reality that many vessels in our waters are single hull vessels owned by both foreigners and locals. What are the consequences on our economy and the impact of the international world to our attitude of implementing the UN regulation?

What is a hull, and a double hull vessel?

Firstly, it should be noted that the “Hull” is the body of a ship between the deck and the keel. The shaped structure of the bottom of a vessel that provides buoyancy and seaworthiness.

A double hull vessel can be defined as a ship designed for the carriage of oil in bulk where the cargo spaces are protected from the environment by a double hull consisting of double side and double bottom spaces dedicated to the carriage of ballast water. These ballast spaces extend for the full length of the cargo carrying area. Some vessels have only partial double-hulls - with the sides of the ships having two hulls, but only a single bottom. These are not included as double-hulled in official statistics. A single hull vessel is a ship designed for the carriage of oil in bulk where the cargo spaces are protected from the environment by a single hull and a single bottom.

How did the issue of phasing out single hull vessels occur?

Shipping is an international industry, therefore maritime safety and prevention of marine pollution from ships in any country or any region cannot be separated from the rest of the world. The International Maritime Organisation (IMO) is the competent regulatory body under the UN for international shipping and their main objective is to provide for Safer Shipping and cleaner oceans. The MARPOL 73/78 is the international convention for the prevention of Pollution from Ships, 1973 as modified by the Protocol of 1978. (MARPOL is short for marine pollution and 73/78 short for the years 1973 and 1978). Its stated objective is to preserve the marine environment through the complete elimination of pollution by oil and other harmful substances and the minimization of accidental discharge of substances. All ships flagged under countries that are signatories to MARPOL are subject to its requirements, regardless of where they sail, and member nations are responsible for vessels registered under their respective nationalities.

The devastating effect of the oil spillage in Erika in December 1999 and the Prestige off the Spanish coast in November 2002, sped up the response of the UN to adopt in December 2003 amendments to Annex I of the MARPOL Convention.

The regulation 13G of MARPOL Annex I brought forward the phase-out schedule for existing single-hull tankers that was first established in 1992 and was subsequently revised in 2001. It specified that tankers of single hull construction should be phased out or converted to a “double hull” according to a schedule based on their year of delivery.

The double hull requirements for oil tankers are principally designed to reduce the risk of oil spills from tankers involved in low energy collisions or groundings. There was also Regulation 13H of MARPOL Annex I on the prevention of oil pollution from oil tankers when carrying heavy grade oil (HGO). It banned the carriage of HGO in single-hull tankers of 5,000 tons deadweight (DWT) and above from 5 April 2005, and in single-hull oil tankers of 600 DWT and above but less than 5,000 tons DWT, not later than the anniversary of their delivery date in 2008.

Under regulation 13H, HGO means any of the following:

• crude oils having a density at 15ºC higher than 900 kg/m3;

• fuel oils having either a density at 15ºC higher than 900 kg/ m3 or a kinematic viscosity at 50ºC higher than 180 mm2/s;

-bitumen, tar and their emulsions.

While we have only given a brief history behind what necessitated the essence behind the regulation to phase out single hull vessels, next week promises to elaborate on some vital occurrence on Nigeria waters and the economic effect of the UN regulation on our indigenous shippers. It will also examine the consequences of the Federal government dragging their feet in implementing the regulation.

Source: Business Day. Kelechukwu O. Okafor. 21 July 2011

http://www.businessdayonline.com/NG/index.php/law/legal-culture/24912-phasing-out-of-single-hull-vessels-in-nigeria-part-1