TANKER INDUSTRY SPOKESMAN WARNS OF FAULTS IN U.S. OIL POLLUTION LAW

Tanker owners carrying oil to the U.S. are sailing into a "war zone" created by the Oil Pollution Act (OPA) of 1990, a senior tanker industry representative warns.

Tormod Rafgard, managing director of the International Association of Independent Tanker Owners (Intertanko), Oslo, told a London conference on OPA and tanker financing, "One might say the U.S. might be the first nation in history that has tried to blockade itself."

Rafgard spelled out the problems of fleet replacement and the prospect of a shortage of modern tonnage.

He said, "The combination of a major oil spill on the coast of the U.S. and a shortage of tonnage is a scenario that ought to attract some attention in the U.S. Department of Energy, just as it should interest the economic planning departments in U.S. major oil companies."

OPA DISINCENTIVE

Rafgard said OPA acts as a disincentive to fleet replacement.

He pointed out that more than 60% of the world tanker tonnage is 15 years or older, with 166 million dwt built before 1978. Only 5 or 6 years remain to replace this huge fleet if the average age is not to exceed 20 years. But the present order book for tanker deliveries to yearend 1994 amounts to only 40 million dwt.

The pace of ordering began to decline in second half 1990, when OPA was passed into law, Rafgard said.

He said oil companies had escaped OPA liability and benefitted from years of cheap transportation but now seem to prefer to leave the risks of ocean carriage to independent tanker owners. He pointed out that only 4% of current tanker orders are for oil majors' account.

"Yet oil companies refuse to pay for quality tonnage."

Rafgard said policies followed by oil companies' chartering departments conflict with environmental commitments of their parent corporations.

"The problem is that most charterers, even large oil companies, are short term traders specifically encourage to take a short term view of almost everything."

Given of the structure of the current world order book, oil companies are set to become even more reliant on independent tanker owners. Yet today, their refusal to pay for quality is coupled with a lack of interest in term chartering, Rafgard said.

"If charterers are not offering extended time charters for newbuilding tankers, they seem to be leaving themselves very exposed to a shortage of modern tonnage in a few years time."

UNCERTAINTIES

Rafgard observed that OPA had been described as "the law of 100 pages of uncertainty."

One uncertainty is the question of whether the U.S. will be willing to follow the International Maritime Organization's decision to allow designs equivalent to double hulls for new tankers.

Another uncertainty concerns the position of banks and other financial institutions following the imposition of OPA.

Rafgard said, "If a lender has structured his financing so he holds some sort of title to a vessel, he could appear to be an 'owner' under the law.

"One bank has pointed out that under U.S. law there is a Catch 22.

"If you finance a polluter you could become liable for cleanup costs. But if you put a borrower through an independent environmental audit first and give instructions on pollution, you are seen as the effective operator and therefore liable.

"If this exposure scares some banks, it is understandable."