Oslo: It will take up to the next decade for 2009 Hong Kong convention on ship recycling to come into the market, says one of the leading protagonists of green vessel scrapping. Petter Heier, ceo of Grieg Green, tells Maritime CEO: “We are waiting for the Hong Kong convention to come into force, but it will take seven more years minimum. There is a long, long way to ratification.”
The Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (the Hong Kong convention), was adopted at a diplomatic conference in May 2009.
The convention is aimed at ensuring that ships, when being recycled after reaching the end of their operational lives, do not pose any unnecessary risks to human health, safety and to the environment, something that will be good news to the likes of Grieg Green when it finally becomes the law.
Grieg Green is a part of the Grieg Shipping Group, a fully integrated Norwegian shipping company with more than 125 years of experience in the maritime industry.
Grieg Green handpicks the world’s top recycling yards – by using its own ‘score-card’ rating method. The firm acts as a manager for owners seeking to scrap ships in a more environmentally friendly way.
The problem at the moment, despite the overarching need for shipowners to scrap to cut back on overcapacity in the global fleet, is all down to price, admits Heier.
“Lots of owners have to recycle,” he admits, “but pricing remains a big issue.”
Owners are selling vessels because they need cash, Heier says, noting how the age of ships being sent for dismantling is getting younger and younger as shipping’s recession enters its fifth year. Owners are scrapping ships that are just 15 years old, he points out.
Heier’s business is not helped out by the fact there is still a big $50 per ldt price difference between India and China, the latter being where Grieg Green opts to recycle.
“China has very thin margins for shipbreaking,” he admits.
Thus far Grieg Green has had four clients and six vessels in its first 18 months of operations. The owner have been Sinokor, Gearbulk, Hoegh and parent Grieg.
A new source of business could come from the offshore sector, notably jack-ups and semi-submersibles. Around 65% of all jack-ups worldwide, for instance, are now over 25 years old.
Scrapping jack-ups in India is not possible as it is impossible to beach a jack-up, observes Heier.
“Offshore companies tend to have a greater green aspect to their business,” he notes.
The challenge is how to bring offshore units from where they have been operating to the scrap yards, something Grieg Green is willing to use heavylift vessels to manage. [23/04/13]