Shipowners rocked by safety proposals

Date: 16/03/2000

By Bruce Barnard

EUROPE'S campaign to drive substandard oil tankers from its seas risks backfiring in the face of mounting opposition from shipowners and the international maritime community.

Shipowners have been bracing themselves for the introduction of tougher safety rules for years as Europe belatedly responds to claims that it is a haven for 'tanker trash' which cannot trade with the more safety-conscious US and Japan.

The European Commission has had to move quickly because an increasing number of tankers reaching the age ceiling for operating in US waters are looking for work in Europe.

Most shipowners initially welcomed the Commission's latest safety drive, expecting it to reward quality vessels and punish rogue operators. They recognised that it was only a matter of time before Europe caught up with the US legislation which followed the grounding of the Exxon Valdez on Prince William Sound more than ten years ago. They were also confident that they could resolve technical disagreements with Brussels and count on help from sympathetic transport ministries in Union capitals.

But all that changed on 21 December when the Erika, a 24-year-old, 37,000-ton petroleum products carrier, broke in two during a storm in the Atlantic and deposited around 29,000 tons of heavy fuel oil on the French coastline.

The timing could not have been worse for the tanker industry, which was already preparing to lock horns with the Commission's maritime safety unit.

The French government, responding to outraged public opinion, was bounced into drafting a ship-safety charter promoting stringent new rules, including a 20-year age ceiling for tankers chartered by French oil companies and sailing to the country's ports. President Jacques Chirac blasted tanker owners and oil firms for their 'mad drive for profit' and Prime Minister Lionel Jospin pledged to make maritime safety a priority of the French presidency of the EU in the second half of this year.

The industry's counter campaign was not helped by the fact that the Erika incident was a purely European affair. The vessel was chartered by the Franco-Belgian oil major TotalFina; registered in Malta, which has just begun Union accession negotiations; and received a technical bill of health from the Italian classification society Rina.

The incident also refocused attention on the poor safety record of ships flying the flag of another would-be EU member, Cyprus - the home of scores of Union-based operators, from Greek tanker owners to German container-ship companies, seeking a more friendly fiscal regime.

Tanker operators fear there is a danger that politicians will exaggerate the scale of the problem. "The fact is that the safety record of this sector of the shipping industry has improved beyond all measure in recent years," insisted Richard Paniguian, chairman of BPAmoco Shipping.

The number of oil spills has fallen by around two thirds since the establishment of the Oil Companies International Marine Forum, which represents 35 top oil firms, in 1970. "Even taking Erika into account, the past year has been one of the best on record from a shipping-safety point of view," said Paniguian.

However, the fact that three of the Erika's Japanese-built sister ships suffered structural failure undermined confidence in industry self-regulation.

The classification societies have been accused of lowering their standards to win business in a tight market. The International Association of Classification Societies, which represents the world's 13 leading societies responsible for 60% of the world fleet, has just drawn up new rules for more frequent and tougher inspections but analysts fear competition between the societies will remain a problem.

Tanker owners argue that the Commission is pursuing an arbitrary 'ageist' agenda by cracking down on old vessels even if they are well managed and maintained by reputable operators.

There is universal agreement that double-hull tankers reduce the risk of pollution resulting from a collision or grounding. The dispute is over the transition period for phasing out single-hull vessels.

Owners are aghast that the Commission wants to change the rules for phasing out single-hull tankers set by the International Maritime Organisation (IMO), the United Nations agency for shipping.

The IMO allows single-hulled tankers to trade for five years beyond their 'use by' date of 25 years, so long as they have Hydrostatic Balanced Loading (HBL) - technical jargon for loading oil above the water level of a tanker so that its cargo will not spill after a sinking, collision or grounding.

Owners are irked that the EU executive is ignoring a study it commissioned by the Swedish Maritime Research Institute which shows that HBL is second only to double hulls in limiting the outflow of crude in an accident.

Disquiet over the Commission's proposals has prompted the IMO to warn of the damaging consequences of Brussels pursuing a "shotgun" go-it-alone policy, with IMO secretary-general Bill O'Neil claiming that unilateral action in response to the Erika incident "could end up in chaos".

O'Neil insists it would be wrong for any one region or country to go out on its own, while Asian countries complain that unilateral action by Brussels would simply drive substandard ships into their waters, undermining global war against rogue shipowners. A recent report for the Dutch government estimated 15% of the world fleet is substandard.

Resigned to unilateral action by the Union, shipowners were consoled by a landmark ruling by the US Supreme Court two weeks ago that Washington State's unilateral safety rules were illegal as they exceeded those laid down by federal law.

Some owners question whether the world's shipyards could cope with a sudden surge in orders for double-hulled tankers as single-hulled vessels are banned from EU waters. They claim that the first double-hulled ships ordered after the Exxon Valdez disaster were built in a rush and some had to cut short their maiden voyages to return to the shipyards for repairs to cracks. The surge in orders also persuaded South Korea to boost its shipbuilding capacity, which eventually was used to capture non-tanker orders from European yards.

Industry analysts reckon between 60 and 64 million dead-weight tons of tankers would have to be built by 2005. With tanker-building berths in Japan and South Korea fully booked for two years, it is unlikely this ambitious timetable could be met. However, Japanese yards have some slack and China would probably reorganise its order book to make way for lucrative hard-currency orders.

There is still room for compromise. Shipowners met Commission officials recently to discuss the issue and are now preparing to lobby member states. It is the one topic which is sure to galvanise Greece, home to the world's biggest tanker fleet, into action.

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