Watch: International Fleet Review 2016

By MarEx 2016-02-08 19:14:40

India’s Prime Minister Narendra Modi delivered a message of international cooperation at the 2016 International Fleet Review in India. India hosted the International Fleet Review at Visakhapatnam from February 4-8. 75 warships from 24 countries joined the review including Australia, China, Indonesia, Malaysia, the United Kingdom, France and Japan.

Extract from Modi’s speech

The oceans and world’s waterways are global commons. Vasudhaiva Kutumbakam– the concept of whole world as a family – is perhaps most vividly witnessed on the oceans of the planet, that connect us all.

The last time India hosted the International Fleet Review was in the year 2001, in the city of Mumbai. The world of 2016 is vastly different. Its politics is turbulent, and its challenges complex.

At the same time, the oceans are the lifelines of global prosperity. They present us with great economic opportunities to build our nations.

Over 90 percent of global merchandise trade is carried on the oceans. Over the last 15 years, its value has grown from about six trillion dollars to about 20 trillion dollars.

Oceans are critical for the global energy security as over 60 percent of world’s oil production moves through sea routes. Our ability to reap economic benefits from the oceans rests on our capacity to respond to the challenges in the maritime domain.

The threat of sea borne terror, of which India has been a direct victim, continues to endanger the regional and global peace and stability. Piracy too remains a strong challenge. The threat of natural disasters like tsunamis and cyclones is ever present. Manmade problems such as oil spills, climate change continue to risk the stability of the maritime domain.

A peaceful and stable maritime environment is, therefore, critical for the regional and global security. It is also a must to harvest the riches of the oceanic ecosystems.

Given the scale and complexity of modern day challenges, the international maritime stability cannot be the preserve of a single nation. It has to be a shared goal and responsibility of all the seafaring countries. To this end, the Navies and maritime agencies of the world need to work together, and engineer virtuous cycles of cooperation. But, where necessary, they also need to act to secure the international sea lanes of communication.

I believe that if oceans were to propel our economies, then we must:

• Use seas to build peace, friendship and trust, and curb conflict;

• respect and ensure freedom of navigation; and

• cooperate, not compete in responding to the challenges in the seas.

The large presence of foreign Navies at this Fleet Review is a confirmation of our shared urge to walk the pathways of peace and cooperation to keep the maritime domain safe and secure.

Friends, India is, and has always been, a maritime nation. India’s ancient Sanskrit texts also refer to the oceans as the storehouse of Chaturdashanam Ratnanam, the 14 gems. Surrounded by sea from three sides, India has a long coastline of over 7500 kilometres. We have been blessed with a rich maritime heritage ever since Lothal in Gujarat became one of the earliest sea ports of the world.

India’s central location in the Indian Ocean has connected us with other cultures, shaped our maritime trade routes, influenced India’s strategic thought, and defined our maritime character. Since the days of the Indus Valley Civilization, India has maintained an extensive network of maritime links, including with Africa, Western Asia, the Mediterranean region, the West, South East Asia and the Far East.

We are delighted that the Navies from all these regions have joined in this Fleet Review.

In modern times too, the oceans, especially the Indian Ocean, occupy a vital place in India’s national security and economic prosperity. The waters of the Indian Ocean touch the shores of over 40 countries. About half of world’s container traffic; and close to one-third of world’s cargo traffic passes through this region. 90 percent of our trade by volume and 90 percent of our oil imports are carried on the seas.

India’s 1,200 island territories and our huge Exclusive Economic Zone of 2.4 million square kilometers makes clear the economic significance of the Indian Ocean. For us, it also serves as a strategic bridge with the nations in our immediate and extended maritime neighborhood.

In March last year, in Mauritius, I had spelt out our vision for the Indian Ocean. The Indian Ocean Region is one of my foremost policy priorities. Our approach is evident in our vision of “sagar”, which means “ocean” and stands for – Security And Growth for All in the Region. We would continue to actively pursue and promote our geo-political, strategic and economic interests on the seas, in particular the Indian Ocean.

