The burned out hull of a suspected pirate skiff drifts near the amphibious dock landing ship USS Ashland (LSD 48). U.S. Navy photo by Mass Communication Specialist 2nd Class Jason R. Zalasky

A federal appeals court in Virginia ruled this week on the definition of piracy on the high seas, upholding the convictions and life sentences of five Somali men charged with piracy for their role in the 2010 attack on USS Nicholas and at the same time remanding a seperate but similar case where the piracy charge was dropped.

The five Somalis in the Nicholas attack were convicted on November 24, 2010 by a federal jury in Norfolk, VA on a number of counts including piracy, which is punishable by life in prison.  During the attack, the five men used a mothership to stage an attack and fire upon the USS Nicholas, which they unfortunately had mistaken for a merchant vessel, while west of the Seychelles in the Indian Ocean.  The USS Nicholas quickly apprehended the suspects, and sank their vessels for good measure.  The men were later sentenced to life in prison followed by a consecutive 80 years.  The case marked the first piracy conviction in the U.S. since 1819.

Attorney’s of the defendants challenged the convictions and life-plus-eighty-year sentences, appealing on several grounds including that their unsuccessful attempt to hijack the USS Nicholas did not amount to piracy offense.

During the appeal, attorney’s for the defendants argued that the crime of piracy has been narrowly defined as robbery at sea, i.e., seizing or otherwise robbing a vessel. The basis of the appeal was that because the men boarded the Nicholas only as captives and had not actually taken any property, the piracy charge should be overturned.

In a separate case, the Fourth Circuit also vacated the pre-trial ruling involving an alleged separate but similar attack on the USS Ashland by five other Somalia men where the piracy count was dismissed from the indictment.

In the case of the attack on USS Ashland, on April 10, 2010 the Somali men chased and fired upon the amphibious dock landing ship that they had somehow mistaken for a vulnerable merchant vessel in the Gulf of Aden.  True to form, the USS Ashland apprehended the suspects and sank the pirate skiffs.

The Fourth Circuit remanded the case back to the District Court for further proceedings that will likely pursue the piracy charge.

“Today, the Fourth Circuit made clear that anyone who attempts an armed hijacking of another vessel on the high seas is a pirate under U.S. law,” said U.S. Attorney for the Eastern District of Virginia Neil H. MacBride. “Since the earliest days of this country, piracy has been a serious crime. That is why Congress in 1819 chose a definition of piracy that would reflect advancements in the law of nations. For decades, the international community has considered violent attacks on the high seas as an act of piracy, and today’s ruling will strengthen our ability to hold those who attack U.S. vessels by force accountable, regardless of whether they are successful or not.”

Stabilized-volatility would be the most accurate description of the oil markets this past week.  Overall crude prices closed down only about $1 bbl this week; but we have seen them down several dollars at different stages throughout the week and during each trading day.  While the KPI Bridge Oil Composite continues to go down,  fuel oil and gas oil prices are just getting in line with the overall market trend of the last several weeks.  It would not be unreasonable to expect bunker prices to stabilize next week barring any major change in the crude markets.

It is amazing to see how volatile operational costs have become for ship-owner’s and charterer’s.  In this month alone,  we have seen the KPI Bridge Oil Composite go down over $57 MT.  For a vessel burning 20 MT per day that represents decrease of $1140 to daily operating costs.  With changes like this,  a spot charter can go from a winner to a loser quickly, and visa-verse.

With a short week next week, we should all prepare for a lot more volatility.  Offices in the United States will be closes on Monday 28 May in observance of Memorial Day.

About the KPI Bridge Oil Composite                                                                                   

The KPI Bridge Oil Composite is a calculated fuel number based on 14 ports strategically positioned worldwide.  It is calculated on a weekly basis blending 90% fuel oil prices with 10% distillate prices.  The idea behind the number is that it would represent actual fuel costs on a global basis and what vessels would consume on average.  This number will not fluctuate as quickly as daily prices and can easily be hedged or used for voyage calculations.

Fly-over shots of the M/V Rena grounded on the Astrolabe Reef on October 8. Photo: Dudley Clemens

The Master and Second Officer of the stricken M/V Rena that has been stuck on Astrolabe Reef since grounding on October 5 have each been sentenced to seven months imprisonment for their role in the grounding.

The men were sentenced on a total of 11 charges laid out by Maritime New Zealand that included operating a vessel in a manner causing unnecessary danger or risk, discharging harmful substances from ships, and willfully attempting to alter the course of justice by altering ship’s documents after the grounding.

