News From The Maritime Industry
Wärtsilä and Samsung to co-develop most efficient LNG Carrier & Shuttle Tanker solutions
Wärtsilä Corporation, Trade press release, 4 April 2019 at 10.30 am EEST
The technology group Wärtsilä and Samsung Heavy Industries (SHI) have signed a Joint Development Project (JDP) agreement aimed at establishing a more efficient solution for LNG Carrier and Shuttle Tanker vessels. Overall cost optimisation, including both CAPEX and OPEX, is among the project aims. The agreement was signed on 3 April at the LNG19 exhibition in Shanghai.
The JDP will build on the sharing of knowledge and experience between SHI and Wärtsilä, a company with unique single-source supplier credentials. It is expected that the agreement, which provides a level of equality that is greater than in normal shipyard/supplier relationships, will benefit both parties and the industry as a whole, since it gives valuable opportunities for important co-creation.
“At Wärtsilä we are committed to creating greater efficiencies, better environmental sustainability, and improved safety for our customers. The joint development with SHI will support this commitment. SHI is a major high-tech, high-value shipbuilder with a number one newbuilding share in various vessel markets. We are, therefore, delighted to be partnering with them in a project that will ultimately benefit owners and operators around the world,” says Timo Koponen, Vice President, Processing Solutions, Wärtsilä Marine.
“We look forward to working with Wärtsilä to co-develop LNG Carriers and Shuttle Tankers with improved efficiency. We are both market leaders in our spheres, and this joint development underscores the mutual respect and appreciation that we have for each other’s knowledge and experience,” says Jin-Taek Jung, Executive Vice President, Engineering & Procurement Operations, SHI.
An important driver for the JDP is the strong LNG carrier newbuilding market. There are potentially dozens of new vessels to be ordered for transporting increasing volumes of LNG from both new and extended export LNG terminals in Africa, Australia, Middle East and USA.
April 3rd, 2019 — Sweden’s Furetank Rederi AB is selling its 17,999 dwt LNG dual fueled product tanker Fure Vinga, delivered just over a year ago to Canada’s Groupe Desgagnés Inc. Neither privately held company has disclosed the price involved, however Furetank has already ordered an identical replacement ship with China’s Avic Dingheng Shipbuilding. The agreement with the yard includes an option for one further vessel.
The cruise ship Oasis of the Seas has suffered an unspecified casualty in dry dock at Grand Bahama Shipyard, a major repair and refit facility for the Caribbean cruise industry.
Few details are available at present, but the video suggests that the vessel has taken a slight tilt to starboard in a floating drydock. One of the drydock’s cranes has tipped over and come to rest against the Oasis’ superstructure.
“Ship collapsed, dock collapsed, crane collapsed,” said a shipyard worker in a video posted to social media (above). “I was right there on the dock working and just missed it by the grace of God.”
In a statement, cruise line Royal Caribbean said that the shipyard has reported eight injuries related to the accident, none of which are life-threatening. “We are aware of damage to the dock structure and to construction cranes. We are assessing damage to the ship. Drydock is a maintenance procedure, and there are no passengers on the ship,” Royal Caribbean said.
At 1,200 feet long and 6,300 passengers at full occupancy, the 2009-built Oasis of the Seas is one of the largest cruise ships in the world. She is scheduled for a series of cruise itineraries in Europe this summer, followed by a major scheduled drydocking for a “bow-to-stern revitalization.” She will be homeported in Miami for fall and winter 2019.
Sanctions against Iran, Syria and North Korea: Sanctions information on skuld.com
29 March 2019
On 25 March 2019, the US Department of the Treasury published an OFAC Advisory to the Maritime Petroleum Industry which highlights sanctions risks related to petroleum shipments involving Iran and Syria. The Advisory does not provide a comprehensive summary of US sanctions but serves as a clear warning that the US government will aggressively target those involved in sanctionable activity under Syria or Iran related sanctions. Reference is made to deceptive shipping practices, such as turning off AIS transmitters and concealing cargo origin by STS transfer or falsified documentation. The Advisory identifies some risk mitigation measures and spells out the sanctions risk related to the provision of underwriting services, insurance and reinsurance to certain Syrian and Iranian marine-related persons or activity. The Association reminds members that cover is excluded where payment by the Association or the provision of cover may expose the Association to the risk of being subject to a sanction, prohibition or any adverse action by a state or international organisation or competent authority.
On 21 March 2019, the US government issued a North Korea Sanctions Advisory with updated guidance on addressing North Korea’s illicit shipping practices. The Advisory contains a useful summary of US and UN sanctions and describes methods used to evade sanctions, particularly through the use of STS transfers, with a focus on the export of coal and import of refined petroleum.
Members are reminded that the INSIGHT pages on Skuld’s website provide comprehensive and up to date information, materials and articles on sanctions targeting the governments Iran, Syria and North Korea as well as sanctions in other countries which have an impact on shipping.
Australia Intensifies Efforts to Contain Solomon Islands Oil Spill
Australia is deploying more assets to the Solomon Islands in an effort to contain the oil spill from the grounded bauxite bulk carrier Solomon Trader which is moving towards the UNESCO listed World Heritage area.
“Given escalating ecological damage, and a lack of action by commercial entities involved, the Solomon Islands Government has requested Australia’s assistance,” Marise Payne, Australian Minister for Foreign Affairs, said.
“In response, we are mobilising an offshore pollution mitigation operation, including equipment, vessels and specialised personnel, under the leadership of AMSA and working alongside the Solomon Islands government’s own efforts,” Payne added.
On February 5, 2019, the Solomon Trader carrying over 700 tons of heavy fuel oil ran aground in Solomon Islands’ Rennell and Bellona Province due to inclement weather conditions. The 73,600 dwt vessel remains in Kangava Bay, Rennell Island, home to a UNESCO World Heritage site.
Aerial assessments conducted by the Australian Maritime Safety Authority (AMSA) have confirmed that up to 75 tons of heavy fuel oil from the ship has dispersed across the Island’s sea and shoreline, contaminating the ecologically delicate area.
The oil spans five to six kilometers across the shore and is moving towards the adjacent World Heritage area. There is a high risk that the remaining heavy fuel oil on the vessel — over 600 tons — will be released into the surrounding area, according to a statement issued by Australian Department of Foreign Affairs and Trade (DFAT) last week.
