Friday, 27 February 2009
The spill reportedly occurred as the 46,000 tonne Russian aircraft carrier, Admiral Kuznetsov, was refuelling 50 miles off West Cork in the Celtic Sea. The spill, initially covering an area of 9 square miles, is now reported to have split up into three different slicks covering almost 40 square kilometers. Authorities revealed revised estimates of 522 metric tonnes of oil spilled on February 18; earlier figures were almost twice this number at a thousand tonnes. Believed to be heading for the Irish coast, the slick could well end up on the British Isles depending on wind and current conditions.
First picked up by the European Maritime Safety Agency’s (EMSA) CleanSeaNet satellite monitoring system on February 14, the spill was initially believed to be small, but recent photographs by surveillance aircraft indicate that the environmental risk is far greater. EMSA, the Irish Coast Guard and British authorities are now monitoring the oil slick, although the Russian aircraft carrier and its attendant refuelling ship and tugs have departed the area. Oil samples have reportedly been collected by the naval patrol ship LE Aisling and the British navy ship HMS Gloucester, and the Russian Federation has been asked to supply oil samples for comparative analysis. The Russians say that they are investigating the incident.
The Irish Coast Guard thinks that the oil spill would hit their coast in about 16 days, and may “ appear on beaches in tarry balls of oil”, according to Irish Coast Guard director Chris Reynolds. The tug Celtic Isle is en route to the area with oil dispersal equipment, and so is the EMSA’s “Galway Fisher”, a pollution response vessel. Reynolds said that success could be very limited, stating that unless the fuel oil is sprayed within the first day of a spill, the success rate at sea is only about one percent. The Irish and UK Coast guards are continuously monitoring the area with aerial surveillance flights with special sonar equipment.
The coast of Ireland has more than a hundred small and medium sized shellfish farms that could be potentially devastated by this serious spill. Experts point to similar incidents that seriously affected the aquaculture industry in Europe, including the Braer in 1993 and the Prestige in 2002, and say that the impact on Ireland could be as bad. Local authorities said they were preparing to deal with any oil that reaches the shore.
“Friends of the Earth” spokesperson Molly Walsh has demanded a full investigation into the incident. She said that the spill was “extremely significant”, and that “Damage to marine life is likely to be devastating, and this will have, as many environmental things do, economic repercussions." Other environmentalists say that besides marine and wildlife, fishing and tourism could be severely hit.
The incident in Irish patrolled waters has sparked a flurry of diplomatic activity since the Russian navy is involved. Some activists have made calls for more stringent anti pollution regulations in the wake of the serious spill.
Maritime pollution should be a criminal offence, says Europe. Members of the Transport committee of the European Parliament voted on February 17 recommending that serious maritime pollution cases should be made a criminal offence. Minor cases could be treated as ‘administrative infringements’, although even these should be made criminal if they are repeated, deliberate or caused by serious negligence. Criminal penalties could be decided by State administrations. The proposals before the Committee, called the Erika III plan, call for action against owners and classification societies as well. Seafarer organisations are watching these developments with apprehension bordering on dismay. Some members say that these actions are essential for preventing environmental disasters, pointing out that many ship owners prefer to pay a fine rather than tighten up on pollution. Experts say that the February 17 vote has cleared the decks for the European Parliament which will negotiate with its members and vote in March, and that the recent massive oil pollution off the Irish coast by a Russian naval tanker refuelling in the region will probably catalyse regulations. There is also talk of strengthening EMSA, the watchdog European Maritime Safety Agency.
Mahindra & Mahindra to enter leisure boating segment, and will manufacture powerboats, cabin cruisers and catamarans, reports the Economic Times. A joint venture with Mumbai based marina operator Ocean Blue, the new entity will be called Mahindra Ocean Blue. It will import US Evinrude engines and manufacture boats in the 20 to 40 feet segment under the brand name ‘Mahindra Odyssea’. The company will eventually manufacture its own marine engines. The Vice President of M&M, Zhooben Bhiwandiwala, told reporters “A dedicated facility would be set up, depending on the demand”. This is the first time a major industrial group has entered the leisure boating industry in India. The company will target corporate and high net worth individuals in Mumbai, Goa and Cochin, as well as the defence forces. “We hope to sell around 200 to 300 units in the next 2 to 3 years,” said Mr Bhiwandiwala. Anand Mahindra, the MD of the Mahindra Group, said that this move would help develop Indian waterways.
