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Unscrupulous owners may break the low-sulphur rules
( LL ) UNSCRUPULOUS shipowners appear to be preparing to break the tougher sulphur emission regulations that will come into force from next January.
The rules will require all ships operating inside an emission control area either to use a fuel with a sulphur content of 0.1% or to produce emissions of an equivalent low level.
That means they will have to use more costly distillate fuel, today about $300 per tonne more expensive than standard fuel oils, or spend millions of dollars installing an exhaust-gas cleaning scrubber or converting the vessel to run off liquefied natural gas.
Even though the regulations will apply to all ships that operate in an ECA, there are signs that some owners are preparing to ignore the rules.
The Danish Shipowners’ Association has warned Copenhagen that some of its members are already losing forward cargoes for 2015, as they cannot offer prices as competitive as other operators’.
The DSA claims that some of its dry bulk shipowners have factored in higher fuel costs to charters for after January1 next year, whereas competitors are offering prices significantly lower.
The association says this suggests that these firms are not accounting for any fuel-price increases while operating in the ECAs. It has called for stronger action against any owners that flout the sulphur regulations.
It is not yet clear how the regulations will be enforced.
The 2015 drop to 0.1% sulphur is written into International Maritime Organization regulations and into European Union regulations.
Two years ago, the European Commission told Lloyd’s List it was developing guidelines to be issued to port state control authorities in the areas on how the regulations should be enforced.
DSA vice-president Jan-Fritz Hansen said he was not aware of guidelines, but added that the existing fines for regulatory non-compliance are not a strong enough deterrent.
The DSA has estimated that a commercial vessel running though the English Channel and then into the Baltic Sea through the Kiel Canal could save up to $300,000 per trip by using heavy fuel oil instead of a low-sulphur diesel.
Additionally, the DSA has been told by a major international shipowner that only one of 1,000 port calls in Europe was subject to a fuel test to ascertain the sulphur content of the fuel.
Mr Hansen warned that the chances of being caught only one time in 1,000 while saving $300,000 each ECA voyage made the risk of a $27,000 fine worth taking.
Mr Hansen insisted that Danish owners would comply with the rules, despite the negative competitive effects.
The DSA is urging the Danish government to get greater assurance from Europe that there will be a strict enforcement regime as of January 1 next year.
Mr Hansen said that if owners were already beginning to lose cargoes because their competitors were using the regulations to offer cheaper freight prices, then the problem needed to be solved now, not next year, and with serious threats of detentions, thus depriving owners of their vessels.
No one was available from the European Commission to comment on any further developments of guidelines for port state enforcement of the 2015 sulphur regulations ahead of this story being published.
The Paris Memorandum of Understanding on Port State Control said any inspections will be entered into its database as usual, but there had been no discussions of a concentrated enforcement campaign as its member states were both inside and outside the ECA region.
A spokesperson for the Netherlands Ministry for Infrastructure and Environment, under which port state control functions are co-ordinated, confirmed via email that there would be increased inspections, with methods such as sniffing and sampling being used to test for compliance.
The spokesperson also said any actions against non-compliance would be dependent on situations on board vessels, and be estimated on a case-by-case situation.
Nakilat looks to growth on posting stable annual net profit
( LL ) QATAR Gas Transport Company, better known as Nakilat, kept its balance sheet relatively stable in 2013 with a net profit of QR729m ($200m) in 2013, down modestly from QR765.5m in 2012.
The company attributed the result to its status as the world’s largest transporter of liquefied natural gas and its efforts to enhance that position.
Nakilat added four joint venture vessels to its LNG carrier fleet, increasing its total vessel count from 54 to 58 once the vessels are delivered this year.
The joint venture, Maran Nakilat, runs with Greece’s Maran Gas.
Nakilat told investors that the four newbuildings would carry gas produced by global energy projects outside Qatar.
It said expanding to global markets would have “strategic and operational benefits”, increasing the company’s future growth opportunities to “achieve attractive returns on the investment of our shareholders”.