Australia stressed it is supporting the Solomon Islands government to hold the responsible commercial entities to account for the ongoing oil spill.
“Australia continues to stand behind the Solomon Islands Government’s efforts to ensure that commercial parties responsible for this incident take action and are held responsible,” the minister concluded.
The 1994-built Solomon Trader, previously known as Ocean Amber, is owned by Hong Kong-based King Trader Ltd, data provided by VesselsValue shows.
Incat Lands 1000-Passenger Ro-Pax Ferry Design Contract
Australian designer Incat Crowther has been contracted to design a 1000-passenger ro-pax ferry for operation between mainland China and Taiwan.
As informed by the Sydney-based naval architect, the ferry will be built by AFAI Southern Shipyard and operated by Fujian Strait Shipping Co (CSF) between Pingtan Island and the Taiwanese cities of Taichung, Taipei and Kaohsiung.
The ro-pax will have two vehicle decks capable of carrying 230 cars or 42 containers while the passenger cabin will have seating for 1000.
According to Incat, the Fujian Strait Shipping Co (CSF) vessel will be the largest aluminium ship built in China, and when in operation, will promote the further cross Taiwanese Strait public and economic exchange.
Fincantieri, Viking Ink Deals for Two Ocean Ships
Italian shipbuilder Fincantieri and US-based cruise company Viking Cruises have signed contracts for the first two of six ocean ships ordered in March 2018.
The two newbuilds will be delivered to its owner in 2024 and 2025, according to Fincantieri.
In partnership with the shipowner, the shipbuilder plans to develop a project based on the characteristics of the previous ships, upgraded and revisited in line with the latest available technologies.
Viking’s current ocean fleet includes ships having exclusively all-veranda staterooms, a gross tonnage of about 47,800 tons with accommodation for 930 passengers in 465 cabins.
Fincantieri started its partnership with Viking in 2012. Today, the cooperation which first began with an order for two ships has reached a total of 20 units, including the order awarded to Vard for two special cruise ships and the options.
As explained by Fincantieri, this is an all-time record, the largest number of units built by a shipbuilder for one sole shipowner.
The first in the series, Viking Star, was built at the shipyard in Marghera and delivered in 2015. The other units, Viking Sea, Viking Sky, Viking Sun, and Viking Orion, handed over in 2016, 2017 and 2018, were all built at the Ancona yard, as well as Viking Jupiter, which joined the shipowner’s fleet in February 2019.
Other ten units — options included — for Viking Cruises will take to the sea from the group’s Italian yards between 2021 and 2027.
BOA Management Transports Norway’s Sunken Frigate to Main Navy Base
Norwegian frigate HNoMS Helge Ingstad was successfully transported to the country’s main navy base after spending over four months almost completely submerged following the collision with tanker Sola TS in November 2018.
The frigate arrived at the Haakonsvern navy base on the BOA Management-operated semisubmersible barge “Boa barge 33” on Sunday, March 3.
The lifting operation itself started on February 26 and saw heavy-lift vessels Scaldis and Rambiz lift the frigate off the sea floor and transport it 15 nautical miles from the Hjeltefjorden fjord to Hanøytangen where the ship was loaded onto the barge for the final stage of her transport.
To remind, HNoMS Helge Ingstad and Maltese-flagged tanker Sola TS collided on November 8, outside of the Sture terminal in Øygarden Municipality in Hordaland County, Norway. The frigate was heavily damaged in the collision and was driven onto the rocks in attempt to prevent her from sinking completely. Several days later, however, the frigate slipped from the rocks into deeper waters and spent over four months almost completely submerged.
The Aframax oil tanker did not sustain damages below the waterline in the collision and only minor fuel spill had been detected around the vessel.
Norway’s defense ministry said the next steps in the process will be to save as much equipment from the frigate as possible. Once this is completed, the navy will be able to better assess the ship’s condition and make a definite decision on its future.
CMA CGM Unveils Massive Cost-Cutting Plan
French shipping major CMA CGM is launching a USD 1.2 billion cost reduction plan despite record revenues seen in 2018.
As informed, the company will implement “a global plan” in 2019 to improve its operational performance.
CMA CGM intends to achieve this objective through the optimization of lines and brands, and by further streamlining its processes.
“In 2019, despite persisting geopolitical tensions, trade perspectives are positive. We will continue our development with the objective of improving profitability. That is why we are launching a new USD 1.2 billion cost reduction plan,” Rodolphe Saadé, Chairman and Chief Executive Officer of the CMA CGM Group, commented.
The group closed 2018 with record revenue of USD 23.48 billion, an increase of 11.2% when compared to revenue of USD 21.12 billion seen a year earlier.
In 2018, volumes carried by CMA CGM for the first time exceeded 20 million TEUs, rising by 9.3% year over year.
The increase was attributed to the commercial dynamism of most of the shipping lines operated by the group, in particular the Transpacific, India/Oceania and Africa lines.
“In 2018, in a difficult environment, the Group posted a sharp rise in volumes and a record revenue of nearly USD 23.5 billion. Despite an increase in oil prices, our recurring EBIT margin remains considerably above the industry average,” Saadé said.
“We are pursuing our strategy of innovation and digital transformation in order to continue to offer excellent service to our customers and strengthen our performance,” he added.
During 2018, the group accelerated its digital transformation through the development of IoT and Artificial Intelligence, as well as partnership agreements related to blockchain. In addition, the CMA CGM Group opened an incubator in Marseilles, ZEBOX, which already hosts 15 start-ups from around the world.
CMA CGM also initiated a major strategic partnership with Swiss logistics company CEVA Logistics. The acquisition was approved by the European Commission in January this year.
In February 2019, CMA CGM launched a friendly public tender offer for CEVA’s shares.
This move represents a major transformation that will make the CMA CGM a 100,000-employee strong group, with more than USD 30 billion in revenue.
“Through the friendly public tender offer we are conducting on CEVA, our ambition is to become a world leader in both transport and logistics,” Saadé concluded.
CMA CGM currently controls a fleet of 509 vessels with a combined capacity of 2.71 million TEUs. In addition, its terminal network comprises 45 strategically-placed terminals worldwide.