World tonnage touches 1.12 billion deadweight, according to the United Nations Conference on Trade and Development (UNCTAD).The last two years have seen a huge increase in the global merchant fleet, the UN says, pointing out that there was a gain of 82 million DWT on a YOY basis. The UK based Guardian quotes the UNCTAD review of Maritime transport, saying that the dry bulk sector witnessed particular growth, although vessel orders in general were at their highest levels ever, “reaching 10,053 ships with a total tonnage of 495 million dwt, including 222 million dwt of dry bulk carriers”. The tonnage of dry bulk ships on order at the end of 2007 was 72 times higher than it was in 2002. One result of this phenomenal increase has been a decrease in the average age of a ship, now at just below twelve years. Ship sizes, too, continue to increase. The average container ship size grew to 2516TEUS instead of 2417TEUS between Jan2007 and Jan 2008. Developed countries have the youngest vessels with an average age of ten years, and an increasing number of containerships have replaced general cargo vessels.
Shipping Ministry moots setting up Rs 10000 crore fund to finance buying of ships. The move comes as owners struggle to secure funding from banks and the external commercial borrowing option becomes increasingly difficult. The industry also wants the Government of India to encourage banks to make finance available for buying ships. In the present climate, many shipping companies have postponed plans for ship purchase, although SCI said recently that it has plans to buy 29 ships soon with another 40 in the pipeline. With about a eighth of the money payable upfront, the fund will undoubtedly give a boost to debt financing, which accounts for three quarters of payment on an average. Foreign banks have become increasingly shy of lending money to Indian companies, or are in no position to take on additional liabilities on their books. The proposal is reported to be with the Ministry of Finance awaiting clearance.
Fairplay Research warns of poor prospects for the oil industry in 2009, saying that newbuildings continue to enter the market at a time when demand is drying up. The oil tanker fleet stood at 358 million DWT at the end of last year, and is still growing at more than 6 percent annually, with the chemical tanker segment growing at around 10 percent. Although the use of tankers for storage may soften the landing a bit, Consultant Niklas Bengtsson said that “Research analysis confirms that the tanker sector, like the world shipping industry as a whole, faces a year of overcapacity, weak demand, falling production and low freight rates. It won’t get better in the short term.”
Monday, 23 February 2009
The Indian Government will well understand the implications of mainland Pakistan that close to India going over to the Taliban. Unfortunately, for the ordinary Indian citizen, Swat is far away. People just do not realise how close to ground zero they actually are. The poor and the uneducated don't know; the rich and the educated have their heads in the sand.
Recent reports of scheduled talks in Washington between the US administration and Pakistani officials may encourage some. Unfortunately, unless there is a substantial and radical change in policy and strategy, President Obama and his administration will continue to do more of the same thing, and so, logically, they will get more of the same results. I may agree that options in AfPak (the coining of this new term for the region is telling in itself) are limited with the alarming resurgence- indeed, alarming expansion- of the Taliban. Capitulation, however, should not be an option. There may be good Taliban and bad Taliban out there, although I would not bet on it. In any event, there are no Taliban out there that do not pose a threat to Indian security. You will pardon me if I say that a strategy of Predator attacks combined with handing over vast areas of Pakistan to the Taliban does not make me break out the champagne or break into song.
It is time, in my view, for India to push for inclusion in direct talks between Washington and Pakistan, because an unstable Pakistan a step closer to disintegration precipitates grave security, logistical and humanitarian threats to us. We probably could not predict, at the time of the Bangladesh war in 1971, that terrorism from within that country's borders would be a clear and ongoing menace to India. We will not learn anything new the second time we are kicked by a mule either, even one on another border. The fact that this mule has clear links with terrorism going back decades and is hostile to us should spur us to shake off our inertia faster. Pakistan is slipping the Iraq way- from being a US ally with a moderate majority in the population to paying for the real and imagined sins of its regime(s), to a state approaching civil war. If India does not become part of the solution now, we risk having the first nuclear state controlled by terrorists as our neighbour. Right now, most of us assume that the US will do something in that eventuality. Maybe, though to think that the US will put our national interests above its own is folly. In any case, a sixth of the world's population- and an economic superpower in the making- cannot simply outsource its national security.