Nakilat’s LNG fleet represents around 15% of the world’s seaborne LNG-carrying capacity.
The total global fleet of LNG carriers is around 390 ships.
As part of its diversification of its fleet, Nakilat has completed its first full year of technically operating and managing four very large gas carriers jointly owned with fellow Qatari shipowner Milaha, cementing that partnership and its wider relationships with Qatar’s energy business.
Last year was marked by several impressive finance deals.
Nakilat arranged $917m in refinancing with Qatar National Bank and refinanced another $1.3m for the joint venture Maran Nakilat, in which Nakilat increased its ownership to 40% from 30%, and added the four vessels previously mentioned.
In December 2013, Nakilat successfully arranged $160m bank financing for its shipyard joint ventures, shiprepair yard Nakilat-Keppel Offshore & Marine and shipbuilder Nakilat Damen Shipyards Qatar, with Al Khaliji Bank.
As of December 31, 2013, total assets of Nakilat, including its share of its joint venture assets was more than QR44bn.
Japanese shipbuilder denies error in MOL Comfort’s design and construction
( LL ) MITSUBISHI Heavy Industries has defended the design and construction of MOL Comfort, one of the largest ships lost at sea, having been taken to court by shipowner Mitsui OSK Lines in a case widely watched by shippers and insurers.
In an email to Lloyd’s List, the Japanese yard said: “The design of the vessel… has complied with classification societies’ rules and regulations related to hull strength and satisfied inspection requirements for the ship under construction.
“Thereby MHI believes that there has not been any problem in MHI’s design and construction.”
MOL has launched the lawsuit against MHI for damages related to MOL Comfort and costs of strengthening six sisterships in Tokyo District Court, with the first preparatory hearing due on March 5.
After the hearing, at least another 10 preparatory hearings are expected at an interval of five to six weeks before the examinations of witnesses and experts begin. The court would then invite the two parties to have final briefs before fixing a judgment day.
MOL’s move came after the carrier established a limitation fund for clients hit by the accident at the same legal authority, which received around 600 claims before the deadline for filing passed in mid-November.
The MOL-MHI case is intertwined with the limitation fund despite legal proceedings being carried out separately, as the amount of damages is related to total claims.
“A court-appointed administrator is still evaluating the claims based on the principle of one cargo, one claim to avoid double claims,” said Shuji Yamaguchi, an attorney with law firm Okabe & Yamuguchi representing some cargo interests involved.
“The total amount of claims is not fixed. Some non-vessel operating common carriers have not yet indicated the amounts but filed their claims against the fund first, in case they receive claims from cargo interests in the future.”
Makoto Hiratsuka, senior partner of Hiratsuka & Co representing some cargo interests and NVOCCs, expected MOL’s claim against the yard to more than double from the present level when the dust settles.
“The carrier demands $40m now… I estimate the demand will expand to more than $100m,” Mr Hiratsuka said.
Both lawyers expect MOL to object to the claims made against the limitation fund by arguing it is not responsible as a carrier due to defects of MOL Comfort, and that MOL will try to prove those faults in the MHI case.
If this occurs, claimants would still be able to pursue MOL in the court or launch separate cases against MHI while the MOL-MHI case is still proceeding, the lawyers said.
MOL was not expected to suffer much direct cash loss itself even without those moves, as the vessel had a $66m hull and machinery policy led by Mitsui Sumitomo and was protected by Japan P&I Club for claims from cargo interests in many cases.
However, if MOL makes claims to insurers for damages and liabilities, premiums will likely rise later.
“Insurers would seek to recover in any case. In the scenario they fork out the final payments for MOL, they would raise premiums for the carrier in the future,” Mr Hiratsuka said.
There is an alternative option for insurers of not only MOL but also cargo interests: they could accept the claims first, if there are any, and follow MOL’s case to take action against MHI, the lawyers said.