The "PACIFIC VOYAGER" - Court of Appeal decision
12 February 2019
In November last year the Court of Appeal handed down judgment in the PACIFIC VOYAGER , a case concerning the circumstances in which an owner under a voyage charter is under an absolute obligation to proceed to the loadport by a certain date. The Club has previously reported on the earlier High Court decision.
To recap the facts
- The parties entered into a charter on amended Shellvoy 5 terms for loading in Rotterdam and with a laycan that expired about a month after the charter was fixed.
- At the time the fixture was entered into, the vessel was carrying out a voyage for the previous charterers from Egypt to Antifer, France.
- Part 1(B) of the Shellvoy 5 form has a box headed “Position/Readiness” to be filled in under two entries, one under “Now” and the other under “Expected ready to load” (ERTL). No ERTL was given, but an itinerary for completion of the current voyage including an ETA at the disport Antifer.
- While transiting the Suez Canal on the way to the disport, the vessel struck a submerged object and repairs were needed.
- The vessel missed the laycan and the charterers terminated the charter.
It’s settled law that where a charterparty contains
- an obligation on the owner to proceed to the loadport with “utmost despatch” (as in clause 3 of Shellvoy 5) or “with all convenient speed”, and
- an ERTL or ETA at the loadport
there is an “absolute” obligation to start the approach voyage by a date when it is reasonably sure that the vessel will arrive at the loadport on time.
It’s important to keep in mind that both parties accepted that the charterers were allowed to cancel the charter due to the vessel missing the laycan. The dispute was about whether the charterers could also claim damages: the additional costs of a substitute fixture, which in this case were considerable. To succeed with that it was necessary to show a breach of an absolute obligation to commence the voyage to the loadport by a certain date.
In the first instance judgment the High Court found in favour of the charterers by extending the rule mentioned above and applying it to the facts of the current case, where there was no ERTL or ETA at the loadport, but there was an ETA for the completion of the prior voyage.
The Court of Appeal Decision
The Court of Appeal agreed with the High Court’s decision.
In short, there is (as the Court put it) “no particular magic” in the concept of an ERTL or an ETA at the loadport. An ETA set out in the recap for completion of the prior voyage was equally valid as a point from which to determine the date by which the approach voyage to the loadport had to be commenced.
The decision emphasises that where the parties have agreed that the vessel must proceed to the loadport with “utmost despatch” (or, by analogy, “with all convenient speed”), the obligation is an important one, intended to give comfort to the charterer. To give it meaning, there needs to be a date by which the approach voyage must be commenced, and that will be determined by looking at all relevant terms of the charter- not only by reference to an ETRL or an ETA at the loadport.
The Court did not give permission to appeal.
Reprinted with the kind permission of SKULD P&I
Saudi Arabia’s tanker owner Bahri has dismissed reports that one of its very large crude carriers (VLCCs) was breaching U.S. sanctions on Venezuela.
Namely, the company’s 303,000 dwt oil tanker Abqaiq is on its way from the Red Sea to pick up a cargo from the Port of Jose Terminal in Venezuela for one of its Indian customers.
Bahri explained that the cargo was contracted on January 9, 2019, before the U.S. sanctions were imposed against Venezuela on January 28, 2019. The company added that the Abqaiq voyage is expected to be completed before the end of the exemption period allowed to wind-down agreements.
“Venezuela is a frequent loading destination for Bahri’s oil tankers, delivering cargoes to ports in India and China. Hence, the recent voyage to the Port of Jose is not an exceptional or peculiar one, as lately stated by a media outlet,” Bahri concluded.
The company’s explanation comes on the back of a report by S&P Global Platts suggesting that the VLCC Abqaiq may be in violation of the sanctions.
The U.S. sanctions on Venezuela left more than 20 tankers, loaded with 9.6 million barrels of Venezuelan oil, stranded off the U.S. Gulf Coast in the initial ten days following their implementation, according to Reuters.
Venezuela’s crude exports dropped to 1.275 million barrels per day (bpd) in January, from 1.37 million sent out in December, Reuters cited data from Refinitiv Eikon. US imports of Venezuelan crude averaged under 0.5 million b/d last year. The biggest buyer was Citgo, followed by Valero, Chevron and PBF.
“The sanctions come at a time of restricted supply of heavy sour crude and so it may be challenging to replace Venezuela’s barrels but not impossible. Similar quality crudes could be sourced from different sources, most likely from Latin America and Canada,” according to Gibson Shipbrokers.
There is also a possibility of higher shipments from the Middle East, but that will be subject to OPEC’s willingness to increase production.
“The loss of Venezuela-US crude trade is a negative for regional Aframax and Suezmax demand, although this in part will be mitigated if trade from other Latin American countries rises as a result.”
Furthermore, Venezuela’s state-run oil firm PDVSA plans to divert the volumes effected by sanctions to China, Russia and India, where Rosneft has an equity stake in refining assets.
Several cargoes which had been en route from the US to Venezuela when sanctions were announced have been rerouted elsewhere. If Venezuela is unable to find alternative suppliers of diluent, about 250,000 – 300,000 b/d of the country’s output could be at risk, Gibson said.
The latest sanctions are also expected to halt Venezuela’s imports of other clean US products, with shipments averaging around 80,000 b/d in 2018.
Fincantieri Delivers Latest Cruise Ship to Viking Cruises
zoomImage Courtesy: Fincantieri
Italian shipbuilder Fincantieri delivered the cruise ship Viking Jupiter to cruise line Viking from its Ancona shipyard on February 7.
Viking Jupiter, which can accommodate 930 passengers, is the sixth of overall 16 units Fincantieri is set to deliver to Viking.
With a gross tonnage of about 47,800 tons, the vessel is a part of the small cruise ship segment. The keel-laying ceremony for the ship was held in October 2017.
The first of the series, Viking Star, was built at the shipyard in Marghera and delivered in 2015. The other units, Viking Sea, Viking Sky, Viking Sun, and Viking Orion, handed over in 2016, 2017 and 2018, were all built at the Ancona yard.
Other 10 units, options included, for Viking Cruises will take to the sea from the group’s Italian yards between 2021 and 2027.