The Indian electronic media has the greatest multilingual reach within our borders. It should take up this cause instead of the local crime victim causes it usually pursues for nightmarish durations. Analysts, talking heads and opposition politicians should be brought in. Doubtless, the first step is to educate the uneducated and to galvanise the aware. It is time to underline the risk that the increasing radicalisation of Pakistani society poses to us. The middle class, as is usual, will be alarmed most by the economic threat a disintegration of Pakistan will cause to the limping Indian economy; use that fear. The Indian government should be pressurised in this election year; their democratic buttons have to be pushed so they can then push buttons in the US an elsewhere.
Sure, there is probably quiet diplomacy going on between India and the US as we speak. So far, though, there has been no visible public commentary in India on this approaching threat. There is no public opinion pressurising the Government of India to push for direct involvement in the resolution to the crisis in Pakistan. While such a clamour will undoubtedly alarm some Pakistanis, it is up to India to stake its claim at the table. That such a claim should be made in a calibrated and mature way that stresses a non-aggressive Indian stance is a given. That such a claim is not made is inexcusable.
Wednesday, 18 February 2009
Sri Lankan forces captured Prabhakaran’s bunker last week; the wily and dangerous LTTE Supremo is now said to be engaged in a desperate battle for survival, and given old links and support in parts of India, may send at least some of his followers here. Indian security experts believe that the LTTE is almost certainly in touch with extremist elements in Pakistan, Afghanistan and Bangladesh, and that India will have to be extremely vigilant in patrolling its southern coastline. This coastline may be as penetrable as the one in Gujarat at the time of the Mumbai attacks last year, a fact used by terrorists to devastating effect.
The apprehensions come just a month and a half after a police operation was launched at Dhanushkodi and surrounding areas near Rameswaram after five bullet pockmarked and bloodstained abandoned boats were found on that southern Indian coast. At the time, intelligence officials confirmed that up to five unidentified bodies were also washed ashore, and Ramanathapuram DSP Velan had said that there was information that arms could have been smuggled into the country. It is thought that LTTE militants fleeing the recent Sri Lankan army offensive could have found their way to India. The LTTE has gotten increasingly anti Indian in the last couple of months, as can be seen from the organisation’s website; it is obviously angry at the relative lack of support it has received from Indian quarters, and is now desperately trying to create anti Indian sentiment in Tamil Nadu.
Thirty seven countries including India, US, the UK and the EU have declared the LTTE a terrorist organisation. With Prabhakaran coming under increasing international pressure, and with dwindling support even in Tamilnadu, the group may finally be on the verge of annihilation. Analysts point out, however, that the LTTE, which gave the world its first suicide bomber, has a phoenix like ability to rise from the ashes, and it would be premature to write it off. It may well form a caucus with extremist groups in Bangladesh, Pakistan and even Nepal, where the recent violence has not been linked to any religious group but has been as extremist in nature. India, in that eventuality, may find itself surrounded by neighbours with a significant presence of extremist anti Indian groups.
There are signs that India is taking the new threat seriously. Just a few days ago, Home Minister Chidambaram announced that the country was planning to constitute a "grassroot" coastal command under the Home Ministry to strengthen the country's Coast Guard in guaranteeing coastal security. “To counter the sea threat and ensure integrated security, the Centre has ambitious plans and the Coastal Command is part of it. The coastal force would keep vigil at the grassroot level," Chidambaram said, speaking in Kerala.
In connected developments, Indian external affairs Pranab Mukherjee has said to have spoken to his Sri Lankan counterpart during his recent visit to the country about the urgent need to capture Prabhakaran.
Another story doing the rounds: US defence major Raytheon is trying to sell its airborne standoff radar (ASTOR) as the ideal solution for Indian homeland security.