MNZ laid six charges against the Master, Mauro Balomaga, and five charges against the Second Officer, Leonil Relon, following the grounding. Both men pleaded guilty to all charges against them.

“In this case, the Master and the Second Officer have breached the most basic fundamental principles of safe navigation,” said Keith Manch, Director of MNZ, who welcomed the charges.

An investigation into the grounding found that the Master and Second Officer had deviated from their original passage plan from Napier to Tauranga to save time, but failed to properly assess navigational hazards of the new plan and also not adequately record these changes.

According to the MNZ investigation, the final alteration to the course of the ship occurred around 1.35am and put Rena directly on target to hit the Astrolabe Reef, where it would eventually run aground at 2.14am.

About 10 minutes prior to the grounding, the investigation found, the Astrolabe Reef appeared as blip on Rena’s radar, which would have provided sufficient lead time to change course to avoid the reef had the Master not dismissed it as a small vessel.

“If there is a need to deviate from a prepared passage plan, the alterations must be plotted and the new projected path carefully assessed to ensure all potential navigational hazards are identified,” said Manch.

The Master and Second officer were not only targeted for their actions prior to grounding, but it was their actions afterwards that would also land them in the hot seat.

During the course of the MNZ investigation, Manch added, both officers admitted making alterations after the grounding to the ship’s GPS log, its passage plan and its computer to mislead investigating authorities.

“This offending is also very serious in that it caused genuine confusion for investigators trying to piece together the events that led to the grounding.

“It is vital that when these types of events do take place, we can find out how and why they have happened to help prevent such an event happening again.”

In a separate prosecution, MNZ has also laid a charge under the RMA against the owner of Rena, Daina Shipping Co.

Earlier this week the Rena salvage reached a milestone after surpassing 800 recovered containers from the vessel. The vessel had a total of 1368 containers when it grounded.

Details of the charges against the Master and Second Officer can be found below.

Mauro Balomaga, the ship’s Master:

• One charge under section 65 of the Maritime Transport Act (MTA) 1994, “for operating a vessel in a manner causing unnecessary danger or risk”.
• One charge under section 338 (1B) and (15B) of the Resource Management Act 1991 (RMA) relating to the “discharge of harmful substances from ships or offshore installations”.
• Four charges under S117(e) & 66 of the Crimes Act, that he “wilfully attempted to pervert the course of justice” by altering ship’s documents subsequent to the grounding.

Leonil Relon, the ship’s Second Officer (Navigation):

• One charge under section 65 of the Maritime Transport Act (MTA) 1994, “for operating a vessel in a manner causing unnecessary danger or risk”.
• One charge under section 338 (1B) and (15B) of the Resource Management Act 1991 (RMA) relating to the “discharge of harmful substances from ships or offshore installations”.
• Three charges under S117(e) & 66 of the Crimes Act, that he “wilfully attempted to pervert the course of justice” by altering ship’s documents subsequent to the grounding.

APM Terminals Portsmouth Virginia, the largest privately owned terminal in North America. Image: APM Terminals

COPENHAGEN — The port-operating arm of Danish industrial conglomerate A.P. Moller-Maersk A/S (MAERSK-B.KO), APM Terminals, said Thursday it has made an offer to the state of Virginia to operate the cargo traffic facilities at the U.S. Port of Virginia.

In return for the long-term concession, APM Terminals offers to transfer ownership of its facility in the Portsmouth Marine Terminal at the port to the Virginia administration, in a strategic partnership deal that the company estimates to have a total value to the state of between $3 billion and $4 billion.

The proposal includes operation of freight facilities at the Port of Virginia, which is comprised by four marine terminals and adjacent inland services, all centered around the ice-free, natural harbor of Hampton Roads.

“Our proposal provides for the lowest cost, long-term solution for future growth at this time of a stabilizing economy and the eventual expansion of global commerce,” said APM Terminals Americas Region President Eric Sisco.

Included in the value estimate are initial payments, fixed concession payments, revenue sharing, capital investments and tax benefits, transferring market risk from the Commonwealth to the private sector, APM Terminals said.

The offer has been submitted to Virginia’s Office of Transportation Public-Private Partnerships and will undergo a detailed review in the coming months, APM Terminals said.

-By Flemming Emil Hansen, Copenhagen Bureau

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Time Charter Market, via Clarksons (click for larger)

But the results topped estimates, and the company, which recently undertook a restructuring effort, said it expects its second-quarter results to be better than the first.

Shares were up 4.4% in premarket trading to $5.20. Through Thursday’s close, the stock was up 16% so far this year.

The company, which owns and operates oil tankers, added that it won’t be paying out a dividend in the first quarter.