Wärtsilä to deliver world’s first hybrid retrofit for short-sea shipping vessel
Wärtsilä Corporation, Trade press release, 8 February 2019 at 10 am EET
The technology group Wärtsilä has signed an agreement with the international shipping company Hagland Shipping AS for a hybrid retrofit installation. The project will take place onboard the ‘Hagland Captain’, a general cargo vessel owned by Hagland Shipping. It will be the first project of its kind ever in short-sea shipping applications. The agreement was signed in December 2018.
The installation of a Wärtsilä battery hybrid propulsion solution will significantly enhance the ship’s environmental performance by reducing its emissions, fuel consumption, and noise. Included in the solution are a shore power connection to provide power for loading/unloading operations and for battery charging, a new reduction gear with power take-off (PTO) and power take-in (PTI) technology, and a Wärtsilä NOx Reducer (NOR). It is estimated that the total reduction in nitrogen oxide (NOx) emissions after the retrofit could be as much as 80 to 90 percent, while overall fuel cost savings are expected to be in the range of 5 to 10 percent. The battery capacity will be sufficient to sail in and out of harbour on electric power for approximately 30 minutes, which will effectively reduce noise and pollution levels in the vicinity of the harbour.
The project is in response to a collaborative agreement between Hagland Shipping and NOAH AS, the Norwegian environment and resource company, whereby the shipping of materials to the island of Langøya in Norway is required to be via environmentally sound vessels. Wärtsilä’s solutions will play a crucial role in enabling the ‘Hagland Captain’ to meet this requirement. Valuable input to the project concept has been given by the non-profit NGO, Bellona.
“Wärtsilä has been chosen as a partner due to their significant experience in providing environmentally sound solutions such as hybrid systems,” says Oivind Wendelboe Aanensen, COO, Hagland Shipping AS. “Wärtsilä’s forward-leaning and supportive approach has enabled Hagland and NOAH to arrive at an optimal solution. We believe our mutual project will have a considerable impact in the market and will further the environmental drive towards sustainable solutions in short-sea shipping.”
“Environmental considerations are increasingly important for fleet owners around the world. The need for the latest smart marine technologies has been seen for some time already in deep sea shipping, and this project is evidence that the need also exists in short-sea transportation. Wärtsilä is responding to these developments with its Smart Marine Ecosystem approach, which through the use of high levels of digitalisation and connectivity, is creating greater efficiencies, increased safety, and more sustainable solutions,” says Paul Kohle, Director, Sales & Sales Support, Asset Management Services, Wärtsilä Marine.
Wärtsilä’s hybrid solutions are based on a ‘first-of-its-kind’ fully integrated hybrid power module. This combines engines, an energy storage system using batteries, and power electronics optimised to work together through a newly developed energy management system (EMS). It marks a new frontier in marine hybrid propulsion.
Issued by: Steamship Insurance Management Services Limited
The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Petroleos de Venezuela, S.A. (PdVSA) pursuant to Executive Order (E.O.) 13850 – “Blocking Property of Additional Persons Contributing to the Situation in Venezuela” which was originally issued on 1 November 2018 (“the EO”).
Concurrently, OFAC issued eight General Licenses, and issued a new Executive Order – “Taking Additional Steps to Address the National Emergency with Respect to Venezuela”. This new Executive Order amends the definition of the term “Government of Venezuela” in EO 13850 to include PdVSA and “any person owned or controlled, directly or indirectly, by the foregoing, and any person who has acted or purported to act directly or indirectly for or on behalf of, any of the foregoing, including as a member of Nicolas Maduro’s regime.”
The general licenses authorise US Persons (individuals and entities) to wind down or continue certain commercial activities, although in some cases the authorisation requires that payments must be made to blocked accounts which PdVSA would not be able to access or use.
Of particular note are the following:
General License 7 – authorises (a) up to 27 July 2019, transactions and activities involving PDV Holding Inc (PDVH), CITGO Holding Inc. and their subsidiaries; (b) up to 28 April 2019, PDVH, CITGO Holding Inc. and their subsidiaries to engage in transactions and activities ordinarily incident and necessary to the purchase and importation of petroleum and petroleum products from PdVSA.
General License 8 – authorises up to 28 July 2019, all transactions and activities ordinarily incident and necessary to the operations in Venezuela involving PdVSA or its subsidiaries for: Chevron Corporation, Halliburton, Schlumberger Limited, Baker Hughes, and Weatherford International.
General License 11 – authorises up to 29 March 2019 (a) US person employees and contractors of non-US entities located outside of the US and Venezuela to engage in all transactions and activities that are ordinarily incident and necessary to the maintenance or wind down of operations, contracts, or other agreements involving PdVSA and its subsidiaries, and (b) U.S. Financial institutions to reject funds transfers involving PdVSA and non-U.S. entities located outside of the U.S. or Venezuela. The GL expressly prohibits dealings with ALBA de Nicaragua (ALBANISA).
General License 12 – authorises (a) up to 28 April 2019, all transactions and activities ordinarily incident and necessary to the purchase and import into the United States of petroleum and petroleum products from PdVSA or its subsidiaries, and (b) up to 28 February 2019, all transactions ordinarily incidental and necessary to the wind down of operations, contracts, or other agreements, including the importation into the United States of goods, services, or technology not authorised under (a) involving PdVSA or its subsidiaries.
General License 13 – authorises up to 27 July 2019, all transactions where the only PdVSA entities involved are Nynas AB or any of its subsidiaries.
On 31 January 2019 the US released a series of FAQs, which should be read in conjunction with the full terms of the General Licenses.
The impact of the above on non-US persons is not made clear in EO 13850 or the associated general licenses, nor in the FAQs.
On the face of it, FAQ 657 appears to deal with non-US entities:
657. I am a non-US entity that purchases petroleum and petroleum products from Petróleos de Venezuela, S.A. (PdVSA) or an entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest. Am I now prohibited from purchasing petroleum and petroleum products from these companies?