Taiwan based TMT’s Chief Nobo Su intends to offer supertankers to oil speculators, reports say. TMT may hire out the VLCC’s at below market rates to speculators betting on an increase in crude prices later this year. It will also take a percentage of any profit in addition to the hire charges. Analysts are intrigued by this unusual offer; Nobu Su is reputed to be a smart operator who had predicted the overcapacity threat to the industry more than a year ago, when TMT stopped making any significant purchases. Each of his VLCCs can store around 2 million barrels of oil; added up, the TMT fleet can store enough oil to supply the whole of Europe for a couple of days. “The oil price is very cheap,” Su said in London, implying that a price rise was likely in the future. Plans include TMT involving itself in the oil market, coordinating oil purchases for investors, storing the oil within the Persian Gulf region on single hulled tankers and transporting them if required on more modern double hulled ones. Bloomberg reports that oil companies such as BP and Citigroup have stored up to 80 million barrels of crude at sea already, at a storage cost of less than a dollar a barrel per month.
Cochin, India’s first E-port: Enterprise Resource Planning takes off at Cochin Port; the ERP project being implemented will computerise all port processes and integrate them seamlessly and effectively. The Economic Times quotes CPT Chairman N Ramachandran saying that Tata Consultancy Services are involved in the 13 crore rupee project which will provide a single window facility to the industry for “for filing applications, receiving bills, payments and enquiries”. The Indian Port Association is simultaneously implementing a port community system. The system is now working, but duplication with the older manual system will continue until the end of this financial year to ensure that there are no hiccups. Meanwhile, TCS will train more than three thousand CPT employees to ensure that the seamless integration required works well. The move is slated to dramatically increase efficiency and reduce cost at CPT, besides offering real time improved service to its customers.
Hebei Spirit owners file lawsuit against Samsung Heavy Industries, reports Lloyd’s List. The joint move along with Skuld, the insurance company involved, pertains to the infamous Hebei Spirit case of December 2007, when a Samsung owned barge collided with the Spirit at anchor in Korea and resulted in the worst oil spill in South Korean history. Ocean Shipping (the owners of the Spirit) and Skuld now want to recover the 400 million dollars which may be payable under the International Convention on Civil Liability for Oil Pollution Damage (CLC), 1969 (The convention ensures that adequate compensation is available to persons who suffer oil pollution damage from maritime casualties.) Interestingly, the International Oil Pollution Compensation Funds are also involved in the legal action. The lawsuit has been filed in Ningbo, China; observers say that the intent is to break Samsung’s limitation of liability, resulting in the conglomerate having to pay for the entire cost of the cleanup. Present Samsung limitation is less than 4 million USD and the total compensation available from the Hebei Spirit’s insurers and the IOPC is around $317 million USD. Actual cleanup costs may be more than 30 percent higher
Thursday, 12 February 2009
Baltic index jumps to highest levels since October on the back of increasing Chinese demand for ore. The Dry Index BDI, which tracks freight rates for basic commodities like iron ore, coal, fertiliser and grain, is said to have benefitted immensely from the drop in ore volumes in China, resulting in imports picking up to that country. The index rose 14% on Thursday to just below 1500, a marked improvement on its sub 700 levels late last year. On the Indian stock exchanges, stock prices of shipping companies rose substantially following the rise in the BDI, although financial analysts are unsure whether this is a long term move or a temporary uptick due to adjustment in supply and demand. Reuters had earlier quoted BHP Billiton Plc, the world's biggest miner, saying that the massive build up of iron ore stockpiles in China that prompted suppliers to defer millions of tonnes in shipments last year is ending, pushing spot prices higher. The credit crunch, which has plagued the industry for the last six months, is also seen to be easing, with cautious bankers now slowly opening new Letters of Credit. Traders must be heaving a sigh of relief, as must be Indian ship owners, some of whose stocks rose almost 20 percent in two days.
Indian maritime infrastructure investment must be quadrupled, says Ashwani Kumar, Minister of State for Industry. Speaking at an Industry meet, the Minister said that this increase in investment was essential to bring up the Indian ports and services sector to international standards. "Our shipping and logistics infrastructure is far below international standards. We need to improve on speed and cost of handling of cargo. Investment in shipping needs to be quadrupled. Seventy five per cent of this trade is through ports. If we make our port infrastructure world class, it can lead to an increase of two per cent in the country's GDP year after year." The Minister rued that the Indian share of global trade stood at a paltry one and a half percent at just US$ 448 billion, pointing out that an increase in investment in the sector would also create a huge employment opportunity in India. Many analysts claim that FDI has slowed down in the recent downturn in this sector, although the Minister was quick to point out that PSA Singapore, Dubai Port and a Spanish company have invested in India. Industry watchers say that government initiatives are urgently needed to kick start this process once more.
