World Bunkering > News > Summer 2009 > Single-hull compromise

Olga Bogacheva

The most worrying issue concerning the bunkering market during the last several months has been the compulsory removal from services of single-hull bunkering vessels (heavy fuel carriers), as required by MARPOL convention. The operation of single-hull tankers with deadweight ranging from 600 to 5,000 tons, had to be cancelled during 2008.

However, the international convention does not require the compulsory use of double-hull bunkering vessels in the inland territorial waters of the signatory states. In practice, it was found that operations in many European and Asian ports confirm this conclusion – up to 80% of tankers operating in inland waters do not comply with MARPOL Rule 21.

Shock decision

The relevant order was issued by the Transport Ministry of the Russian Federation on April 17, 2008, and it shocked all operators of the bunkering market. Flag state administrations usually inform businesses in advance about the introduction of new rules, thus providing a transition period for the implementation of necessary measures to conform to the rules. This was not the case in Russia, where nobody believed that convention requirements would be applied to port bunkering vessels.

“The undue haste of the decision became evident immediately after its publication,” one of the market participants said. “It is evident that these rapid and restrictive actions by the government were caused by the catastrophe in the Kerch Strait in November 2007 when several tankers carrying fuel oil were holed during a violent storm. It is unlikely that anybody wished to destroy the domestic bunkering market; most probably they just forgot to take it into account.“

Whatever the intention of the ministers concerned, immediate implementation of the Transport Ministry order would bring the industry to a standstill because 90% of tankers in operation are single-hull.

Vitaly Kovalev, President of the Russian Association of Marine and River Bunker Suppliers, said: “The Russian Association of Marine and River Bunker Suppliers urgently made all reasonable efforts to solve the problem of single-hull vessels, taking into account both protection of the environment and industry interests. We arranged numerous discussions among officials, bankers and shipbuilders aimed at finding a mechanism that would provide an opportunity for businesses to continue operations and for the flag state administration to ensure the safety of each working tanker.”

Exceptions to the rule

At present the Transport Ministry has adopted the so called mechanism of exception from general convention rules. Individual permission will be granted to each vessel meeting the following provisions:

• Compliance with requirements of Chapter IX of the International Convention SOLAS 74;
• Vessels older than 10 years should pass maintenance to upgrade the hull to the 2 SS level (vessels Class PMPC), U-2 (Vessels Class PPP). This ensures that its condition is equivalent to the condition of a new vessel used for no more than 10 years;
• Operations of the vessel should be limited to the port, harbour and coastal area with the borders established in the Register with account of local conditions;
• The shipowner should insure the vessel to cover damages and losses resulting from the maximum possible fuel spill;
• The shipowner should present a programme of replacement or modernisation of the vessels in operation;
• A statement from the relevant port administration is also necessary

At the time of writing, two St Petersburg companies, Scanship Neva and Sea Engineering (a Lukoil subsidiary), have received an exception from the general convention rules for their vessels.

Shipowners possessing vessels which do not comply with MARPOL requirements may continue operations in other ways. For example, they may assign their vessels for work with light-end oil products only. If the tanker is equipped with double bottom side tanks, the capacity of these tanks may be excluded from the total deadweight when calculating whether the vessel is allowed to operate.

Limiting the cargo deadweight carried by the tanker to 600 tons is another option. Expert opinion, however, considers that these measures may reduce a company’s efficiency by up to 68%. Voluntary reduction of deadweight will also lower the performance of the vessel, especially under unfavourable weather conditions. To ensure safety, tug-boats are used, thus bringing additional expenses. However, under certain circumstances bunkering companies consider these approaches economically feasible. For example, Komplekt Service, Novorossiisk, reduced the deadweight of its tankers Don and Shipka to 600 tons and continued operations with heavy fuel.

Modernise or replace?

“Fleet modernisation is the challenge of the moment. Any successful company striving to stay in the market is interested in working with safe and manoeuverable vessels with modern equipment,” said Oleg Borisov, deputy director of Scanship Neva, a Petersburg barge company. “Our company adopted a programme of complete modernisation of our two tankers over the last two years. A Petersburg company will prepare the designs, and reconstruction will be performed at our shipyards. Taking into account the present economic situation, our company will invest our own funds in this project”.

Vessel modernisation and reconstruction is rather expensive; the time needed is similar to that needed for the construction of a new vessel. Thus, many experts consider fleet replacement is more feasible.

The world crisis has restricted the availability of financial support from outside the company. In addition, credit has became very expensive in Russia. However, shipbuilding development became a priority in the country this spring. The government has adopted two programmes providing state support for the design and building of ships at domestic shipyards. This may include the development of a generic design for a bunkering tanker financed by the state budget, financial support for the necessary research, the partial subsidisation of interest rates, and leasing construction of ships.