Transactions to purchase petroleum and petroleum products from PdVSA or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest, and that involve U.S. persons or any other U.S. nexus (e.g., transactions involving the U.S. financial system or U.S. commodity brokers) must be wound down by April 28, 2019 pursuant to Venezuela-related General License 12. In addition, under General License 11, US person employees and contractors of non-U.S. companies located in a country other the United States or Venezuela are authorized to engage in certain maintenance or wind-down transactions with PdVSA, or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest, through 12:01 a.m. eastern daylight time, March 29, 2019. (See FAQ 654.) [01-31-2019]
On one view, the answer seems to suggest that:
(a) non-US entities may continue to purchase petroleum and petroleum products from PdVSA and its subsidiaries:
(i) without restriction if all related transactions do not involve US persons have a US nexus, and otherwise
(ii) up to 29 March 2019 insofar as the activities involve winding-down of business entered into before 28 January 2019, and transactions do involve US persons or have a US nexus (under General License 11), and
(b) up to 29 March 2019 US persons working for non-US companies located neither in the US or Venezuela can engage in maintenance or winding-down of such business entered into before 28 January 2019 (under General License 12).
However, the position is not straightforward. The FAQs do not address the effect of Section 1 (a) (iii) of EO 13850 which provides for the blocking of all property in the U.S. of “any person” (i.e. including a non-U.S. persons who is determined –
“to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of … any person whose property and interests in property are blocked pursuant to this order.”
The designation of PdVSA under Section 1 of EO 13850, with effect from 28 January, means that the U.S. Secretary of the Treasury, in consultation with the Secretary of State, now has authority to designate persons (including non-US persons and entities) who are involved in certain prohibited activities (material assistance, sponsorship, provision of financial, material or technological support, or goods or services to or in support of a person whose property has been blocked pursuant to EO 13850 (e.g. PdVSA).
Since PdVSA’s property is now blocked pursuant to EO 13850, the question arises as to whether a non-U.S. shipowner / charterer who provides ocean transportation for PdVSA would fall within the ambit of Section 1 (a) (iii) of EO 13850. There is no explicit prohibition on PdVSA shipments to third countries and no wind-down period specifically established for such shipments. However, it is possible that the U.S. authorities may consider ocean transportation provided to PdVSA under a charter party to fall within the activities described in Section 1 (a) (iii) of EO 13850. It is conceivable that ocean transportation could be viewed as a service in support of PdVSA, in which case Section 1 (a) (iii) of EO 13850 may apply.
Whilst unsatisfactory, the position seems to be that:
- US persons are authorised to transact with PdVSA in accordance with the general licenses, subject to certain wind-down deadlines, which variously apply up to 27 February, 29 March, 28 April, and 27 July 2019 respectively, depending on the specific activity concerned.
- Non-US persons are not expressly authorised to transact with PdVSA, and although the U.S. may not have intended the new sanctions to apply more restrictively to non-U.S. persons than to U.S. persons, non-U.S. persons could be exposed to sanctions risks under Section 1(a) (iii) of EO 13850 if they conduct prohibited activities which benefit PdVSA.
The Club’s US lawyers have opined that it is unlikely that the OFAC meant to target non-U.S. entities in this way. However this cannot be ruled out with certainty. Therefore, non-U.S. entity members who may potentially be affected by these sanctions are advised to proceed with caution and seek specific legal advice as appropriate.
Insofar as Club cover is concerned, EO 13850 does not include any express restrictions against the provision of P&I insurance for targeted trades and activities. However, Members should note that cover is always subject to the terms of entry and the Rules of the Club, including Rule 47 which provides for automatic termination of cover if a member, by the employment of its entered vessels is exposed to the risk of sanctions, or such employment thereby exposes the Club to the risk of sanctions
The Club, through its lawyers, will seek to engage with OFAC for further clarity on the applicability of EO 13850 to non-US entities.
Brazil and Argentina: Soybeans with high moisture content
21 April 2017
As set out in our Circular dated 25 November 2016 the Association has come across various claims arising out of soybeans with excessive moisture content being loaded in Brazil and discharged in China.
This circular aims to provide an update on loading/storage conditions at Brazilian ports, especially in Santos and Paranagua, and also ports in Argentina.
Delay in transportation to northern ports of Brazil, Santarem and Itaxoatiara
Significant delay due to heavy rain has been experienced for cargoes transported on the route from Cuiaba (State of Mato Grosso) to Santarem (State of Para) on highway BR-163. This is from the center of soy plantations in Mato Grosso to the border of the state of Para. The highway is tarmac but some 1,000 km to the northern port of Santarem on the Amazon River the highway is in a very bad state, especially during heavy rain periods. Many trucks got stuck in the mud and soybeans were transported back to the southern/southeastern ports of Santos and Paranagua.
Storage conditions at Santos and Paranagua
Soybeans are transported from farms to warehouses in Santos and Paranagua by trucks and railcars where the cargo is covered with heavy tarpaulins. Loading in these ports is done by means of shiploaders, supplied by conveyor belts from warehouses. All the cargo is stored in warehouses instead of in open yards.
Image of Terminal ADM-39 at Santos, where grains are loaded
Storage conditions in Argentina
In the last sowing season several provinces of the country experienced heavy rains (for example, relevant areas of Buenos Aires / Santa Fe / Córdoba). Some crop areas were affected by flooding, especially soya and maize which have been harvested or will be harvested soon.
After the harvest there can be different scenarios for the subsequent storage:
- Silo bags in the field;
- Cells or silos (either owned by the farmer or from a third parties, including grain terminals);
- Occasionally the harvest is loaded onto trucks and sent to the grain terminals.
Many of those storage areas are provided with dryers. The grain terminals are also provided with dryers on which they process the grains to achieve the condition/quality required by the traders. They all store the grains in closed spaces (silos or cells) and no outdoor storage is noted.
Loss prevention surveys
Generally, both in Brazil and Argentina, before loading the soybeans are stored in warehouses. However, for both transportation and harvest in excessive rain, soybeans could be stored in open conditions thereby exposing them to high moisture. Whilst the dryers could decrease the level of moisture to allow stable transit, there is no guarantee that this will avoid all extra moisture. Soybeans with excessive moisture content loaded on board the vessel may self-heat and claims for discoloration, mouldy and burnt cargo could arise at the discharge port.
Owners are better protected if the moisture content of the cargo to be loaded can be certified. If there are cargo claims at the discharge port, owners may be able to argue that the cargo damage occurred due to high moisture and owners may be able to rely on exceptions such as “inherent vice” to defend the cargo claim.
However, we remind members that whether such argument would stand is subject to the local law of the discharge port. Members are referred to our circular, see attached link.