To this end, India’s modern and multi-dimensional Navy leads from the front. It is a force for peace and good. A network of growing political and economic maritime partnerships, and strengthening of regional frameworks also helps us pursue our goals. India’s quest for economic prosperity through oceans is a part of our larger efforts to transform India. We are not just a bright spot in the global economy. Regionally and internationally, we are a pillar of stability and an important growth centre.

India’s rise is in harmony with the goal of maintaining the regional and global peace and security. Within the country, there is great optimism, enthusiasm and a “can do” mindset. This optimism comes from the energy and enterprise of our confident youth. It also comes from our bold and sustained measures to transform our country, improve our laws, processes and institutions.

We are launching new initiatives and creating opportunities to empower people, and give them a sense of ownership in nation’s progress.

“Make in India”

Defence manufacturing and ship building are among its focus areas. In a week from now, on 13 February, we would hold seven days of global engagement under “Make in India” in Mumbai. During this time, the best in the global industry would link up with the innovation, design and manufacturing opportunities of India- the world’s fastest growing economy.

We want to invite the world to Make in India, Make for India, and Make for the World. We take pride in the fact that of all the Indian Naval ships participating in this Fleet Review, at least 37 are “Made in India” – a number that will surely rise in the coming years. Our “Skill India” program is building institutions that train, support, encourage and guide our 800 million youth on the path of entrepreneurship. Our skilled youth are ready to respond to the national and global manpower demands of the 21st century.

An important part of India’s transformation is my vision of “Blue Economy”

The Blue Chakra – or the wheel – in our National Flag, represents the potential of the Blue Economy. An essential part of this pursuit is the development of India’s coastal and island territories: but, not just for tourism.

We want to build new pillars of economic activity in the coastal areas and in linked hinterlands through sustainable tapping of oceanic resources. Strengthening our marine research, development of eco-friendly, marine industrial and technology base, and fisheries are other elements of our goal. In this endeavour, I see youth in the coastal areas as our true assets. They have a natural and deep understanding of the oceans. They could lead the way in the development of blue economy in India.

In partnership with all the coastal states of India, I want to shape a special program of skilling India’s youth in the coastal areas of the country.

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Government Officials Criticize LCS and Cutter Programs

By MarEx 2016-02-08 18:46:49

On Friday, Senators John McCain and Jack Reed, the top-ranking members of the Senate Armed Services Committee, sent a sharply critical bipartisan letter to the Navy regarding the service’s Littoral Combat Ship (LCS) program.

Their criticisms stem from findings in the latest report of the Department of Defense’s Director of Operational Test and Evaluation, issued in January.

“More than seven years after the first LCS was delivered, the report makes clear the program remains mired in testing delays with an unclear path ahead. Yet, we seldom hear from Navy leaders about these challenges and the path to achieving full operational capability. Instead, Navy leaders seem to be promoting the warfighting capabilities of the LCS,” including its rebranding as a destroyer.

Secretary of the Navy Ray Mabus recently credited the LCS with the ability to “put the enemy fleet on the bottom of the ocean” and described the ships as suitable for use as carrier strike group escorts. However, the senators said that the LCS’ proven range is only about 2,000 nm at 14 knots, raising the question of how the small ships would keep up without frequent refueling: other vessels in a carrier strike group have a range of about twice as far, they said.

Additionally, one of the main intended uses of the LCS platform mineclearing – has not yet been realized. “LCS has not reached an initial operational capability in any elements of mine countermeasures today and the timeline for achieving mine countermeasures capability remains unclear,” four years after its scheduled operating date, they wrote.

The senators also noted the delays in testing and approval for the system’s anti-submarine capabilities, and the limited abilities of its surface warfare systems, which have a “maximum effective range of five miles.”

“Unless the enemy fleet consists of a small number of lightly armed boats at extremely short range, we fail to see how the LCS reality is consistent with [Secretary Mabus’] remarks.”

