Bergen - the world's chemical carrier capital

May 08 2013


Notwithstanding the rise of the offshore sector in Norway, chemical tanker operations still represent a considerable investment in shipowning and operating in that country.

According to a report from Clarksons reported on the newswires, last year, newbuildings placed worldwide amounted to $80.8 bill in value.

Norwegian shipowners accounted for $17.4 bill of the total spend, representing 50% of all European orders last year and was also the largest country in terms of contracting.

Of course, over 50% of the Norwegian orders were for offshore service vessels, an area in which Norway is now the world leader.

Despite other strong Norwegian shipping centres, such as Oslo, Bergen is by far the largest centre in terms of both vessels and major shipping companies.

According to a report commissioned by the Bergen Shipowners’ Association (BSA) and published by Menon Business Economics, Bergen is the centre for many niche markets, including chemical tankers.

Major chemical carrier concerns, such as Odfjell (see page 16), Jo Tankers and Westfal-Larsen in the large segment and Utkilen, Seatrans, Stenersen, Champion Tankers, Bryggen Tankers, Hansa Tankers and Tailwinds in the smaller sectors, are all headquartered in and around Bergen, making the area the chemical tanker capital of the world, according to the BSA.

In other sectors, dominant players are also to be found in the region, including bulk carrier operators KG Jebsen Group, Grieg Star, Westfal-Larsen, Gearbulk, Viken Shipping, Wilson (mini-bulkers); plus offshore concerns GC Rieber, DOF and reefer operator Silversea, among others.

According to the report, tanker owners, such as Jo Tankers, Viken and Odfjell have up to seven chemical tankers, four product tankers, four shuttle tankers and one oil tanker newbuildings to be delivered in the next couple of years.

Most shipowners in the area are in the business for the long haul, as there is very little asset play among the local owners, the BSA’s head Oystein Meland said.

 

Largest shipping centre

Ranked by the number of vessels and gross tonnage, overall Bergen is by far the largest shipping centre in Norway, Menon claimed in its report. Around 510 vessels of over 100 gt are registered in NIS/NOR, compared to around 230 in Aalesund and 180 in Oslo. Obviously these vessels vary in type, size and value.

According to figures produced by Maritimt Forum, Bergen shipowners also control and manage about 530 vessels under foreign flags (above 100 gt), thus in total, there are more than 1,000 vessels controlled from the Bergen region.

In addition to the vessels registered in NIS/NOR, several Bergen companies have expanded abroad, such as tanker owners Westfal-Larsen, Odfjell, Tailwind and Viken, each of whom have set up subsidiaries in other countries, which also control large fleets.

This volume of tonnage has helped to create a complete maritime cluster, which includes equipment suppliers, financial and legal services, insurance and shipbrokers, while the port claims to be the largest in the Nordic region, ahead of Gothenburg, helped by the large oil exporting facilities at nearby Mongstad and Sture, which come under Bergen’s jurisdiction.

In the equipment manufacture segment, Rolls-Royce and Frank Mohn account for 70% of the total turnover in the region. Other household names in the area are Wärtsilä, and the TTS Group. Shipbuilding is also active in the area, concentrating on specialist vessels and led by the Bergen Group, which also has shiprepair facilities.

In addition, several maritime institutions are represented in Bergen and the area is strong in maritime education and research. For example, a professorship of shipping economics was recently sponsored by the BSA.

Bergen’s maritime cluster’s turnover is estimated at NOK80 bill and its value creation in terms of remuneration, profit, etc, is about NOK27 bill. The companies involved in and around Bergen employ some 20,184 people, which includes 2,724 persons in the Norwegian Navy.

As for the BSA, the organisation currently has around 50 full members and 240 representatives. It is financially strong, has a low membership fee structure and charges no tonnage dues. It is an independently operated, regional arm of the Norwegian Shipowners’ Association (NSA).

The BSA is one of lead players in an initiative called ‘Maritime Bergen’, which is a collaborative project set up to further develop Bergen’s maritime industry. The members are the BSA, Maritimt Forum, Foundation Neptun, Bergens Naeringsrad, Business Region Bergen, Norwegian Navy, equipment suppliers and the Bergen Commune.