The Association has checked with the local correspondent in Brazil who advised that that it would be possible to appoint a surveyor to take samples during loading and to have the cargo analyzed for moisture content. The result could be obtained on the same day. In order to mitigate the risk of claims we would recommend such surveys to be conducted.
Recommend a protective charterparty clause
Given that Brazil and Argentina allow for loading soybeans with a maximum moisture content of 14%, and where there is a significant risk that even cargo with a moisture content over 12% may overheat and damage may occur, members may wish to consider inserting a protective clause in the charterparty. The Association is ready to assist members in drafting such clause.
Courtesy: SKULD P&I
Credit to: Alexander Zamaraev / Shutterstock.com
Changing on-board bunkers safely
11 December 2018
Challenges and risks arise when changing from one fuel to another on board. We have handled many cases in which a new fuel was mixed with the fuel already in use, but proved incompatible. A critical moment occurs each time fuel runs out and a new batch is started, but the risk is minimised when the operation is carried out properly according to best practice. This article identifies some of the challenges on-board crew may face, and provides guidelines to reduce the risks of possible engine and fuel-equipment damage.
Numerous bunker disputes over the years reveal that these challenges and risks do not begin at the time of changeover on board. They may arise at the time of the request for fuel oil, so the risk management process for bunker changes should be considered in chronological order from the moment of ordering to the time of consumption.
Fuel changeover is necessary typically in one of two situations:
- The vessel is consuming fuel oil or gas oil and needs to change to a new batch
- The vessel is consuming fuel oil, approaches a Sulphur Emission Control Area (SECA or SEC area), and must change to low-sulphur gas oil
The actual change-over procedure from fuel oil to gas oil is similar for every vessel, and engine manufacturers provide specific instructions on how to complete the process. They may not have done so for changeovers from one batch of fuel to a fresh supply of the same type, whether Intermediate or Heavy Fuel Oil (IFO or HFO), Marine Diesel, or Gas Oil (MDO or MGO). The following steps should be followed.
First and most important is to order, and to ensure you receive, the quality of fuel that is required by the engine’s manufacturer. This starts with a proper description of the required specification (quality) of the fuel in the charterparty, but we have seen several cases where the charterparty leaves too much room for interpretation. Quality is normally referred to in the standard specification ISO8217, with the year of the subject standard as an extension. The most recent standard is 2017, but is not yet commonly in use. Most often used are 2005, 2010, and 2012; the older years’ standards are most prevalent.
Five or more parties may be involved in the ordering process from the time the request is made by the charterer or owner to the time it reaches the physical supplier. It is quite common for these divergent parties to apply different standards. In one case, for example, the fuel originally ordered was ISO8217:2010, with some additional requirements, but the fuel delivered was ISO8217:2005, without the additional requirements.
An on-board inspection of the supplying barge should be made before receiving new fuel, including its void tanks, which must be dry. Another inspection should be carried out when bunkering is complete, especially in cases of difference between the quantity that the barge believes to have supplied and what the vessel claims to have received. The on-board sampling methodology used by the barge should be checked, since the chief engineer eventually signs for the fuel. On board the receiving vessel, a continuous drip sample should be taken from beginning to end of the delivery. It is best to invite the barge crew to witness the set-up of the sampler, and to monitor it during delivery.
After bunkering is complete, the continuous drip sample collected should be divided into four sample bottles, all properly labelled and sealed, and one of them handed over to the barge. A second sample should be sent to the laboratory which all fuel samples are normally sent to; the new fuel should not be used until the analysis results are known and indicate that the fuel is within spec. This should be done as soon as possible, because suppliers normally have a time bar of 10 to 14 days, after which any claims are waived.
The standard rule on board is (and has always been) that mixing fuels is to be prevented, which begins when new bunkers are received. They must therefore be taken into empty bunker tanks. When transferring new fuel from the bunker tanks to the settling tank, the latter will preferably contain less than 10% of its full volume.
Bunker tanks, settling tanks, service tanks, heaters, viscosity controllers, filters, pumps, and piping should be maintained as prescribed. Tanks should normally be cleaned every five years (and sometimes more often) to prevent too much build-up of settled components, which can easily be disturbed during periods of bad weather and taken along to the engines. We have seen instances where the sludge on settling tank bottoms contained over 10,000 ppm of aluminium and silicon. The sludge which collects in bunker tanks should also be collected and disposed of at regular, normally five-year, intervals. However, the necessity of this process can be considered and informed by inspection and the analysis of absolute-bottom samples sent for analysis.
Viscosity controllers, which adjust fuel viscosity upon its injection into the engine, also require attention. Not all IFO and HFO fuels have the same viscosity, even when they are the same grade. For example, RMG 380 has a maximum viscosity of 380 cSt at 50 degrees Celsius, but may be less. Optimum viscosity for combustion is between 10 and 15 cSt, and the majority of engine manufacturers require between 10 and 13 cSt. Viscosity depends on temperature, and declines as fuel is warmed.
Most viscosity controllers can be set to one of two modes, temperature control or viscosity control. Viscosity control is the easier mode to manage. In temperature control mode, actual fuel viscosity must be known to set the correct temperature. In several instances vessels have received fuel oil with a viscosity lower than 380 cSt at 50 degrees, and sometimes have received 180 cSt when 380 cSt was ordered but not available. If the temperature setting of the viscosity controller is not adjusted, problems with engines and eventually with the propulsion can result.
Changing from one supply of fuel to another on board should not be a cause of problems, as long as the following points are carefully considered. Be sure that:
- The correct fuel quality is ordered, according to the correct specification.
- The vessel receives what is ordered. Take proper samples and check the supplying barge.
- Analysis confirms that the fuel is within specification and can be consumed.
- New bunkers are received in empty tanks.
- New fuel is transferred to a settling tank containing less than 10% of its volume.
- Maintenance of fuel equipment is carried out at the required intervals.
- Tanks are cleaned regularly.
- Viscosity controllers are correctly set.
Courtesy: SKULD P&I
PNI1816–Chinese Ministry of Transport (MOT) Issued New Requirement Regarding Emission Control Areas in Chinese Territorial Waters to be Effective from 01.01.2019
Circular Ref No.: PNI1816
Date: 13 December 2018
Subject: Chinese Ministry of Transport (MOT) Issued New Requirement Regarding Emission Control Areas in Chinese Territorial Waters to be Effective from 01.01.2019
Chinese Ministry of Transport issued a new regulation regarding requirements of emission control areas in Chinese territorial waters which will become effective from 01.01.2019. This new regulation introduces some substantial changes to the existing ECA scheme previously announced by Chinese authorities. To help ship owners and operators understand and comply with the new regulation, we have prepared this circular to introduce the main contents of the updated requirements.