Tuesday, 10 February 2009
The Court was hearing a petition filed by relatives of seamen sailing on the tug ‘Jupiter’, the ship ‘Rezzaq’ and the ‘Stolt Valor’, who claimed that the GOI’s lackadaisical attitude in taking prompt action in such incidents was endangering seamen’s lives. Last September, the Supreme Court had directed the GOI to put procedures in place to streamline the recruitment process as well as to set up guidelines to investigate piracy incidents off Somalia. However, the history of the Supreme Court intervention goes even further back.
In fact, the Stolt Valor case has been the only one that has satisfactorily ended with the Indian crew safely back home. On the other hand, the M.V. Rezzak case is as baffling as the Jupiter 6 one: The Rezzak was a Panamanian registered 1982 built vessel, which disappeared between Novorossysk, Russia and Bartin Limani, Turkey on the 17th of February last year. Twenty five Indian crew were aboard. The Rezzak was reported overdue when she did not arrive at the discharge port as scheduled; concerned agencies alerted authorities but attempts to trace the ship were unsuccessful. Although many questions have been raised about the case, the fate of the Indian crew remains unknown.
In its reply, the GOI told the court that it was facing a shortage of qualified personnel in the Director General of Shipping (DGS), which was hampering investigations of incidents in international waters. The GOI also filed a statement in response to the case pursued by the families of the ‘Jupiter 6’ crewmembers. The tug, registered in Jamaica, has been missing since Aug 8, 2005. It reportedly sank off the Namibian coast. The ship's agent, Pelmar Shipping, confirmed its disappearance about two months later. A PIL was filed on behalf of the families of the missing crewmembers, but there has been no satisfactory outcome in the case even after all these years. In fact, relatives of the missing crew claim that the Jupiter 6 crew are not even mentioned on the list of casualties made public by the GOI. The ship was on a passage from Walvis Bay to India via South Africa when it disappeared. Even though the issue was raised in Parliament, authorities have been accused of failing to take steps to trace the missing ship. In November 2006, A Bench of Justice H.K. Sema and Justice P.K. Balasubramanyan had asked the DGS, Pelmar Shipping and Pelican Marine to respond to the petition filed by Sabeeha Faikage and others as next of kin of the crew on board the tug. There were 10 Indians and 3 Ukrainians on board.
It is hoped that last week’s Supreme Court ruling may spur the Government of India to take some action. The Times of India reports that in its September order, the court had asked the following questions.
-How many incidents of marine casualty involving Indian crew have occurred since October 10, 2002? Was information received within 48 hours of the incident as is mandated under the law?
- In how many cases did Indian recruiter of seafarers for foreign vessel give this information?
- In how many cases was Indian government invited to participate in the marine casualty investigation by the lead state or the flag state?
- In how many cases did Indian government actually participate?
-In how many cases has Indian government made public the final report of investigation into such incidents?
- In how many cases has Indian government taken action against recruiting agents/manning agents/managers of the foreign flag ship which employed Indian crew and in what manner has it safeguarded the interest of the Indian crew
The Indian maritime community hopes to get some answers to these questions.
Friday, 6 February 2009
Last year, in the run up to the elections, Obama had declared that “If I am President, I will immediately direct the full resources of the Federal Government and the full energy of the private sector to a single, overarching goal: In ten years, we will eliminate the need for oil from the entire Middle East and Venezuela.” This rhetoric now threatens to become a bitter reality for oil companies and tanker operators.
President Obama has also declared that US States will be able to regulate emission standards for vehicles within their territories. Analysts expect a tightening up of emission standards across the country, especially in forward looking States like California, as a result; Governor Schwarzenegger has hailed the move already. Experts also believe that the President’s plan will weaken the many lobbyists pushing oil company interests in Washington, with obvious financial implications.
Tankerworld quotes a broker as saying that this policy “spells doom for tanker owners; the US is still the world’s largest crude oil consumer, and voyages moving Middle Eastern crude to the US form an important part of global tanker traffic.” Other analysts point out that the implementation of this policy may run into several roadblocks, and that energy guzzling lifestyles in the US will require a paradigm shift before the need for oil imports vanishes.
