NIKOS ROUSSANOGLOU

The first quarter of 2006 saw a notable surge in contracts for the construction of new ships, due to new safety rules that came into force on April 1. The new vessels are built with the addition of 3 to 7 percent more steel in their hulls.

Disputed though they have been by the Greek shipping community, the new rules concerning ship construction have been strictly adhered to. Many shipowners therefore rushed until March to place their orders and book launching cradles in shipyards worldwide before the new regulations lifted the price of building a ship even higher.

Shipyards, however, have gone a step further. More and more analysts note that shipyard managers have already begun approaching shipowners with older tankers, proposing the transformation of single-hulled tankers into double-hulled so as to extend their life.

This offers a handy solution to shipowners who have not managed to renew their fleets to the extent they would have liked, given that shipyards are particularly busy, especially in Asia, and to the constant rise of shipbuilding costs.

According to the Marpol convention, tankers that reach their 25th year of age and do not have double hulls must be scrapped. This even touches upon younger vessels, the single-hulled ones that are 15 years old, as by 2010 security rules force them all to have double hulls. These are the very targets of shipyards. Consequently several Greek companies have proceeded to sell their ships without double hulls. A good example is General Maritime Corp of Petros Georgiopoulos, which recently managed to sell off all its single-hulled tankers after a number of transactions.

The solution which shipyards offer provides tankers with a multi-year life extension. Thanks to a technique that shipyards have developed, the conversion of a single-hulled tanker into a double-hulled one can take as little as 45 days. However, for an older vessel, this period could stretch to 70 days.

B&H Ocean Carriers will be the first company to proceed to such a move, as it recently announced it will have up to six of its oil product tankers, built in the 1980s, changed into double-hulled ones. Rules now in force would dictate the withdrawal of those vessels as the latter are approaching the age of 25 years, but after the conversion they will operate without problems.

Of course the conversion is only a temporary solution and will not be applied by all companies. Experts stress that this process had better be avoided if a ship is of low quality and particularly if its main parts are not well maintained.

The other options shipowners have are the conversion of a ship’s basic function, such as from a tanker into another type. For instance Frontline, one of the biggest companies in the sector, decided recently to convert six single-hulled tankers of the suezmax category, built in the 1990s, into heavy-lift ships. Other tankers are converted into dry bulkers. Last year, for example, China’s Hebei Ocean Shipping Co had its former VLCC tanker Hebei Innovator converted into an iron ore carrier.