Abu Dhabi National Tanker Co. Discusses Shipping Industry Challenges [CEO INTERVIEW]

Lloyd’s Register recently met Mr Ali Obaid Al-Yabhouni, CEO of ADNATCO and NGSCO, in his offices in Abu Dhabi, to discuss the challenges facing the shipping industry.

What do you think are the most important changes your company and the industry can make to meet the challenges of new regulations, high-energy prices and the need for more efficient ships?

In the short term, our aim is full compliance with the MARPOL Convention, particularly Chapter 4 of Annex VI. We aim to have a Ship Energy Efficiency Management Plan (SEEMP) implemented in all the vessels in our fleet by the beginning of next year.

In the longer term, there is a clear need to invest in new energy efficient ships. Current designs can lead to a sharp decrease in energy consumption and, as fuel prices rise, this makes increasing commercial sense. Of course, charter rates are currently at a very low level, but shipowners need the vision and courage to invest in new vessels that are both energy efficient and have lower emissions. Inversely, new building costs have also come down, so there is an incentive for forward looking companies such as ADNATCO to invest in new tonnage, and the ADNOC Group of Companies has plans to continue ordering new vessels.

We feel that the time is right to continue expanding our fleet with a long-term eye to the future market in which energy efficient facilities, bunkering barges, storage tanks onboard and ashore etc. vessels are valued by charterers.

Will most deep sea ships still be burning HFO in 2020? And, if not, what fuel will they be using – for instance, will low sulphur MDO be available in sufficient quantities?

Fuel choice is clearly a major challenge facing the global shipping industry in terms of cost, efficiency and emissions. Whereas the burning of LNG as fuel is a practical and clean solution for LNG tankers, such as our own LNG tanker fleet, it is unlikely to be an option for other vessels. Burning LNG for propulsion power onboard ships other than LNG carriers will require massive investments in bunkering facilities, bunkering barges, storage tanks onboard and ashore etc.

The reality is that there is at present no readily available substitute for HFO. Low sulphur MDO represents an interesting alternative but, for the time being, is not available in sufficient quantities due to insufficient refining capacity. However, as a shipping company owned by a national oil company with significant refining capacity, I would point out that the refining industry has historically shown itself ready to invest in supplying changing demand patterns. Reconfiguring refineries and installing new units takes time, but if the global shipping industry decides to go down the MDO route, the refining industry will respond accordingly. However, this is not something that can be done unilaterally by any single company. There has to be consensus in the industry and a decision that this is the best way forward.

How can other stakeholders in the shipping industry – class, shipbuilders, charterers, insurers and banks – best help operators to manage the challenges of the future?

Shipbuilders and class have a greater role to play in this regard, because of the vast resources and experience they have in designing the new ships with more efficient and environment friendly engines.  The shipowners are ready to spend extra provided the technology is available.

The class in collaboration with shipbuilders could focus on increased research related to energy efficient ship designs, including using low sulphur and alternative fuels, installing fuel efficient and emission compliant engines, integrated power plants, and the use of exhaust-after-treatment devices.

In an ideal world, charterers would reward energy efficient ships with increased rates, while insurers would reduce their premium rates for new energy efficient ships. We need market-based mechanisms to ensure that this happens.

About Abu Dhabi National Tanker Co…

(ADNATCO) was established in 1975 for the transportation of petroleum products. It is a wholly-owned subsidiary of Abu Dhabi National Oil Company (ADNOC).

ADNATCO owns and operates a fleet of oil tankers, a molten sulphur carrier and two ro-ro vessels and is involved in the marine
transportation of petroleum products and the bulk carrying of sulphur.  National Gas Shipping Company (NGSCO) was formed in December, 1993 to transport liquefied natural gas (LNG) on behalf of Abu Dhabi Gas Liquefaction Company (ADGAS). 

NGSCO operates a fleet of eight LNG carriers, each with a capacity for 137,000 m3 of LNG. NGSCO took deliver y of it s first vessel Al Khaznah in July 1994, followed by a further seven vessels, the last of which was delivered in June 1997. The first four ships were built in Japan and the other four in Finland. Both the Japanese and Finnish built vessels are Moss Rosenberg designs and, when built, were the largest LNG carriers in the world.

The company’s LNG fleet was initially managed by third parties but since the end of 2007 all vessels are fully managed by NGSCO.