Terntank orders two more

Terntank proclaims its options on two sister ships to the two LNG powered product tankers ordered in the autumn of 2013. The oil company NEOT also confirmed that they are taking in two of these on time charter. (Source & the article in Swedish: Sjöfartstidningen).

Terntank Rederi AS now has four LNG powered 15,000 dwt product tankers on order at the Chinese shipyard Avic Dingheng Shipbuilding Co., Ltd. The ships will be delivered at three-month intervals so that the first one will be delivered in the spring of 2016 and the fourth in the beginning of 2017.

Terntank elected to declare its two options because there is considered to be a demand for energy efficient and environmentally adapted tanker tonnage. 

Environmental advantages

By using LNG as fuel it is possible to achieve significant environmental advantages in comparison with low-sulphur marine gas oil, which many shipping companies will be switching to when the more stringent sulphur regulations come into force in 2015. LNG reduces emissions of SOx by 90 per cent, NOx emissions by almost 80 per cent, and particulate matter by over 90 per cent. The newly built ships will also emit 35 to 40 per cent lower volumes of CO2 than a conventional tanker today, reports Terntank.

The ships will be fitted a low-speed main engine from Wärtsilä with dual fuel and low-pressure technology. The new engine complies with the emission requirements for IMO Tier III without other exhaust emission systems for NOx during the use of LNG. Bunkering will take place ship-to-ship with bunker ships.

Cooperation 

Two of the new ships will be long-term chartered by NEOT, North European Oil Trade Oy, in Finland. NEOT, which is jointly owned by the cooperative union SOK and the oil company St1 Nordic Oy, currently have three of Terntank's ships in service: Ternvik, Ternhav and Ternholm. They will continue in service until the new ships have been delivered. The energy consulting company Wega Advisors Oy in Finland has negotiated the agreement between Terntank and NEOT.

"We think Terntank is a high quality company who will be the first ship owner who has the innovative LNG technology in use and they are a local company who knows our trading area very well including ice navigation. We believe LNG technology will help us to ensure continuous operations in the Baltic Sea region by meeting the Sulphur Emission Control Area (SECA) requirements that will become binding from the 1st January 2015. Cooperation with Terntank is also a natural continuation for the cooperation we already have with them including the three time chartered vessel at the moment," says Satu Mattila, Chartering Manager at NEOT.

Renewed distribution chain

In the beginning of 2013, NEOT underwent a logistics renewal process. The entire distribution chain was renewed and this also concerned the overall logistics concept, including maritime transportation.

"We also took the new regulations that will apply from 2015 into consideration. At the same time Terntank presented very interesting plans for new LNG vessel technology and WEGA Advisors had a clear vision of LNG solutions in our trading area. Together with Terntank and WEGA Advisors, we began planning a long-term overall logistics solution. In the autumn of 2013 we decided to take in three high-class and efficient ships on time charter from Terntank to cover the logistics requirements until the new LNG powered vessels arrive in 2016," Satu Mattila tells us.

NEOT has set a series of special requirements that Terntank's ships will comply with.

"We have technical requirements for the vessels, such as very good ice capability and operational efficiency, but these requirements also concern the fact that NEOT is working to reduce the environmental impact of oil products within the distribution chain by utilising new and energy-efficient technology to reduce current emission levels in the Baltic Sea's emission control area. In addition to other emissions we are also aiming to comply with IMO's Tier III limit for NOx," explains Satu Mattila.

Trading on the Baltic Sea

NEOT conducts wholesale trading with oil and bioproducts, where maritime transportation constitutes an important part of the distribution chain. Around 2.5 million tonnes of oil products were transported in 2013 under the direction of NEOT's shipping department. NEOT handled a total of four million cubic metres of oil products during the year.

The most important trading area is the Baltic Sea area and the most important ports are located on the west of coast of Sweden and in Denmark and Norway. The products are normally shipped to NEOT's own terminals in Finland, which are located in Hamina, Pori, Vaasa and Oulu, and to terminals on the east coast of Sweden.

"We believe that LNG powered vessels will be a good solution for the Baltic Sea area in the future. One key issue will be access to LNG as a 100 per cent bunker fuel in order to utilise all the environmental aspects for these vessels. We believe that within our trading area, which is mainly the Baltic Sea area, it could be possible to consider chartering in even more LNG powered vessels in the future," says Satu Mattila.

Zero Vision Tool

Terntank is the first shipping company that has ordered tanker vessels planned for within the cooperation and project platform Zero Vision Tool (ZVT). The objective of this is to contribute towards creating safer and more environmentally and energy efficient transports at sea.

The environmental adaption means that Terntank's new vessels cost about one-fifth more than comparable tankers with conventional diesel engines that use marine gas oil or heavy-oil as fuel. Within the industry it is generally considered that the Swedish Maritime Administration and even the ports ought to offer financial support to create incentives for shipping companies to invest in new and environmentally adapted ships.

Carl Carlsson at the Swedish Shipowners' Association tells us that some progress has been made on this issue and that the parties concerned have adopted a positive approach to requirements surrounding this ZVT project, which has been developed under the name of Baltic SO2lution. The Baltic SO2lution includes several different partners: Terntank Rederi AS, Tärntank Ship Management AB, Wärtsilä Finland Oy, North European Oil Trade Oy, Wega Advisors Oy and SSPA.

"The Swedish Maritime Administration had a board meeting last week where they discussed their new system for fairway dues and included discounts for so-called ZVT ships. Terntank and other interested parties in the SO2-lution project and other current industrial projects show that from a technical perspective we have come a very long way," says Carl Carlsson to Sjöfartstidningen.

"Initiative should be rewarded"

The focus is therefore now on the pieces of the puzzle around financing and economics," continues Carl Carlsson.

"The industry needs funding and the financial sector needs the opportunity of risk coverage so that it can in turn support the industry with the necessary loans. In the operational phase the initiatives the shipping companies are now taking must be rewarded. In the same way that the first green cars were initially allowed free parking in some cities, we ask that port and fairway dues should be significantly reduced in the first few years for the different solutions we are now trying out. We are very grateful for the response we received earlier from the Port of Gothenburg that they will help the shipowners during the first few years. ZVT has begun cooperation in the spring with HELCOM, where this immediate issue and a future joint Baltic environmental index have a high priority."