The yard’s statement that it complied with International Association of Classification Societies rules and passed inspections of ClassNK are likely to form the backbone of its argument in the legal wrangle, but may not help avoid full liabilities against other parties.
“Cargo interests and underwriters may initiate proceedings against MHI,” Mr Yamaguchi said.
“In my opinion, the yard could be liable if the defects exist based on Japan’s Product Liability Law, even if it followed the class societies’ rules.”
Mr Yamaguchi pointed out MOL’s liabilities are limited to about ¥4.1bn ($40m) in the accident due to the Convention on Limitation of Liability for Maritime Claims, but liabilities for MHI are estimated at ¥40bn-¥50bn or more as yards do not enjoy such limitation.
Gathering direct evidence related to MOL Comfort has remained difficult after the 2008-built, 8,110 teu vessel split off Yemen in mid-June and sank in high seas in the following weeks, along with all 4,372 boxes on board.
But an investigation led by MOL, MHI and ClassNK found buckling deformations approximately 20 mm high on the bottom shell plates of six sister vessels of MOL Comfort, all of them owned by the carrier.
The investigation suggested MOL Comfort could have split due to possible deformation, heavier-than-expected weights of containers, or both reasons. It remains difficult to determine where the responsibilities lie since the causes are not confirmed.
Aside from MOL Comfort, MHI has built 10 vessels sharing a similar design under ClassNK over the past seven years — and all have had their hull structures strengthened after the incident.
Some of the vessels were the first in the world to use high-tensile steel, which was supposed to enhance the reliability of hull structures against brittle fractures through reduced plate thickness, an MHI report said. ClassNK participated in establishing relevant standards.
Lloyd’s Register, technical adviser to the probe, has been requested by MOL to dual-class the six ships owned by the carrier.
In addition to the MOL-owned ships, MHI built three vessels for Nissen Kaiun and one for Tokei Kaiun, and the two Japanese owners did not ask LR to dual-class their ships that were leased to MISC on long-term charter.
The Malaysia-based owner, which already wrapped up its container business, has been sub-letting them to other operators that include APL. At least two of the ships are now redelivered.
Chartering interest for them has not been affected by the casualty, said an Asia-based container broker.
“APL would have looked at the legal prospects of early redelivery, if that was the case. But as far as I know, the [redelivered] ships met the minimum charter periods,” the broker said.
Chinese state carriers increase their share of national crude oil imports
( LL ) THE four Chinese state tanker companies have increased their contribution to transporting crude oil imports substantially in the past year, but still fall far short of the 2015 national goal to carry 70%-80%.
The four national tanker franchises, subsidiaries of four state-owned conglomerates, in total shipped 47% of the crude for Unipec in 2013.
Unipec is the world’s largest charterer of very large crude carriers and the trading vehicle of Sinopec Group.
The remaining 53% of crude imports was served by foreign tonnage.
The ratio marks a substantial improvement from just over 40% of crude oil imports carried on state tankers in 2010, according to Li Jianhong, president of China Merchants Group, which owns Shanghai-listed China Merchants Energy Shipping.
CMES, with 12 very large crude carriers in service, the smallest of the four, carried 5% of total imports by Unipec, the country’s largest oil trader, Mr Li said in CMES’ extraordinary general meeting on Tuesday, citing data provided by Sinopec.
The company, which has the most international clientele among the four, sourced less than 50% of its volumes from Unipec last year and the rest from international cargo owners.
The remaining 42% of Unipec imports were shipped by Dalian Ocean Shipping Company, China Shipping Development and Nanjing Tanker.
The companies are controlled by China Ocean Shipping Group, China Shipping Group and Sinotrans & CSC.
Imports carried on state-owned tankers remain well below the 70%-80% goal laid out in China’s 12th five-year plan, a grand economic blueprint that runs from 2011 to 2015.