This regulation applies to all the vessels which are sailing, anchoring or working in emission control areas.
The emission control areas
Emission control areas under this regulation include coastal emission control area and inner river emission control area.
Coastal emission control area (hereinafter referred to as coastal ECA) refers to sea areas within sea boundary line connected by 60 points as illustrated in Table 1. Hainan costal ECA refers to sea areas within sea boundary line connected by 20 points shown in Table 2.
Inland River emission control area (hereinafter referred to as Inland Water ECA) includes navigable inland waters administered by Yangtze River main line (from Shuifu County of Yunnan province to Liuyang estuary of Jiangsu province) and Xijiang River main line (from Nanning of Guangxi province to Zhaoqing of Guangdong province), whose starting and ending coordinates are showed in Table 3.
Table 1 Coordinates of control points of sea boundary line in coastal ECA
Table 2 Coordinates of control points of sea boundary line in Hainan coastal ECA
Table 3 Coordinates of starting and ending points in Inland Water ECA
Inner River Control Areas
Detail of Point
Yangtzi River main line
Line from Liuheiwu located in downsteam of Liuhekou to Shixingan located in downstream of Shiqiao River at Chongming Island
Xijiang River main line
Minsheng Terminal in Nanning
Connection line between Jinlixia tiexian corner in Xijiang river and top of Wudinggang Chung Hau
Emission Control Requirements
(1) Oxysulfide and PM emission control requirements
1. From 01.01.2019, ocean-going vessels are required to use fuel with low sulphur content not exceeding 0.5%m/m when entering into emission control areas. Large inland vessels and river-coastal vessels shall use fuel oil that meets newly revised GB standard. Other inland vessels are required to use diesel oil that meets relevant standard. From 01.01.2020, ocean-going vessels are required to use low sulphur content fuel not exceeding 0.1%m/m when entering Inland Water ECA.
2. From 01.03.2020, vessels without taking alternative measures, such as installing PM and oxysulfide control device are only permitted to carry and use fuel oil specified in this regulation when entering into emission control areas.
3. From 01.01.2022, ocean-going vessel are required to use low sulphur content fuel not exceeding 0.1%m/m when entering Hainan costal ECA.
4. Chinese authority will evaluate the feasibility of using low sulphur content fuel no more than 0.1%m/m at an appropriate time and decide whether or not to require ocean-going vessel to use fuel with sulphur content not exceeding 0.1%m/m when entering coastal ECA from 01.01.2025.
(2) Oxynitride emission control requirements
5. For international navigating vessels built on/after 01.01.2000 (subject to the date of laying keel, hereinafter the same) or undergone major modification of a marine diesel engine, if the output power of a single marine diesel engine exceeds 130 kW, the vessel shall meet the Tier I oxynitride emission limits stipulated by MARPOL.
6. For international navigating vessels built on/after 01.01.2011 or undergone major modification of a marine diesel engine, if the output power of a single marine diesel engine exceeds 130 kW, the vessel shall meet the Tier II oxynitride emission limits stipulated by MARPOL.
7. For Chinese domestic navigating vessels built on/after 01.01.2015 or undergone major modification of a marine diesel engine, if the output power of a single marine diesel engine exceeds 130 kW, the vessel shall meet the Tier II oxynitride emission limits stipulated by MARPOL.
8. For Chinese domestic navigating vessels built on/after 01.01.2015 or undergone major modification of a marine diesel engine, who sailed into the Hainan coastal ECA and Inland Water ECA, the vessel’s marine diesel engine with single cylinder displacement no less than 30 liters shall meet the Tier III oxynitride emission limits stipulated by MARPOL.
9. Chinese authority will evaluate the feasibility of implementing Tier III oxynitride emission limits stipulated by MARPOL, in order to decide whether the marine diesel engine with single cylinder displacement no less than 30 liters, which equipped on Chinese domestic navigated vessels built on/after 01.01.2015 or undergone major modification of a marine diesel engine, shall meet the Tier III oxynitride emission limits stipulated by MARPOL.
(3) Requirements of using shore power by vessel in port
10. The Chinese public service vessels, inland river vessels (with exception of liquid cargo vessel) and river-coastal vessels build on/after 01.01.2019 shall be equipped with ship shore power system ship-borne device. The Chinese domestic coastal container ships, cruises, ro-ro passenger ships, passenger ships with a gross tonnage at least 3,000 tons and dry bulk cargo ships with a gross tonnage at least 50,000 tons build on/after 01.01.2020 shall be equipped with ship shore power system ship-borne device.
11. From 01.07.2019, shore power shall be used if vessels equipped with shore power system ship-borne device (with the exception of liquid cargo vessel) at berth with onshore power supply capacity for more than 3 hours in the Coastal ECA, or get alongside berth with onshore power supply capacity in the Inland Water ECA for more than 2 hours and without using other equivalent alternative measures (including the use of clean energy, new energy, ship-borne electrical storage device or closing the auxiliary engine, etc., hereinafter the same). From 01.01.2021, shore power shall be used if a cruise gets alongside berth with onshore power supply capacity for more than 3 hours and without using other equivalent alternative measures in the ECAs.
12. From 01.01.2022, Chinese public service vessels, inland river vessels (with the exception of liquid cargo vessel) using single marine diesel engine power output of more than 130 KW but do not meet the Tier II oxynitride emission limits stipulated by MARPOL, and the Chinese domestic coastal container ships, ro-ro passenger ships, passenger ships with a gross tonnage of at least 3,000 tons and dry bulk cargo ships with gross tonnage of at least 50,000 tons are required to install shore power system ship-borne device. Shore power shall be used if vessels get alongside berth with onshore power supply capacity for more than 3 hours in the Coastal ECA, or berthing at port with onshore power supply capacity for more than 2 hours in the Inland Water ECA, without using other equivalent alternative measures.