Frontline completed a restructuring of its business late last year, selling 15 of its wholly-owned special-purpose companies to create a new company, Frontline 2012 Ltd., which it will manage through a subsidiary. Following the restructuring, the company reduced its operating fleet to 48 vessels from 58 vessels.

Frontline reported a first-quarter profit of $7.18 million, or 9 cents a basic share, down from $15.5 million, or 20 cents a share, a year earlier. The latest quarter included a loss of $2.2 million on the sale of a double hull tanker and a $9.4 million gain from the termination of the charter party for a single hull carrier.

Operating revenue dropped 29% to $167.3 million, while operating expenses fell 26%.

Analysts surveyed by Thomson Reuters had seen a loss of 10 cents on revenue of $91 million.

-By Kristin Jones; Dow Jones Newswires

Original drawing of the apparently "unsinkable" Titanic, image courtesy Lloyd's Register HORIZONs Magazine

-By Christopher Browne, Editor of Lloyd’s Register HORIZONs magazine

The message was brief and cryptic: “Struck an iceberg and sank in latitude 41.16 N, longitude 50.14 W”. It might have been just another daily entry in Lloyd’s Register’s Casualty Returns. But it hid perhaps the most infamous event in shipping history – the sinking of the Titanic.

That was 100 years ago – on 14 April 1912 to be precise. Since then a flurry of historians, scientists, investigators, conspiracy theorists and media pundits have pondered and puzzled over just why this great and ‘unsinkable’ vessel should founder on a lone iceberg.

A spectacular array of events are being held this year in the seven European and North American cities involved in the mighty ship’s last voyage. However behind the ritual and razzamatazz are some curious post-disaster stories including one about the role of Lloyd’s Register.

A few days after the incident, the national press wrote a series of reports suggesting the Titanic had been built ‘considerably in excess of the requirements’ of Lloyd’s Register. Although we had not classed the vessel, and the information was patently wrong, you could argue it was a form of faint praise by association. Although our Secretary at the time, Sir Andrew Scott, didn’t quite see it like that.

“I am directed to say that these statements are inaccurate. On the contrary, in important parts of her structure the vessel as built did not come up to the requirements of Lloyd’s Register for a vessel of her dimensions,” he wrote in a letter to The Times of London.

“I do not for a moment suggest that this circumstance had any bearing whatever upon the loss of the vessel and therefore, for obvious reasons, this letter has been delayed until after the close of the Inquiry (the Mersey Committee set up in the UK to investigate the loss). But in justice to this society and to those who rely upon its classification, it is felt to be only right to dispel the erroneous impression which might be created regarding the standard of classification of Lloyd’s Register for such vessels if the statements referred to remain uncontradicted.”

A pithy riposte indeed. As Andrew Scott points out, we were not involved in classing the Titanic, however we did approve her anchors which still lie intact on the seabed of the North Atlantic Ocean. We also classed the passenger liner Carpathia which arrived to assist the sinking ship a few hours later, saving 705 men, women and children from the Titanic’s lifeboats.

The tragedy with its disturbing death toll of 1,523 had an important sequel. In 1914, the impact of several inquiries in the UK and USA led to the set ting up of the fir st International Convention for the Safety of Life at Sea (SOLAS), its aim to improve maritime safety and help prevent any future catastrophes.

SOLAS’s principles – robust lifesaving appliances and lifeboats, improved vessel design and equipment, better fire protection, effective satellite communications, rescue planes and helicopters and properly trained personnel – have been the major safety code for the global marine industry ever since.

Christopher Brown edits HORIZONs magazine, a quarterly publication by the UK-based classification society, Lloyd’s Register. Mr. Browne’s accolades include: Winner of the 2006 Consumer Broadsheet Journalist of the Year in the BIBA Awards; nominated in 2007; shortlisted for journalism’s Oscars, the British Press Awards; nominated four times for the IBP Journalism awards.

Oskarshamnsvarvet, image courtesy Damen

Damen Shipyards Group announced today that they have taken over the shares of Swedish ship repair and maintenance yard Oskarshamnsvarvet in Oskarshamn. The deal went down on May 16th and was prepared in close cooperation with the owners and includes the full continuation of the repair yard, both as to current operations and personnel.

Oskarshamnsvarvet is a ship repair yard on the south-east coast of Sweden. It is specialized in the maintenance and repair of vessels up to 80 m and has built, repaired and maintained a substantial part of the Swedish coastal fleet since 1863.

Apart from a floating dock, the company operates a slipway covered by a portal crane of 100 tons. In addition to shiprepair the company is active in industrial activities, such as specialized crane assembly and the production of special-purpose containers. Oskarshamnsvarvet employs about 60 people and has been profitable over the past years.