A joint committee has been established under the secretariat of Maritimt Forum to look at four defined areas for action – visualisation, recruitment, enhancing expertise and information versus authorities. A budget and financial plan has already been agreed.

The first task was to produce the Menon report to map the size of the sector and its value creation. A problem that has already been identified is that the Norwegian oil and gas industry tended to attract the best recruits and as a result, the project aims to make the shipping industry more visible, enhance its reputation and develop the expertise within the maritime community.

 

Little co-operation

It was realised that many individual companies and groups were working towards the same goals but with a only a small degree of co-ordination and interaction. More cooperation and co-ordination will strengthen their efforts, BSA’s Meland said in a presentation given recently in Bergen.

Several companies were visited by Tanker Operator during a tour of the region in April of this year. While some did not have the tanker sector as their core business, many were involved in some way, or another.

For example, cargo handling equipment supplier TTS said that it had received a lot of inquiry for hose handling cranes on the back of the surge in product tanker newbuilding activity recently. The company’s COO Ivar Hanson told Tanker Operator that he foresaw an increase in overall tanker demand coming at the end of this year, or the beginning of next.

Several of the crane designs are being switched from hydraulically driven to electrically driven. This alleviates the threat of hydraulic fluid spills. Explosion-proof hose handling cranes are being upgraded to electric drive and also to meet the new requirements for personnel transfers during ship-to-ship (STS) transfers.

A relative newcomer to the OSV sector, Atlantic Offshore is based at Agotnes, just outside Bergen, which is claimed to be the largest subsea base in the world.

One of the tasks undertaken by the vessels, depending on their charters, is to assist and standby shuttle tankers when attaching, or detaching hoses, to production units and to keep the tankers on station when loading cargo.

Atlantic Offshore’s OSVs are working in the Norwegian and UK sectors of the North Sea where usually larger vessels with greater bollard pull are required, due to the harsh conditions encountered in the area.

With the rising numbers of DP2 type shuttle tankers there will be a reduction in tanker assisting OSVs, However, there will still be a need for standby vessels, Atlantic Offshore CEO Roy Wareberg explained.

Another example of an offshore concern overlapping into the tanker sector is GC Rieber’s charter of an icebreaking support vessel/tug for the Sakhalin 1 project, in a joint venture between ExxonMobil and Primorsk Shipping Corp (PRISCO). Tankers are loaded through a single buoy mooring system aided by the vessel.

The icebreaking tug Polar Pevek and the crew boats Polar Piltun and Polar Baikal are owned through a 50/50 joint venture with PRISCO and are operated by the group’s ship management company in Yuzhno-Sakhalinsk.

Polar Pevek is chartered to Exxon Neftegas until 2021 and operates out of the De Kastri oil terminal, assisting tankers carrying oil from the Sakhalin I offshore field off eastern Russia. The two crew boats are chartered to the Sakhalin Energy Investment Corporation until 2013 and are employed in the Sakhalin II field. The tug, measuring 72 m x 17 m, has an engine power of 11,000 kW.

Also based just outside Bergen is the former Bergen Diesel works now owned by Rolls- Royce Marine (RR). RR has launched its ‘Environship’ concept, which includes small chemical/product tanker designs.

The bow is strait, similar to the design on the 1912-built Titanic, to reduce bow impact and thus less plate damage. The hull is longer and slimmer and the stern has also been designed to reduce resistance, which is claimed to give up to 10% less speed loss in a seaway. In addition, the design is claimed to reduce green seas breaking on deck.

Incorporating this design is a ro-ro due to be delivered to Norlines from China this year and a Norwegian fish food carrier built locally. Rolls-Royce said that a contract for a LNG bunker tanker was due to be signed soon with a European-based owner and an LNG carrier contract was also due to be signed by another European owner in the near future at a Chinese shipyard.

The design can be tailored to most sizes and types of vessels, including chemical/product tankers, the company said.