The Navy’s leadership emphasized the strengths of the LCS program at the annual Surface Navy Association symposium in January. U.S. Navy Director of Surface Warfare RAdm. Peter Fanta called on members of the Navy to join together to back the service’s new Littoral Combat Ship and to “sell the story” of its capabilities. “In the long run, you’ve got to help me get the message out, there’s warfighting capability in this thing, and it’s overwhelming even our own submarines and surface ships,” he said, referring to the LCS’ performance against other U.S. Navy assets in exercises.

Separately, Government Accountability Office (GAO) officials told Congress’ Coast Guard and Maritime Transportation Subcommittee Wednesday that the USCG needed additional oversight of its National Security Cutter (NSC) program. Navy tests on the ships in 2014 found that they were suitable and operationally effective, but noted ten deficiencies, including that “the Coast Guard has not yet demonstrated that [the NSC] can achieve a hard and soft kill against a subsonic cruise missile as required,” said a statement from Michele Mackin, the GAO’s director of acquisition and sourcing management. In addition, the GAO said that the USCG will have to pay about $200 million for fixes unrelated to the Navy’s deficiencies list, including electronics systems repairs and replacements, “structural enhancements,” and recurring problems with propulsion systems.

Huntington Ingalls, the builder of the National Security Cutter, declined to comment to media, as the GAO’s statement referred to vessels already delivered.

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Georgia to Build New Silk Road Port

By MarEx 2016-02-08 17:01:35

A U.S.-Georgian consortium has been awarded a $2.5 billion contract to build and develop a deep-sea port in Anaklia on Georgia’s Black Sea coast, as the tiny ex-Soviet republic sets eyes on lucrative cargo transit from Asia to Europe.

The Anaklia Development Consortium is a joint venture of Georgia’s TBC Holding LLC and Conti International LLC, a U.S.-based developer of infrastructure and capital projects, Georgia’s Economy and Sustainable Development Ministry said in a statement on Monday.

The government of Georgia, which initiated the project, has committed to invest $100 million in ensuring its success.

The consortium, selected in a tender, aims to start the construction of the port by the end of 2016 and finish it in three years. The port will have the capacity to berth 10,000TEU container ships and to process up to 100 million tons of cargo per year upon completion.

“We are looking forward to breaking ground and working with the government of Georgia to help forge new paths from Asia to Europe as well as unlocking the economic potential of Georgia’s neighbors,” said Kurt Conti, Conti International’s CEO and president, was quoted as saying in the ministry’s statement.

The consortium is expected to raise investment from international financial institutions and port operators who will be selected within the next six months, the Economy Ministry said.

The Anaklia Development Consortium was also awarded the right to develop a free industrial zone on about 600 hectares of land adjacent to the port.

Located on the eastern edge of the Black Sea, Anaklia strategically sits on the shortest route from China to Europe. The route has recently become a focal point for $40 billion in Chinese infrastructure investments under the Silk Road Development Fund and already accounts for 26 percent of Chinese foreign trade volume.

The recent opening of the $100 billion Asian Infrastructure Investment Bank will also support regional infrastructure development. The restoration of the Silk Road has been a major priority for Georgia as well and builds upon the government’s Deep and Comprehensive Free Industrial Agreement with the European Union in December 2014.

Mamuka Khazaradze, Founder and President of TBC Holding and Founder and Chairman of TBC Bank JSC, said: “The Anaklia project represents a one-of-a-kind investment in the restoration of the Silk Road that will pay dividends for generations of workers in Asia and Europe. The government of Georgia deserves much credit for its foresight in initiating this project and ensuring it receives the support necessary for its completion. Their level of commitment clearly reflects the port’s tremendous economic importance to the country and the region.”

Two other Black Sea ports in Georgia – Batumi and Poti – are capable of handling only feeder vessels, carrying a maximum of 1,700 containers.

Larger Panamax size vessels with Georgia-bound cargo use other ports in the region, mostly Turkey’s Istanbul, where containers are reloaded to feeder ships which then are transported to Poti and Batumi.

In 2014 container throughput of Georgian ports increased by 18.5 percent year-on-year to 480,000 TEUs of which 80 percent was handled by the country’s largest port in Poti.

