Europe View: Single-hull witchhunt

Europe View: Single-hull witchhunt

LONDON - The European Union's decision in early December to ban single-hulled tankers carrying heavy fuel oil from travelling within 200 miles of its coastline seemed a questionable move at the time. Six weeks on it's beginning to look a little crazy.

At first it appeared the ban, a knee-jerk reaction by politicians to the sinking of the tanker Prestige 130 miles off the northwest coast of Spain, would have a muted impact as it only affects certain types of cargoes.

Trouble is, the move has created a witchhunt against all single-hulled tankers regardless of their age, quality and trading record in countries like Spain and France which rushed through legislation within weeks of the EU decision. The EU's parallel proposal to outlaw all single hulled tankers, as well as all vessels over 23 years old by 2010 - five years before an internationally agreed deadline - shows it's open season on tanker shipping in Brussels.

Strange side effects

The EU's ill-thought out action is already producing some strange side effects: ships that can sail to the United States, which operates the world's toughest maritime safety regime, will now be barred from Europe. The Almudaina, a 131,391-deadweight ton tanker, was pulled out of a voyage from Mexico to Spain and fixed for a trip from Port Gentil ,Gabon, to Philadelphia. The Almudaina was a modern ship, built in Spain in 1993, equipped with segregated ballast tanks and had a spotless inspection record, But all that mattered was her single hull.

Hardly any single-hulled ships have been chartered to haul oil to Spain since Madrid implemented the EU ban on Jan. 7, and brokers fear these vessels will be frozen out of other European countries starting with France over the coming months even if they are not carrying heavy fuel oil. In time, they forecast, there will be a de facto blanket ban on single-hulled ships, leading to a shortage of tonnage and higher freight rates.

EU politicians claimed their action on single hulls showed a united Europe leading the world on maritime safety.

United ? Not quite. Paris and Athens clashed earlier this month when France expelled a Greek-flagged tanker, the Kriti Filoxenia, from its 200-mile economic zone.

Further flare ups are inevitable as Greece holds the EU's rotating presidency until July and will come under pressure from member states to accelerate safety proposals, while its shipping industry, the world's largest, urges it to soften their impact.

Greece is supposed to be neutral over the next six months as it steers the EU but already its temper is fraying. Shipping minister George Anomeritis claims the Prestige didn't sink itself, but was sunk by Spanish and Portuguese warships which forced it out to sea rather than give it safe haven. He says Madrid is behaving like " a Third World country" by holding the Prestige's Greek captain in a high-security prison with bail set at over $3 million.

U.S. responds

The EU's action has already provoked a response in the U.S. where a Senate Commerce Committee has started hearings into whether to accelerate the timetable for their elimination from U.S. waters. "There is a very real risk that stricter rules in other parts of the world will force older single-hulled vessels to trade to the U.S.," Robert Cowen of New York-based Overseas Shipholding Group told the committee. "It is wholly unacceptable to let the U.S. become the port of last resort."

With Italy mulling an outright ban on single-hull ships in its ports, forecasts of a tanker shortage don't seem so far-fetched. Intertanko, the independent tanker owners' lobby, has warned this could boost transport costs from the current $1.50 per barrel to $2.50.

First to suffer from the EU's determination to shorten the trading life of single-hulled tankers will be Russia, which is being courted by the U.S. and Japan as a reliable alternative supplier to the politically unstable Middle East. "The new rules will block both loading and discharging. It will be a big problem for us to transport products out of the Baltic Sea," said to Andrei Chirikov, a director of Sibneft Oil Trade, the trading arm of Sibneft, Russia's fifth-largest oil group.

Russia ships around 25 million tons of fuel oil out of the Baltic every year and another 9 million tons from the Black Sea, mostly in older single-hulled tankers. EU officials say there should be enough double-hulled tankers to meet demand, but brokers warn rates for these vessels could soar by as much as 40 percent in the short term.

The EU is smelling blood in its campaign against tankers. Romano Prodi, president of the European Commission, has told member states that the EU's executive is considering a proposal for criminal sanctions against all those responsible for pollution, including shipowners and shippers.

The latest salvo comes as oil companies study an earlier suggestion from EU transport commissioner Loyola de Palacio to ring Europe with pipelines to lessen their dependence on tankers!

No wonder tanker owners are feeling a little paranoid.

Bruce Barnard is the European correspondent for The Journal of Commerce Online.