René Berkvens, CEO Damen Shipyards, says: “The takeover of Oskarshamnsvarvet fits right into our strategy to increase Damen’s network of ship repair yards in Europe. Moreover, Oskarshamnsvarvet is a solid base from which we can provide services to existing and new (Swedish) clients. We look forward to work with the yard and its employees.”

Mr Martijn Smit has been appointed as board member of Oskarshamnsvarvet. Damen is an established player in the ship repair market and now has two Swedish yards: Oskarshamnsvarvet on the east coast and Damen Shiprepair Götaverken on the west coast. All in all, Damen operates 9 ship repair and conversion yards along the North Sea coast and 3 repair yards in the Middle East.

"West Phoenix", a Moss Maritime CS50 MkII Design (PHOTO: Niclas Eliasson/Seadrill)

Fred Olsen Energy ASA announced today that one of their wholly owned subsidiaries has entered into a turnkey contract with Hyundai Heavy Industries Co., Ltd. for the building of a harsh environment ultra deepwater semi submersible drilling rig.  The total project cost is estimated to be in the range of USD $700 million (including spare parts, owner furnished equipment and yard project team).

Another subsidiary for Fred. Olsen Energy ASA has been granted an option from Hyundai for the purchase of a similar second drilling rig exercisable within October 2012.

The new drilling rig will be a Moss Maritime CS 60 E design and is designed for water depth capacity up to 10,000 feet. The unit will be fully compliant with Norwegian Continental Shelf requirements, and is designed for year-round operations in the Norwegian Barents Sea. Further, the rig is specially designed for safe and efficient drilling and completion operations for the full water depth range.

Delivery is scheduled for March 2015.

Gerald R Ford Lower Bow Lift. Photo by Ricky Thompson via Huntington Ingalls

Huntington Ingalls’ Newport News Shipbuilding (NNS) division this week reached a major milestone in the construction of the U.S. Navy’s new nuclear-powered aircraft carrier, Gerald R. Ford (CVN 78), as the lower bow was lowered into place in dry dock.

As we saw earlier this week, the Gerald R. Ford is being built using modular construction, a process where smaller sections of the ship are welded together to form large structural units, outfitting is installed, and the large unit is lifted into the dry dock. Of the nearly 500 total structural lifts needed to complete the ship, 390 have been accomplished.

The lower bow section shown here is more than 60 feet tall and, at 680-metric-tons, is one of the heaviest superlifts to be placed on the ship.

“The lower bow is a distinctive component of an aircraft carrier,” said Rolf Bartschi, NNS’ vice president of CVN 78 carrier construction. “Its sheer size is indicative of the massive undertaking of this project and the incredible work ethic of the shipbuilders bringing Ford to life. I congratulate the team on yet another major construction milestone.”

This is one of the cooler photos we’ve seen in a while and I highly recommend viewing it in hi-res, HERE.

The placement of the lower bow section as seen during the Gerald R. Ford build sequence animation. Click for Video

The deal requires ships to reduce the sulphur content of their fuels by close to 90%. Photo: Danish EPA

The EU Wednesday announced an informal agreement requiring, by law, that all ships operating in EU waters meet mandatory sulphur content limits of marine fuels in an effort to reduce harmful emissions from ships.

Under the provisional agreement and in line with Annex VI of the MARPOL Convention, ships operating in the EU’s “sulphur emission control areas”, including Baltic Sea, the North Sea and the English Channel, will have to lower the amount of sulfur used in marine fuel from 1% to 0.1% by 2015.  Meanwhile, ships operating in other EU waters will have to lower the amount of sulfur used to a less onerous 0.5% by 2020.

The agreement is based on international regulations adopted by the International Maritime Organization (IMO) in 2008. However, a key result of the new agreement is that the limits will now become mandatory under EU law, and ships failing to meet the new limits will face fines high enough to cancel out any savings of not complying with the rules.  A formal EU decision on the agreement is expected this summer.

While environmentalists and health advocates are applauding the drastic actions, critics, including some of the Nordic region’s biggest companies, are saying that the new rule will largely have a negative effect on shipping costs and distort competitiveness in the region.

The European Commission estimated that meeting the new limits will cost the shipping industry between 2.6 billion and 11 billion euros ($3.3 billion-$14 billion), reports Reuters, however that number is far outweighed by the estimated public health savings of up to about 30 billion euros.

Air pollution produced by ships in Europe leads to an estimated 50,000 premature deaths each year says the European Council.