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IMO Pushes “Polluter Pays” Convention

By MarEx 2016-02-08 16:41:27

The IMO, together with the International Oil Pollution Compensation Funds (IOPC Funds) and the International Tanker Owners Pollution Federation (ITOPF), is urging member states to ratify and implement a key compensation treaty covering the transport of hazardous and noxious substances (HNS) by ship.

The International Convention on Liability and compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 2010, (HNS Convention) establishes the principle that the polluter pays by ensuring that the shipping and HNS industries provide compensation for those who have suffered loss or damage resulting from an HNS incident.

Together with the IOPC Funds and ITOPF, IMO has produced a six-page brochure that explains to states the purpose and benefit of the HNS Convention and encourages IMO member states to take the next steps to ratify or accede to the Convention.

“The HNS Convention recognizes that accidents can and do happen, and it is the last piece in the puzzle needed to ensure that those who have suffered damage caused by HNS cargoes carried on board ships have access to a comprehensive and international liability and compensation regime,” said IMO Secretary-General Kitack Lim. “The number of ships carrying HNS cargoes is growing steadily with more than 200 million tonnes of chemicals traded annually by tankers. I urge all states to consider acceding to the HNS 2010 treaty as soon as possible, in order to bring it into force.”

Entry into force requires accession by at least 12 States, meeting certain criteria in relation to tonnage and reporting annually the quantity of HNS cargo received in a state. There are as yet no contracting states to the 2010 HNS Convention. However, progress towards the Convention’s entry into force has gathered pace over the past year, with a number of states preparing the necessary implementing legislation.

The 2010 HNS Convention can deliver the uniform and comprehensive regime needed to provide compensation for costs, including clean-up and restoring the environment, in the event of an incident involving HNS cargoes. Total compensation available under the Convention is capped at 250 million Special Drawing Rights (SDR) of the International Monetary Fund (approximately $380 million at current exchange rates) per event.

Shipowners are held strictly liable up to a maximum limit of liability established by the Convention for the cost of an HNS incident. Registered owners of ships carrying HNS cargoes, have to maintain insurance that is state certified. The HNS Fund pays compensation once shipowner’s liability is exhausted and is financed through contributions paid post incident by receivers of HNS cargoes. The HNS Fund is administered by states and contributions will be based on the actual need for compensation.

HNS covered by the Convention include: oils; other liquid substances defined as noxious or dangerous; liquefied gases; liquid substances with a flashpoint not exceeding 60˚C; dangerous, hazardous and harmful materials and substances carried in packaged form or in containers; and solid bulk materials defined as possessing chemical hazards.

The Convention complements existing regimes already in force for the transport of oil as cargo, bunker oil used for the operation and propulsion of ships, the removal of hazardous wrecks and claims for death of or personal injury to passengers, or for damage to their luggage, on ships.

The brochure is available here.

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Modern Express’ Cargo Stirs Environmental Controversy

By MarEx 2016-02-08 16:36:21

The head of European Roro Lines (ERL), the operator of the stricken ro/ro ModernExpress, has disputed claims by Greenpeace that the vessel should be investigated for carriage of a cargo of illegal timber.

Greenpeace, echoing reports in the press that the vessel was loaded with timber of uncertain and potentially illicit origin, has recently called for French and Spanish authorities to investigate. The group called for officials “to take immediate steps, seize the timber and determine whether the operators involved acted in compliance with their obligations under the E.U. Timber Regulation,” or EUTR. In addition, the group said that “in the case of non-compliance with the timber regulation, sanctions should be imposed.”

The EUTR requires that timber sold within the E.U. must be legally obtained in its country of origin. It applies to whole logs and to wood products, including lumber and composites.

For those trading in timber, says the Forest Stewardship Council, the EUTR means an obligation to either: 1) deal in wood products that have an accepted third-party certification; or 2) to conduct “due diligence” in investigating suppliers to ensure that the timber is legal.

Greenpeace suggested that the probability that the wood was illegally obtained could be high. “All countries that could potentially be the origin of the timber are part of the Congo Basin, a region where illegal logging is a widespread problem. The forestry sector in the region is beset by rampant corruption, a lack of transparency and a lack of proper monitoring and law enforcement on the ground,” the group said.

