Greek shipping warns 2010 scrapping of single-hulls could disrupt oil flows

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[chance33_98]

Greek shipping warns 2010 scrapping of single-hulls could disrupt oil flows

by Harry Papachristou

ATHENS, June 8 (AFP) - The Greek shipping community, the industry's biggest player worldwide, has strongly opposed a European Union decision to send single-hull oil tankers to the scrapyards by 2010 and warned the move will disrupt international petroleum flows around the turn of the decade.

"It's going to be complete chaos in 2009," a shipowner told journalists on condition of anonymity.

Greek shipping circles maintain that Asian shipyards will not be able to churn out enough replacements for the old vessels by the 2010 deadline. Capacity will dry out and freight rates go through the roof, they added.

Practically putting an end to the maritime security debate that erupted in November after the sinking of the Prestige, a single hull tanker that went down off the coast of Spain spilling 40,000 tonnes of fuel oil into the Atlantic, the European Parliament last Wednesday approved a plan to bring forward the ban on single-hull oil tankers in European Union waters to 2010.

According to data compiled by Newsfront, a Greek shipping review, 19 single-hull, Greek-flag oil tankers will have to be withdrawn immediately after the new rules are enforced, probably by the end of the year.

Another 64 are to follow by 2010. A large number of Greek-owned ships registered under different flags will also be affected.

Trading tonnage in the EU area will be greatly reduced as the phase-out takes effect, warned Jarle Hammer, chief economist at Fearnresearch, at a recent shipping conference here.

He predicted that there would be a "dumping of disqualified tonnage to other areas," with ships as young as eight years old being phased out.

The speedier phase-out will be a boon to shipbrokers as well as South Korean and Japan shipyards instead, shipowners said. Enjoying fat order books, South Korean shipbuilders have already said they aim to control 40 percent of the world market for new ship construction by 2012, up from their present 33-percent share.

"EU politicians are naive if they believe we will turn to European yards," the shipowner said.

Europe's fledgling shipyards find it hard to compete with their more efficient Asian rivals and turn to directly awarded state-financed Navy contracts to stay afloat.

Hellenic Shipyards, Greece's top builder, obtained warship contracts worth 3.2 billion euros (3.75 billion dollars) that are to provide work for the yard until 2010.

Greek shipowners are particularly embittered as they had already embarked on a vast building programme following an earlier deal to phase out single hulls by 2015.

"Greek shipowners had realised themselves that double hulls are safer and invested in them," shipping analyst David Glass told AFP.

The EU's "politically motivated decision to accelerate the ban disrupts our planning," the shipowner said.

According to the GSCC, 203 Greek-owned ships were on order in June, including some 60 tankers. The Greek-owned fleet's average age has already fallen from more than 20 years at the end of 2000 to 17.4 years.

But the move into double hulls reflects not just political pressure and lower shipbuilding costs resulting from higher competition in Asian yards and lower interest rates worldwide. A seachange in Greek shipowners' business strategy also seems to be under way.

Traditionally, Greek shipowners "preferred high-leveraged inexpensive old ships that could be operated at low cost and sold in market-pickups for considerable profit," said the National Bank of Greece in a recent report.

"The earlier Greek shipowner generation had more seagoing experience and a more hands-on approach," Glass said. The new generation of shipowners deal more with their bankers than with their engineers.

According to the latest GSCC data for May, Greeks control 9.3 percent of the world's ships in service and on order, 18.3 percent of deadweight tonnage and 15.9 percent of the gross tonnage against 9.2, 17.8 and 15.5 respectively in 2002.

[AdmSmith]

ccording to the GSCC, 203 Greek-owned ships were on order in June, including some 60 tankers. The Greek-owned fleet's average age has already fallen from more than 20 years at the end of 2000 to 17.4 years.

So what is the problem? 2010 is 6.5 years from now. A ship is ordered and built within 3 years time. The Greek vessels are known to be of low quality scrapping them ASAP is the right thing to do.