CMES, which is 20% owned by Sinopec, booked 10 VLCCs in two state-owned yards last year and is aiming to order more, although it did not specify how many newbuildings.
The company wrote down Yuan2bn ($326.6m) from the value of 19 tankers in its fleet, including the disposal of three VLCCs, which is expected to hit its bottom line for 2013.
“The impairment charges make us well-positioned to take advantage of the forthcoming market recovery,” said Mr Li. “We are confident that we now have the world’s most competitive and cost-efficient tanker fleet.”
Mr Li is also chairman of CMES and was a senior executive at Cosco Group before joining China Merchants in 2010.
CMES also owns seven aframax tankers, seven capesizes, two panamaxes and 12 handymax bulkers, and controls a 50% share in China LNG Shipping (CLNG), the country’s first liquefied natural gas shipping franchise, with six 147,000 cu m vessels on the water.
Partnered with western owners, CLNG is a joint bidder in the Yamal project, which shortlisted seven consortia in the third quarter last year to operate 16 ice-class LNG ships.
Final tendering results are expected between late March and early April, according to a source involved in the matter.
CLNG, which ships LNG into China from Western Australia, West Papua, Indonesia and Bintulu, Malaysia, on long-term, fixed-rate contracts, has achieved over 10% return on investment in the past few years.
It also owns a 20% stake in four 174,000 cu m LNG newbuildings serving the Queensland Curtis project led by BG Group and China National Offshore Oil Corp. The four ships are to be constructed at Hudong Zhonghua.
“CLNG is exploring more opportunities with long-term, fixed returns. We’re not inclined to place speculative orders or be exposed to the spot market,” said Su Xingang, chairman of CLNG and vice-chairman of China Merchants Group.
Mermaid Marine Australia agrees to buy Singapore’s Jaya Holdings
( LL ) Mermaid Marine Australia announced that it has agreed to buy Singapore’s Jaya Holdings in a cash deal worth S$625m ($495m).
The deal would give the Australian-based oil and gas marine services provider two shipyards in Singapore and Indonesia and a fleet of 27 vessels.
Mermaid, based in Freemantle, currently operates a fleet of 34 vessels.
“The combined businesses would represent one of the largest offshore marine services companies in the Asia Pacific region,” said Jeff Weber, chief executive of Mermaid Marine Australia, in an emailed statement.
To finance the deal, Mermaid said it would raise A$217m ($196m) from a share sale to existing holders priced at A$2.40 per share and another A$100m from a sale of new shares to institutions.
Mermaid said that Australia & New Zealand Banking Group and National Australia Bank have provided new debt to support the transaction.
The acquisition is subject to approval by shareholders.
Jaya reported net profits of $7.2m in its second quarter ending December, up 11% from the year-earlier period.
The group saw a 31% growth in revenue to $33m due to better charter utilisation of 83%, up from 80% in last year’s quarter.
Mermaid also announced earnings for the first six months of its fiscal year on Tuesday, reporting a 26% year-on-year fall in net income to A$24.2m. The profit decline was caused by delays in the start of new projects, leading to lower utilisation rates, the company said.
Cathay Asset Management, a subsidiary of Deutsche Bank, bought a majority stake in Jaya for $165m from Affinity Partners in early 2011.
Golden Ocean profits rise
( LL ) OSLO-listed dry bulk operator Golden Ocean has reported full-year revenue of $308.9m and a net profit of $84.5m, compared with the $229.8m revenues and $11.6m net profit reported for the full year 2012.
Total operating revenue in the fourth quarter of 2013 was $71m, compared with $55.9m in the final quarter 2012.
A fourth-quarter net profit of $18.1m compares favourably with the $9.3m reported a year earlier. It is also up from $16.1m in the third quarter of 2013.
However, Golden Ocean has warned that first-quarter 2014 is proving to be weaker than the year end as more vessels are delivered and the company retains a high exposure to the spot market.