The shortfall is planned to be met by the White House with a mix of vehicle fuel standards and increased domestic production. Hybrid cars, better fuel efficiency and other energy policies will get a simultaneous boost from the Obama administration; political analysts point out that Global Warming was always high on Obama’s priorities, and that the President is far from finished with his agenda. "It will be the policy of my administration to reverse our dependence on foreign oil while building a new energy economy that will create millions of jobs," Obama said, unveiling the new policy.
Calling US dependence on foreign oil “one of the most serious threats facing the nation”, the President was blunt while announcing his new policies. "The days of Washington dragging its heels are over," Obama said, reiterating that he intends to encourage fuel efficiency and research into new car engines and plug in hybrids. The administration has also indicated that they would accelerate research in renewable energy resources with the goal of significantly reducing foreign crude oil imports and domestic oil requirements. Other pre election promises include a comprehensive energy plan, with plans for nuclear power generation and clean coal technology. All these will have a significant negative impact on the oil industry in general and the tanker trade in particular.
According to brokers Gibson quoted in Tankerworld, Obama had also vowed to establish a national low carbon fuel standard in the run up to the elections. “These ambitious energy proposals represent a major threat to tanker demand in the long term,” Gibson now says.
One can safely assume that the President’s recent call to the US Congress to pass a stimulus package to “create a new American energy economy” will not have many supporters from the oil industry.
US Navy and IMB make guarded statements about reduction in Somali hijackings, saying it is too early to be sure. US Naval officials and IMB director Mukundan confirm that patrols by International warships and more alert crews have reduced the number of successful hijackings in the Gulf of Aden and Somali waters. "The number of successful hijackings has come down for the second month. It is encouraging but let's wait and see what happens over the next two or three months," Mukundan told Reuters at a UN piracy conference. "We attribute this to the actions of the navies there. We think it is having an effect. What we are calling for is sustained action of the navies." Vice Admiral Moeller of the US navy agreed, but said that January’s figures may be attributed to the weather, although naval patrols undoubtedly had an impact. Those numbers show 15 reported attacks, 2 hijackings and 43 crew taken hostage last month: an improvement on last year’s averages, which were the worst in seventeen years. Meanwhile, in fresh developments, the Japanese navy will add its strength to the flotilla of warships in the region, and South Korea is contemplating similar action. It was also announced on Thursday that the maritime safety corridor would be altered further away from Yemen’s coastline with a ‘buffer zone’ for more effective patrolling by the multinational forces in the area. The danger is far from over, though. At the time of writing this report early on Friday, unconfirmed reports were tricking in saying that Somali pirates had hijacked a tanker and its crew of 12 Filipinos and 1 Indonesian in the Gulf of Aden on Thursday.
Truck rams through door of ferry bound for Belfast. The Stena HSS Voyager had close to 200 passengers and crew aboard when the accident occurred. The ferry had just started its trip from Stranraer to Belfast when a lorry broke free in the hold, crashed through a stern door and was left “dangling outside the vessel”. No one was injured in the incident, but passengers are reported to have panicked after a loud bang was heard near the stern of the ferry soon after the voyage began. They then saw the truck hanging out of the stern of the vessel. Recent reports suggest that the Clyde Coastguard is monitoring developments closely, and that the ship will have to inspected and repaired before it is declared fit to sail. The company has confirmed the incident.
Boxships between a rock and a hard place. says Seatrade Asia, quoting French consultants Aphaliner saying that 255 ships of a total capacity of 675,000 TEU were idle as of Jan 19. This figure represents almost 6 percent of the world’s container fleet, and the number of lay ups is increasing. This seems to confirm the terrible Christmas season the container trade was suspected to have undergone a month ago, which analysts are now calling ‘the worst in many years.’ Alphaliner says, worryingly, that considering the new builds all set to enter the market in the next two years, it is very unlikely that anticipated demand will absorb this supply at present rates of scrapping. To add to industry woes, slow steaming is becoming uneconomical at present bunker prices. Meanwhile, Drewry, the UK consultancy, confirms that freight rates continue to decline and that there are no signs of recovery in the near future. Expect lay ups to increase, seems to be the expert consensus.