Norway’s national authority for the investigation and prosecution of economic and environmental crime (Okokrim) is fining Stavanger-based Altera Infrastructure $700,000 for the illegal export of two vessels to India in 2018.

“We are surprised not only by Okokrim’s conclusion but also with the process, as the fine in our view is neither factually nor legally substantiated,” Altera said to TradeWinds.

“Over the course of more than four years of investigation, we have not received any reasoned or documented response to our repeated and detailed rejections of these charges.”

The company went on to say that it “takes great pride in being one of the front-runners in establishing a framework for the safe and environmentally sound recycling of ships, and we have for more than a decade promoted responsible business practices in such respect, including as an active signatory of the Ship Recycling Transparency Initiative”.

The two vessels involved are the 124,000-dwt shuttle tanker Navion Britannia and 126,955-dwt Alexita Spirit (both built 1998).

Okokrim said both ships had operated as shuttle tankers in the North Sea for almost two decades, which was the maximum commercial life of such vessels in the region.

“The tankers’ contracts were consequently not prolonged leading to them leaving Norwegian waters shortly before they turned 20 in March and July 2018, respectively. Both tankers were then beached and scrapped in Alang, India.”

Okokrim raided Altera offices in 2020 as they launched their investigation. Altera Investment was Teekay Offshore Partners at the time.

The shuttle tanker Navion Britannia. Photo: Teekay Corp

Altera Infrastructure argues that the two vessels were “in mint condition” when they were exported from Norway, believing at the time that they had many years of design life remaining.

“For a long period of time, we were actively pursuing various alternatives for further use of the vessels, such as conversion into floating offshore storage units to replace existing FSO units in our Asian and Australian fleet, or sale to third parties.

“We invested considerable sums in pursuing these opportunities, including performing technical studies with third parties, ordering substantial new equipment necessary for the pursued redeployments and undertaking negotiations with potential customers.

“It would not be sensible, neither from a commercial nor an environmental point of view, to have the vessels recycled before exhausting such alternatives. We, therefore, do not accept Okokrim’s conclusion that these vessels were ‘waste’ when they left the North Sea. Altera admits no guilt and we are considering our options together with our team of advisers.”

Strategic tanker sales

The sale of the two tankers came shortly after Toronto-based private equity firm Brookfield first took a position in Teekay Offshore in July 2017, then recapitalising the company in exchange for a 60% stake.

Its ownership grew to 77.1% in May 2019 after buying out Teekay Corp for $100m.

“Okokrim takes a serious view of export of Norwegian-operated obsolete ships and their associated waste and environmental problems to developing countries with weaker legislation and law enforcement than Norway,” Okokrim police prosecutor Maria Bache Dahl said.

In an interview for TradeWinds’ Wavelength podcast, she said that the waste shipment regulations apply to all exports of waste from Norway.

“We are of the opinion that it is important to make sure that ships operating in Norwegian waters are recycled in a responsible manner.”

Bache Dahl declined to comment on whether Okokrim was investigating other shipowners falling foul of the Norwegian rules, which are based now on the European ship recycling directive.

However, when asked about the chances of other owners falling foul of the Norwegian waste export rules, she said that there has been an increase in approved recycling yards in Europe even though there were still none from the Indian subcontinent.

“If shipyards in Alang are added to the European list then they would of course need to adhere to the requirements of the EU ship recycling regulation and that would by definition be a responsible recycling manner,” she said.

“But we do see more shipyards in the EU and also in Norway, and I think this is a response to a demand for responsible ship recycling from shipowners.”

Altera has until 25 June to consider whether they will accept the fine.

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