In its financial statement, the Norwegian group said that 60m dwt was added to the dry bulk fleet in 2013, while 22m dwt was scrapped; giving a net fleet growth of 7% at the year end, the lowest growth in four years.
The company expressed market sentiment when saying fleet utilisation turned in favour of owners towards late 2013, with higher fleet utilisation being expected by both owners and analysts, resulting in a fresh spree of newbuilding orders and prices rising by 15% during the year.
In its full year statement, Golden Ocean said that there was good visibility when it came to supply of new vessels over the coming two years, and it expected the delivery ratio compared to the official orderbook to be higher than that experienced in the last three years, with scrapping levels remaining low.
On the demand side, however, the group indicated the position would remain positive.
Golden Ocean said that demand from China for coal and iron ore remained intact and demand in India from the country’s new coal fuelled power stations, along with improved port infrastructure, had resulted in increased imports of 10%.
The John Fredriksen-controlled company is still in arbitration to win back payments from China’s Zhoushan Jinhaiwan Shipyard, following the cancellation of nine kamsarmax vessels in late 2012. While the company has received a positive award in relation to two of the cancelled deals, it is seeking further payments relating to the other cancelled orders. Golden Oceans claims it has paid an aggregate of $175.3m on these vessels.
The group’s remaining newbuilding programme consists of eight supramax vessels with the remaining expenditure for the vessels standing at $195.3m.
Total operating revenue in the fourth quarter of 2013 was $71m, compared with $55.9m in the final quarter of 2012. A fourth-quarter net profit of $18.1m compares favourably with the $9.3m reported a year earlier.
For the full year 2013, Golden Ocean has reported revenues of $308.9m and a net profit of $84.5m, compared with $229.8m revenues and $11.6m net profit reported for the full year 2012.
In January, Golden Ocean issued a $200m convertible bond with a five-year tenor and a coupon of 3.07%, and has acquired three 2012-built kamsarmax bulk carriers, with delivery in late April.
Asian Air Freight Hubs See Solid Growth
( JOC 24/2/14 ) Asia's leading air freight hubs have gotten off to an encouraging start to the year, posting healthy growth rates across the board in January.
Last year Asia-Pacific airports saw only a 0.9 percent increase in tonnage, according to data from Airports Council International. But demand picked up toward the end of the year, and the latest figures suggest key lanes also saw expansion last month.
South Korea's Incheon International Airport, Asia's third largest by tonnage last year after Hong Kong International Airport and Shanghai Pudong, handled 198,000 tons in January, up 8.2 percent compared to a year earlier.
HKIA saw volumes rise 5.3 percent year-on-year to 352,000 tons last month, primarily due to a 10 percent increase in exports, with throughput to and from Southeast Asia and Europe the best performing lanes.
Changi Airport Group said volume through Singapore rose 3.8 percent year-on-year in January to 151,400 tons as air shipments picked up ahead of Lunar New Year celebrations at the turn of the month.
Speaking to the JOC from Thailand, Stewart Sinclair, managing director of Suvarnabhumi Airport ground handler Bangkok Flight Services, said "imports were flat year over year for both December 2013 and January 2014 but exports were up 11 percent and 11.5 percent, respectively."
Although final figures from ACI revealed sluggish cargo growth overall last year, some airports bucked the trend.
The Malaysian airports of Kuching, Penang and Subang recorded growth of 39.1 percent, 24.7 percent and 15.6 percent in 2013, respectively.
In Japan, Nagoya posted a 16.4 percent year-on-year hike in throughput.
In India, Cochin increased volumes by 12.9 in 2013 compared to a year earlier.
And in China, airports at Kunming and Xiamen reported growth of 11.4 percent and 11 percent, respectively.
( LL ) THE Seychelles Police Force has completed its autopsy on the two US private security officers found dead on board Maersk Alabama last week.
infarction (heart attack)”.
“Samples of urine, blood, stomach contents etc, from the two men are being sent to Mauritius for forensic analysis to establish if they had consumed a substance which may have induced these events,” the police added.
