The Hindu Business Line : Ministry relooking at ban on old foreign ships

Under the Indian flag
In 2007-08, 921 chartering requests for offshore vessels were raised
On June 30, 2008 130 offshore vessels were registered — 94 for offshore supply, 36 specialised vessels

Richa Mishra
Mamuni Das

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New Delhi, July 18 The Shipping Ministry is re-examining the Government stance of disallowing foreign flag vessels over 25 years to sail in Indian waters.

This move follows strong representations from oil exploration companies such as Oil and Natural Gas Corp and Reliance Industries, which have expressed serious concerns, pointing out that these norms would severely hit their operations.

Oil cos’ views

The oil industry officials said that these norms would impact the offshore work as the companies are at a crucial phase of their exploration activities in the offshore KG basin.

They argue that seaworthiness rather than age should be the criteria. Oil companies use offshore supply vessels and multi-support vessels for ferrying material and workmen to offshore rigs.

A significant share of offshore vessels used by oil companies are under foreign flags, which are governed by the laws of their respective countries as far as the maintenance of those ships are concerned.

While Indian flag vessels are examined for their seaworthiness after a thorough survey of each vessel, it is difficult to comprehend the same for the foreign flag vessels, shipping industry officials told Business Line.

Cause of concern

The ban, which came into effect from May 15, was prompted by the Director-General of Shipping’s concern over a number of ship disasters in Indian waters last year — as the vessels involved in the accidents were all foreign flag and very old.

A committee set up by the Ministry to suggest measures to reduce marine casualties had recommended restricting the age of vessels plying in Indian waters and a tighter regime of surveys and inspection.

While no clear data was available on the number of foreign vessels in use, an indication can be drawn from the fact that during 2007-08, 921 chartering requests for offshore vessels were raised.

Meanwhile as on June 30, 2008, under the Indian flag, 130 offshore vessels were registered (94 offshore supply vessels and 36 specialised vessels), according to DG Shipping data.

Implications of restriction

An ONGC official said that they have all the necessary safety certifications and even the underwriters are willing to giving insurance cover for these vessels.

“In the current global crude scenario, we cannot miss any opportunity. Imposing such a restriction would adversely impact the exploration activities,” the official said.

Financial implications of such a restriction could be huge on the shipping companies, which in turn will significantly drive up the chartering costs for oil companies.

Cost of vessels

Industry sources say that replacing an average, simple vessel would cost around Rs 50 crore. A small multi-supply vessel would cost between Rs 100-150 crore.

“Currently, as these vessels are specialised and supply is limited globally, the prices are likely to be even higher,” said an industry source.

Incidentally, about a year ago, DG Shipping was mulling the possibility of setting up emergency towing vessels (ETVs) — one each on the East and West coast. But the proposal did not find any takers since ETVs would entail significant costs.

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