 

Taxing issues

Turning to onshore and offshore staff, the local Bergen office of PricewaterhouseCoopers (PwC) issued a warning about tax and social security.

The regulations tend to be different for Norwegians working overseas and overseas people working in Norway, whether onshore, or on board a vessel. A rather extreme example was Brazil, where different laws can apply in different regions of the vast country.

PwC’s local tax expert and partner Elin Sarai said that it was difficult to get answers to tax questions from Brazil in some cases. For instance, questions have arisen as to what happens in a situation of a rotational crew change and people arriving from abroad to work on short term projects in the country, she explained.

She thought that the tax risk to individuals and companies was becoming much higher. “The maritime sector must expect more focus and control from the tax authorities in the future,” she said. Companies should be aware that there is probably something happening, or going to happen soon, regarding tax and social security payments, she warned.

Logically, the source of income should be in the country where the work is performed, but this is not always the case, she said.

PwC claims to be the largest tax firm in Norway and advises many local companies in the maritime field on accountancy and tax matters, both domestically and internationally.

Among the strong chemical tanker owners and operators based in Bergen is Westfal- Larsen (WL). This family owned concern was formed in 1905, but started in the chemical tanker sector by signing a cooperation agreement with Odfjell in 1964, which led to the formation of Odfjell Westfal- Larsen Tankers in 1980.

WL sold out of this tie-up in 1990 and today operates 12 IMO II type chemical tankers. The fleet’s average size is 45,216 dwt and the average age of the vessels is seven years. They are crewed mainly by Latvian and other eastern European seafarers.

A series of eight tankers was ordered in 2004 from Hyundai Mipo and were delivered in 2008-2011 and are claimed to be of an eco-design.

The cargo tanks are coated with inorganic zinc and the core business is shipping methanol. The tankers are commercially operated by subsidiary concern Westchart on a mixture of contracts and spot market charters.

As for greater fuel efficiency, like many other tanker owners/operators, WL is looking at various methods to save fuel, thus emissions. Some of the DNV classed tankers are undergoing a test project with Finnish concern NAPA for optimal trim.

WL’s approach for the measuring and monitoring of vessel efficiency under SEEMP is a voyage optimisation programme, including speed selection optimisation, optimised route planning and trim optimisation.

The company is also looking at propulsion resistance, including hull resistance (coatings, cleaning, etc) and propeller resistance – polishing, coating and cleaning, etc. The company has recently used the Norwegian concern CleanHull for underwater inspection and cleaning. CleanHull uses high pressure water jets with an underwater camera attached to an ROV.

A machinery optimisation programme is also underway involving the main engine monitoring and the optimisation of lubrication, as well as other machinery and equipment. An MAN Alpha lubricator has been retrofitted on some vessels as have sliding valves on some of the 2-stroke diesel engines. The company has also adopted an energy conversation awareness plan, which also involves training.

In the pre-voyage planning stage, the officers will take into account vessel trim, routing and weather, etc. While at sea, the engine’s performance and speed will be monitored and the data compared with that recorded at the vessel’s sea trials. WL stressed the need for correct reporting procedures in order to receive the correct data feedback.

Improved communications between ship and shore is another area looked at, as is training both on board and onshore, while new projects under review are further vessel ecodesigns and alternative fuels, such as the use of methanol and LNG.

As for fitting ballast water systems, the shipmanagement division said that it is working with several makers/options.

Another relatively new concern is Norwegian Electric Systems (NES), born out of Scandinavian Electric Systems. This company designs and manufactures dieselelectric and hybrid electric systems, including electrical thruster systems for shuttle tankers.

For example, in 1995 to 1998, under its previous ownership, the company retrofitted thrusters on five shuttle tanker undergoing conversion in Poland. The tankers were being converted to shuttle tankers for Awilco and Knutsen, among others and were fitted with three thruster motors each ranging from 1,000 kW to 1,800 kW, each started by generator excitation.

President and CEO Jan Berg told Tanker Operator that NES is currently working on thrusters systems for seven newbuilding shuttle tankers in Brazil.



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