The police also named the two men as Jeffrey Reynolds and Mark Kennedy, who were contracted out to Maersk from Trident Group, a security firm in Virginia, and said arrangements were underway for their repatriation.
In a statement, Trident Group chief executive Thomas Rothrauff said that people should not make assumptions about the incident without knowing all the facts.
He said: “Assumptions are being reported about this situation without the benefit of any fact -based information.
“These reports have been devastating to Mark and Jeff’s family, friends and SEAL brothers and we urge them to cease.
“Trident Group will continue to support Mark and Jeff through the repatriation process until they are safely back with their loved ones.
“I urge everyone to consider the honourable service to this country and dedication to the commercial merchant industry that Mark and Jeff have provided before conclusions are jumped to and judgement is passed over these two special warfare operators.”
The two men were found dead in a cabin on the 1,092 teu containership last Tuesday in Port Victoria in the Seychelles, where it had berthed the previous day.
Maersk said in its statement last week that Trident had been hired in accordance with US Coast Guard security directives.
It was the hijacking of Maersk Alabama by Somali pirates in 2009 that gave rise to the film Captain Phillips, starring Tom Hanks.
Pirates bring operations ashore
( FP ) More proof that Somali pirate gangs have switched to land-based operations came with the announcement yesterday that two Kenyan civil engineers were kidnapped while working on a construction contract in Mogadishu.
Andrew Mwangura, secretary general of the Seafarers Union of Kenya, told IHS Maritime that the kidnappers belong to a group controlled by pirate boss Mohammed Gafanje. They have demanded a $1M ransom from the men’s families. The Kenyans were seized on 12 January and are being held in Haradheere.
The pirates are members of the Habargidir-Hawiye clan, which was implicated in the kidnapping of US journalist Michael Scott Moore in January 2012 and British tourist Judith Tebbutt in September 2011.
Pirate leader Mohamed Abdi Hassan, aka Afweyne, is a prominent member of the clan, based in Galguduud region. Along with alleged accomplice Mohamed Adan Tiiceey, Afweyne is in Belgium charged with the 2009 hijacking of dredger Pompeii.
Somali online news source Waagacusub.net recently alleged that Tiiceey and Gafanje had invested substantial sums from piracy in a UK-based money transfer business.
Pirates are holding a dozen hostages captured on land, most of them seized since maritime piracy operations were scaled back in mid-2012 in response to naval patrols and onboard armed security. Mwangura said: “There has been a recent acceleration in kidnap for ransom on land of aid workers and tourists, who are then transferred to the coast for ransom negotiations.”
The union leader added: “Somali pirates have the capability to adapt, and are already doing so. Some pirates have even begun to offer their services as counter-piracy and negotiation experts.”
Mauritius seeks to become armed security hub
( Fairplay ) he Mauritian capital Port Louis is well placed to become a regional hub for embarking and disembarking weapons for onboard security teams, some private maritime security company (PMSC) personnel believe.
Patrick Bouquet, area manager for logistics company RDT (Maurice), told IHS Maritime: “Mauritius is well situated in the Indian Ocean, and using Port Louis to proceed with the transit of the PMSC is much more attractive for the shipowner as well as for the PMSC itself.”
Other advantages cited include lack of port congestion, 24-hour access and low tariffs. “For each vessel proceeding with a crew change, a discount of 50% is applicable on the port dues,” Bouquet noted.
Bouquet added that regulations on the transit of arms and ammunition have recently been tightened to “eliminate any risk of diversion of the weapons towards any illicit usage”. Once disembarked, weapons are transferred under escort to the police armoury.
The stricter controls may have been introduced in response to recent allegations by the Conflict Awareness Project, an anti arms-trafficking NGO, that Mauritius was about to be used by Russian gun-runners as the centre for an illicit arms trade to conflict zones. The claims are being investigated by the country’s Independent Commission Against Corruption.
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