ERL said in its statement that both the Gabonese Customs Department and the Préfecture Maritime have confirmed the nature of the cargo. On its regular runs from Europe to West Africa, the Modern Express is loaded with vehicles heading south and lumber heading back.

Karim Chami, director of ERL France, said in a statement that “the [cargo] is composed of four different species of lumber: Okan, Azobé, Movingui, [and] Tali.” None of these species appear on the United Nations’ list of endangered trees. Additionally, he said, the vessel was definitely not carrying whole logs, as “this type of vessel is not at all suitable for transporting [them].” Whole logs are typically shipped aboard general cargo vessels as breakbulk freight.

But both whole logs and sawn lumber are included in the scope of the EUTR, and Greenpeace’s questions regarding the shipment do not center on either the type of product or the species of tree – rather, they focus on whether the owner of the cargo acted in accordance with the EUTR.

Gabonese Minister of the Economy Regis Immongault has called for an investigation and for penalties for anyone found to be involved in illegal wood exports, including a port operator and potentially for the nation’s Customs Department, said Gabonese media.

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Cruise Ship Rides Out Severe Storm

By MarEx 2016-02-08 13:31:15

Royal Caribbean’s Anthem of the Seas departed Cape Liberty, NJ for Port Canaveral on Saturday, with 4,529 passengers and 1,616 crew aboard. On Sunday, she entered a rapidly developing, severe storm with sustained winds to 65 knots and seas in the range of 30 feet, centered off the Carolinas.

Images posted by passengers aboard show overhead paneling torn free, chairs and stools tossed about the decks and planters shattered and spilled. “At 949 pm we had winds of 106 knots . . . and that wasn’t even the worst of it,” tweeted Vinnie (@NYR230), who appended a photo of a cabin-mounted weather display as evidence:

Passengers posting to CruiseCritic.com’s message boards in real time reported that they were confined to their cabins beginning at 3:30 PM Sunday. The captain informed them that due to worsening conditions he would put the bow into the wind and ride out the storm at low speed.

The storm began to abate in the late evening, and by one in the morning the Anthem was under way again, passengers reported. A Royal Caribbean spokeswoman told Florida media outlets that the weather had delayed a planned noon arrival time in Port Canaveral.

In a sales point for satellite data and television service providers, the severe storm did not interrupt the ships’ reception of Sunday’s Superbowl coverage, nor its internet connection.

The “extreme wind and sea conditions” were not expected, and resulted in minor injuries for four passengers, said spokeswoman Cynthia Martinez. She did not elaborate on any damages to Anthem of the Seas.

NOAA spokeswoman Susan Buchanan told media that alerts regarding the storm were issued beginning Friday, with an official warning product issued Saturday.

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Indonesia Rejoining OPEC

By MarEx 2015-10-15 12:31:30

The Organization of the Petroleum Exporting Countries (OPEC) has notified Indonesia that it plans to accept the request to reactivate its membership at the December meeting. Indonesia would increase OPEC’s output by three percent. In July, OPEC produced about 33 million barrels per day, which is well above its target of 30 million bpd.

Indonesia will be the fourth-smallest producer in OPEC just ahead of Libya, Ecuador and Qatar. In 2014, it produced 790,000 bpd.

OPEC was founded in 1960 and is currently made up of 12 members. While OPEC allows associate membership, currently its members are full members and Indonesia is expected to become a full member as well.

Indonesia was the only Asian country that belongs to OPEC member and was a member for 50 years before it left in 2009. Their rising domestic demand and falling production turned the country into a net oil importer.

It does not come as a suprise to anaylsts that Indonesia has returned to OPEC after six years in what many called a suspension from the group . Ecuador which rejoined OPEC back in 2007 after being suspended, so the precedent had been set.

By 2004, Indonesia left OPEC because of growing internal demand and declining crude oil and condensate production in mature fields. After years of limited investment the country became a net importer. It plans to upgrade and expand all existing refineries by 2025.

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