Analysts Say Planned Ban Could Put Oil Supply At Risk

Friday, April 07, 2000
Detailed Plans Sumitted To The EU Contain Stiffer Rules Than Earlier Outlines

European plans drawn up in the wake of the Erika accident to crack down on aging tankers could endanger shippers' ability to supply oil to the continent, shipping analysts said. Detailed plans put to European Union transport ministers last week were stiffer than early outline proposals, they said.

"Europe may not be able to guarantee oil supply because it has suddenly moved the goalposts," one tanker analyst who asked not to be identified said.

The EU proposals demand that all single hull crude tankers above 20,000 deadweight tons and product carriers over 30,000 dwt should not be able to enter European ports after January 1, 2010.

In February the EU issued outline proposals indicating it would follow the U.S. Oil Pollution Act (OPA), enacted in 1990 after the Exxon Valdez oil spill, giving operators until 2015 to upgrade their fleets. This would prevent old tankers switching from the United States to Europe from that date, after which U.S. legislation demands the use of double hulled vessels, which are believed to reduce the chances of pollution in low-impact collisions or groundings.

But the European plans have now opted for a cut-off five years earlier than the American laws.

"The single hull tanker will be dead in Europe by 2010 if the Europa (Europe oil pollution act) plans are adopted," an analyst said.

Forcing vessels which could be just 15 years old out of the market rather than allowing them to sail on until an average of 25 would put enormous pressure on vessel supply and shipyards to replace them, analysts said.

Europe's oil trade is the largest in the world, with crude oil imports representing about 27 percent of the total, compared with 25 percent for U.S. imports. More than 2,000 million tons of crude and refined oil products were transported globally by sea in 1998.

Up To Half Tankers Redundant

Although all new tankers have been required to be built with double hulls since 1996, the proposed European regulations would still make up to 50 percent of ships redundant in some sectors, and leave just eight to 13 years to replace all single hull vessels.

"This would put massive pressure on the yards and mean ship prices could increase dramatically," sources said. Shipyard orderbooks are already full for the next two years.

The European plans also ban all non-segregated ballast tank (SBT) ships by 2005 but allow smaller tankers - under 20,000 dwt for crude and 30,000 dwt for oil products - built after 1982 to operate until 2015 provided they do not exceed ages of 25 or 30 years depending upon specifications.

The shipping industry opposes the new rules as too strict and says they should be applied globally through the United Nations body for marine affairs, the International Maritime Organization.

Britain's shipping industry trade body the Chamber of Shipping said it would lobby to prevent "a raft of knee-jerk regulations" being imposed unilaterally by Europe.

The 2010 cut-off for larger tankers would most drastically squeeze the supply of one-million-barrel Suezmax and 80,000-ton Aframax tankers.

The 30,000-ton workhorses of the dirty oil product sector would also come under heavy pressure as most of the ships used to carry fuel oil are older vessels that can no longer be used for higher value clean petroleum cargoes. - (Paul Berrill, Reuters)

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