Norwegian environmentalist group Bellona has called for more transparency in passengership scrapping after one of two Fred Olsen Cruise Lines vessels sold for further operation wound up in the hands of a Turkish cash buyer.
Sigurd Enge, head of shipping at Oslo-based environmental non-governmental organisation Bellona, said owners that value their green reputation have an added responsibility, especially those with very old ships nearing demolition.
"It's all about the transaction and the transparency," Enge told TradeWinds.
Last September, Fred Olsen Cruise announced the sale of the 28,600-gt sisterships Black Watch (built 1972) and Boudicca (built 1973) to an unidentified Turkish buyer for use as accommodation.
But by May, TradeWinds reported that the Boudicca had arrived at Aliaga for scrapping.
The ships were Bahamas-flagged but operated out of Scotland and thus subject to some provisions of European Union rules on demolition sales, according to green ship-recycling industry sources.
Comparing an old ship’s sale price with estimated scrap levels is the best guide to whether it was really sold for scrap, one green shiprecycling industry source said.
Proceeds from the sale of the elderly Fred Olsen Cruise ships has not been disclosed. But when the deal was announced in the parent company Bonheur's third-quarter results, it was put down as an NOK 187m ($22.6m) impairment. This increased to NOK 197m in the 2020 annual report.
Sources acquainted with the transaction told TradeWinds they believe neither ship was ever used for accommodation and said the Boudicca went to cash buyer Ersay Ship Recycling.
Ersay is touted as operating in compliance with the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships. It also claims to comply with the standards set out in the EU Ship Recycling Regulation, although it is not on the EU list of approved ship-recycling facilities.
Fred Olsen Cruise managing director Peter Deer said the Boudicca and the Black Watch were sold last year to provide accommodation for a company in Turkey.
“We are aware that the former Boudicca has recently arrived in Aliaga, Turkey, and to the best of our knowledge will be recycled in accordance with applicable laws and regulations,” he said.
“We are not aware of any changes to the use or location of the former Black Watch.”
Enge said he believes Fred Olsen Cruise wants to be a green company — and generally is one.
“They should have done some more homework,” he said.
He pointed to the parent group's involvement in wind energy as evidence of the company wanting to do the green thing.
“But the environmental footprint of the end-of-life operation of a vessel is not a small part of its life-cycle footprint," Enge said.
In particular, the Bellona official believes the ships should have had an inventory of hazardous materials (IHM) survey before the sale. Because the sale took place before the end of 2020, Fred Olsen Cruise escaped an EU deadline for all owners to have IHM certificates.
Two green ship-recycling sources said the cost of an IHM survey for ships of that size and age might range from $12,000 to $20,000 per ship from a reputable surveyor. The cost of following up with asbestos remediation before breaking would be "in the six figures" per ship.
Henning Gramann, managing director of German green demolition consultancy GSR Services, said a "constant delta" of surging per-tonne prices currently on offer for scrap steel is making such costs less significant for shipowners who want to recycle vessels responsibly.
Enge added: "I wouldn't want to punish them too hard. Turkey is not the worst place you can take a ship for scrapping. But following these procedures very strictly would be a way to show that their words are more than just words."
Fred Olsen Cruise is a sister company of NHST Media Group, the company that owns and publishes TradeWinds. The parent of both — Oslo-listed Bonheur — is managed by private Olsen family holding company Fred Olsen & Co.
Fred Olsen Cruise and Bonheur did not respond to further questions from TradeWinds about whether Fred Olsen Cruise or its parent placed enforceable conditions on the sale.