Consequences of the EU/IMO phase-out decisions

As advised in our Weekly News No. 29A (Special) circulated to members on Wednesday, the European Union (EU) has now finally decided to implement its unilateral accelerated phase-out scheme for single-hull (SH) tankers without waiting for international consensus at IMO. This means that as from September/October this year, all SH tankers carrying heavy fuel oils, bitumen, tar and their emulsions or heavy crude oils with a density higher than API 25.7 will be banned from European waters, as well as all SH tankers built 1980 and earlier without protectively-located segregated ballast tanks (SBT/PL) in accordance with MARPOL.

This means that some 353 tankers totalling 38 million dwt (155 tankers 20-60,000 dwt, 24 tankers 60-80,000 dwt, 75 tankers 80-120,000 dwt, 39 tankers 120-200,000 dwt and 60 tankers over 200,000 dwt) will be phased out almost immediately from European waters and flags. The other “pre-MARPOL” tankers built in 1981 (some 50) and 1982 will be phased out in 2004/05.

The figures are as per today, but must be seen as indicative, as we see that the various databases provide different results. We have based ourselves on the figures used by the IMO Group of Experts in preparation for MEPC 49.

As for phasing out the Category 2 and Category 3 single hulls, the IMO Marine Environmental Protection Committee, at its 49th session held in London 14-18 July, did not reach any conclusions with regard to revising MARPOL 13G. As reported in last week’s Weekly NEWS, the EU proposal for a 2010 drop-dead deadline for all single hulls met with rather strong opposition from those who did not see any need to amend MARPOL 13G and from those who wanted an international compromise to avoid regional regulation. In the end, the EU block, fronted by the Italian delegation as holders of the EU presidency, tabled an indicative compromise, linked to a requirement to  maintain its own particular position. Thus the EU “indicator” accepted the extension of the final phase-out year for SH tankers from 2010, but reserved the right for nations to deny port entry for these tankers (clause 8b). INTERTANKO reminded delegates that Europe had accepted the Condition Assessment Scheme (CAS) as being an efficient means to stop substandard ships and that it would therefore be reasonable for tankers that had undergone CAS to be allowed to continue to trade. The EU is, however, adamant that  it will accept a compromise only if SH tankers that are allowed to continue to trade beyond 2010 pass CAS and  if individual States retain the right to deny such tankers entry to their ports.

MEPC 50 (to be held in London at the beginning of December) is expected to make a final decision on accelerated phase-out.

There was a good debate in the MEPC working group (WG) set up to consider the EU proposals and the submissions commenting on the EU proposal, even if the debate was hampered by EU acting as a block and not 15 nations with obviously differing interests.

There was strong support for the Condition Assessment Scheme (CAS) on  condition that the scheme was made practicable to implement. There was also strong support for extending the application of CAS to include tankers of 15 years and older and also for later considering CAS for all tankers as a part of the regular survey scheme.

With regard to the carriage of heavy oils in SH tankers, reference is made to the Weekly NEWS No. 29 of 18 July 2003. Some nations were particularly concerned about the inclusion of  small tankers as many of these are dedicated to fueloil and are also purpose built for special trades with port restrictions. The fact that some 70% of the heavy crude oil trade is concentrated in the Caribbean area also gave rise to opposition from the countries most involved in this trade to the inclusion of crude oils.

There was virtually no opposition to the proposal to accelerate the phase-out of Category 1 tankers (those that do not have SBT/PL according to MARPOL) to 2005. This will mean that the youngest “pre-MARPOL” tankers will be phased out at the age of 23 years old.

The average age of tankers sold for decommissioning this year has been 28 years, last year it was 27.4 years and in 2001 26.4 years. According to the current MARPOL 13 G, which still applies for the older units, some  3.7m dwt (1973-built or earlier) will have to be sold for decommissioning during the rest of this year, and some 11.5m dwt (1974-built) in 2004. The new proposal means that the remainder of the pre-MARPOL tankers, or some 33m dwt, will have to be sold for decommissioning in 2005. It should be noted that this is based on the figures from the IMO Group of Experts, who based their calculations on the Lloyd’s Register database. The number of pre-MARPOL tankers that have been converted to satisfy the MARPOL requirement for SBT/PL  is uncertain. Such a conversion will qualify them to be included  as Category 2 tankers, which are allowed to trade longer. The phase-out of pre-MARPOL tankers must be seen against the background of the more than 60m dwt orderbook that is to be delivered up to 2005.

The report from the MEPC working group included a compromise to allow Category 2 and 3 tankers to trade beyond 2010 until they are 20, 23 or 25 years (the maximum age to be decided at the December MEPC 50). Japan’s submission initially had suggested 20 years. This would more than halve the large peak in 2010 that would result from the EU proposal. The number of Category 2 tankers to be phased out in 2010 would be reduced from some 75m dwt, or some 375 tankers, to less than 30m dwt, i.e. less than 200 tankers.

Setting the maximum age at 23 years would virtually remove the 2010 peak, reducing it to just above 10m dwt. Setting the maximum age at 25 years would remove the 2010 peak with only 5m dwt having to be phased out that year. Instead a peak would be created in 2015 when the last SH tankers, totalling more than 45m dwt, would have to be phased out.

However, the focus of discussion should be to ensure improved safety and reduced pollution. After 2010 only some 10% of the fleet will be single-hulled and thus the potential extra risk from these vessels  will be significantly reduced.. In this context the application of CAS should be the extra insurance that all tankers maintain good standards, and thus virtually remove the perceived risk posed by SH tankers.

For details on phase out:

Contact:Erik Ranheim