03.04.2008 - Trouble on VLCC conversion front

Talk of stress-related problems on the "Hebei Innovator" is unwelcome news for conversion candidates.

Dozens of conversion projects could be in limbo because of talk of structural and operational problems with the Hebei Innovator (built 1986).

The Hosco-controlled ship was the first VLCC to undergo conversion into a very large ore carrier (VLOC) at Shanhaiguan Shipyard in 2005. It underwent its first dry docking in February.

Market sources suggest stress-related problems around the hold have been found and that it has had operational issues with the size of its hatch cover.

Captain Cui Li Xin of North China Lines, Hosco's Hong Kong-based operating arm, denies the ship has run into any difficulties.

However, talk of a troubled first conversion has reignited concerns over the suitability of VLCCs for conversion into VLOCs.

Shipyard surveyors point out that tankers and bulkers are fundamentally different. Tankers are strengthened lengthwise and bulkers crosswise to fortify the hull and allow hatch covers to be fitted. The square hatch covers present an obvious stress point in conversions.

It is understood that the International Association of Classification Societies (IACS) and marine insurers are already conducting their own study into the safety of conversion projects.

There is also concern whether sufficiently large hatch covers can be built into the smaller 1980s-built VLCCs.

Talk of problems already appear to be having an effect on conversion decisions. Taiwan Maritime Transport (TMT), which has 15 VLCCs lined up for conversion, is said to have scrapped rather than sold the 239,000-dwt C Elephant (built 1987) and its sistership, the B Elephant (built 1986), partly because of the hatch-cover-size issue.

A broker said: "These ships were not converted into VLOCs or double-hull VLCCs because demolition prices are at a record high at the moment. It was also because of the size of the hatches."

With the smaller 1980s-built VLCCs of around 250,000 dwt, the hatch covers may be too small to meet the requirements of Brazilian mining company Vale. There are more than 60 VLCCs currently pencilled in for conversion with around 20 of them in the smaller-size range.

The additional strength requirements around the hold also makes the job more expensive. It costs around $30m to convert a VLCC into a VLOC and takes between three and six months.

The Hebei Innovator conversion was certified by the China Classification Society. Other classification societies decline to comment on the Hebei Innovator because of an agreement within IACS not to discuss other members' matters.

However, class surveyors tell TradeWinds that with accurate loading simulation and local strengthening holds, conversion projects can be made sufficiently robust to take the demands of loading iron ore at a high rate.

The retrofitted Hebei Inno vator , which has a capacity of 237,000 dwt, moved 165,000 tonnes on its first voyage, 200,000 tonnes on its second and 209,000 tonnes on its third. It has a maximum capacity of 210,000 tonnes. The ship is currently on its way to Tuberao to load. The ship was bought as the Galaxy in 2004 for $20.25m.

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