13. Chinese shipping enterprises and operators are encouraged to install shore power system ship-borne device on vessels other than those specified in article 12, and to use shore power when getting alongside berth with onshore power supply capacity in the emission control area.
14. Vessels may take alternative measures, such as using clean energy/new energy, equipping with power storage device, exhaust gas cleaning system etc. to satisfy the emission control requirements. If the vessel using exhaust gas after-treatment method, the emission-monitoring device shall be installed, and the generated wastewater waste liquid shall be disposed according to relevant regulations.
15. The local governments of other inland water area are encouraged to adopt the requirement of the Inland Water ECA and lodge request to ocean-going vessels to use low sulphur content fuel when entering into local waters.
16. Domestic oil tankers with no less than 150 tons and build on/after 01.01.2020 are required to have oil and gas recovery condition when entering into ECAs and encouraged to conduct oil and gas recovery if safety requirement can be satisfied. Foreign-going vessels shall comply with the emission control requirements for volatile organic stipulated by MARPOL.
17. Vessels should strictly implement other existing international conventions, domestic laws and regulations on emission control requirements for atmospheric pollutants.
Given the above, owners are reminded to ensure satisfaction of relevant requirements mentioned in the regulation above when your good vessels enter into Chinese territorial waters as from 01.01.2019 to avoid any penalty or problems.
Courtesy: SKULD P&I
DP World, SMS Aim to Revolutionize Global Port Logistics
An international joint-venture formed by Dubai-based port and terminal operator DP World and industrial engineering specialists SMS group will revolutionize the way that containers are handled in ports.
A new and intelligent storing system will be applied for the first time ever at Jebel Ali Terminal 4, in time for the Dubai Expo 2020 world fair.
The High Bay Storage system was originally developed by SMS group subsidiary AMOVA for round the clock handling of metal coils that weigh as much as 50 tons each in racks as high as 50 metres.
Instead of stacking containers directly on top of each other, which has been global standard practice for decades, the system places each container in an individual rack compartment. Containers are stored in an eleven-story rack, creating 200 percent more capacity than a conventional container terminal, or creating the same capacity in less than a third of the space.
DP World explained that the rack’s design allows each container to be accessed without having to move another one, enabling 100 percent utilization in a terminal yard, while at the same time cutting costs by as much as 30 percent.
“Our system will significantly increase the productivity of handling ships on the quay. This means that quay walls can be shortened by a third. This disruptive innovation will greatly improve the financial performance of container ports, and well as their overall appearance,” Mathias Dobner, CEO of the joint venture, said.
DSME wins additional order for an LNG carrier from Maran Gas Maritime in Greece
DSME wins additional order for an LNG carrier from Maran Gas Maritime in Greece.
Daewoo Shipbuilding & Marine Engineering (DSME) has won an additional order for an LNG carrier. The company is making all-out efforts to achieve its goal of winning contracts this year.
DSME said on Dec. 10 that it has won an order for a LNG carrier from Maran Gas Maritime affiliated with the John Angelicoussis Group, the largest shipping company in Greece. It will be built at Okpo Dockyard in Geoje and will be delivered to the ship owner by the first half of 2021.
It is a 173,400㎥-class large LNG carrier. Its fuel efficiency is some 30 percent higher than the existing LNG carrier as it is equipped with the natural gas propulsion engine (ME-GI) and Full Re-Liquefaction System (FRS), which are boasted by DSME.
The deal will give DSME the 101st ship from the Angelicoussis Group. “The company’s surplus for the third consecutive quarter and its management normalization lead to the trust of the shareholders, resulting in a rise in the order,” said a DSME official.
The challenges in the current offshore market are still in full swing. The price of oil has recently taken a new plunge and the offshore renewable industry is under pressure to cut costs as it is moving away from government funding. The market conditions for many offshore operators remain demanding. Recent commercial contracts awarded for offshore work seem to follow an upcoming trend where the workability of a vessel has to be specified and calculated to the day, sometimes with penalties for extra days not worked. Another upcoming trend that can be seen is projects being executed during periods traditionally determined as off season due to the forecasted weather. Determining the workability of a vessel can be a lengthy process including many hours engineering work and is based on a lot of assumptions and conservatism. The market is responding to these new contract demands and this article will outline two new products that can assist vessel owners with mitigating the risk that can be involved.
Weather downtime insurance Strong winds, heavy seas: weather conditions bringing offshore operations over the scheduled time, resulting in additional costs for labor and use of equipment.Covering these cost overruns is now an insurable risk. How does this work? Before the work starts, criteria like specific weather conditions (eg. Wind, wave height, current) that impact on the employability of people and equipment will be determined.These determined daily costs will be the basis for payment. Actual support from specialists is available to precise the required parameters. After completion of the work the overrun of time will be calculated, expressed in the number of days lost by the predetermined criteria. The weather downtime cover provides direct right to compensation for the fixed amount per day which is lost through bad weather. Not only contractors can improve their competitiveness by using this methodology -customization per project- but also for Principals this is a very effective tool to achieve cost control in construction, inspection, repair and maintenance projects of offshore installations and structures. This protection against failure due to weather conditions will be accommodated with one of the most solvent insurance companies in the world. Motion forecasting software Traditional workability demands and decision making is based around using wave height as an absolute parameter to determine if a vessel can work or not. However, it is not the wave height that limits the operation, it is the vessels motion response to these waves that determines if an operation can take place or not.
Intelligent forecasting software can be used on offshore vessels to provide transparency to the different stakeholders involved, including insurers and owners, by giving insight in to the operational data. Combing the weather forecast, motion forecast and real time vessel motion data can be used by the master and his crew to optimize the overall operational window whilst working on weather sensitive operations and therefore reducing the operational cost while improving the safety onboard. This same software in a “Tender module” can also be used in the tender phase of a project to determine the vessels workability over a certain period at the location of the project. Allowing for a more accurate determination of the vessels workability without having to complete a full engineering study. Conclusion In order for these new methods to be successfully implemented in the offshore industry a change in the assessment of workability has to be made. The industry will have to make a switch from wave height as absolute criteria to motion limits. Including these limits and a preferred method of monitoring/decision support will help minimize claims and disputes and eliminate the guess work when coming on and off a location or during the actual work. Combining advanced software with the option of a Weather downtime insurance can give operators the combined advantage of higher workability and less risk of financial setbacks on the project.