iii ABOUT THE AUTHOR Tim Knowles has spent a lifetime in shipping. In 1964 he attended Plymouth Navigation School, where he carried out his pre-sea training before joining the Pacific Steam Navigation Company as a Deck Cadet. Having passed his Second Officers’ examination, he moved to Esso Petroleum to work on tankers. Tim sailed on many types of tankers, from small parcel tankers to VLCCs as well as a North Sea off-take tanker as Chief Officer before transferring ashore to work in Fleet Operations as Safety Officer, Superintendent and Fleet Manager. He then moved into the Exxon tanker vetting department and took over as Manager in 1996. He retained this position after the merger between Exxon and Mobil and took part in the development of the tanker vetting process within ExxonMobil, chaired the OCIMF SIRE development group and assissted in the development of the Tanker Management Self Assessment (TMSA) process within ExxonMobil before its adoption and further development by OCIMF. ExxonMobil has been at the forefront of developing the vetting process as a risk management tool. After 10 years managing the Third Party Vetting process for ExxonMobil, Tim retired to become an advisor to the tanker industry on vetting related issues. v AUTHOR’S INTRODUCTION There is a feeling among many people who manage tanker operations that vetting of their operation by the oil major charterers is unnecessary. They consider that people employed in oil major vetting departments have little understanding of the problems and challenges that face tanker operators in their daily work and that this lack of understanding leads to an unrealistic evaluation of their company’s performance and therefore an ‘unfair’ evaluation of their operation when it comes to the vetting process. This is largely, but not totally, a misconception as most of those involved in vetting have served on tankers and many have also taken part in managing tanker operations. Conversely, those involved in the tanker vetting process have a view that tanker operators do not understand the vetting activity, will not respond to the requirements of vetting organisations and consequently make business life more difficult for all concerned. There may indeed be some truth in this, but life as an operator of tankers is difficult, the work is hard, the hours long and successfully managing the interface with the different vetting organisations is not a simple process. In practice, the vetting processes have in the past varied considerably among the OCIMF members and the level of understanding of the vetting process among the many tanker operators has also varied considerably. It is therefore not surprising that difficulties in understanding and managing the vetting interface exist among both parties. This guide seeks to clarify the vetting issues and explain the processes used with the objective of helping all concerned to work together more effectively and, of course, in the process to improve the safety of tanker operations and raise industry standards. This guide came about when I was recently asked by a Fleet Manager to recommend some literature on vetting so that he could better understand the general principles. I realised that, though there are many good publications on specific aspects of the vetting process, such as the recently updated TMSA booklet, the SIRE publications by OCIMF and the INTERTANKO Tanker Vetting vi ‘Guide to the Vetting Process’, there is no single publication that explains the overall function and gives details of its component parts. This guide is therefore intended to fill that gap and to provide information that will enable the tanker operators and vetting organisations to better understand the issues involved in tanker vetting. Achieving this must surely be in their joint interests and those of the industry as a whole. I am indebted to the many individuals and organisations who, over the years, have given me direction in the subject, contributed their experience and knowledge and given legal, practical and anecdotal information. This guide is a representation of the industry development of tanker vetting and, as such, is a distillation of the above. Tim Knowles December 2009 vii CONTENTS Chapter 1 BACKGROUND AND INTRODUCTION 1 1.1 The Case for Tanker Vetting 3 Chapter 2 WHO MANAGES THE VETTING PROCESS? CHARTERER OR TANKER OPERATOR? 5 2.1 Management of Tanker Vetting by the Charterer 5 2.1.1 In-house Vetting 5 2.1.2 External Vetting 6 2.2 Management of Tanker Vetting by the Tanker Operator 6 Chapter 3 THE COMMERCIAL IMPACT OF TANKER VETTING 9 Chapter 4 THE TANKER VETTING PROCESS 11 4.1 Who Carries Out Tanker Vetting? 11 4.2 The Vetting Department 12 4.3 When is Tanker Vetting Carried Out? 13 4.4 How is Tanker Vetting Carried Out? 14 4.5 The Data and its Origin 16 4.6 Vetting Risk Assessments 17 4.7 Funding 17 Chapter 5 THE COMPONENTS OF THE VETTING PROCESS 19 5.1 Vessel Age 20 5.2 TMSA2 21 5.2.1 TMSA2 Application to Vetting 22 5.3 Vetting Profile of the Operator 23 5.4 Vessel Hull Type 24 Tanker Vetting viii 5.5 Hull Dimensions 25 5.6 IMO Number 25 5.7 Vessel Operational History 26 5.8 Incidents and Impact of ‘Significant’ Incidents 27 5.9 Incident Management 29 5.10 Operator Rating (Quality) 30 5.11 Operator Type (Owner Operator/Manager/Oil Major) 31 5.12 Changes of Owner/Operator/Manager 32 5.13 Impact of Different Groups of Tankers within a Management Company 33 5.14 Port State Control Detentions 33 5.15 Visual Appearance 34 5.16 Vessel Inspection 35 5.17 Fleet Inspection Profile 36 5.18 Cargo 37 5.19 Charter Type 38 5.20 Operating Region 38 5.21 Terminal Reports 39 5.22 Berth Fit 40 5.23 Mechanical Reliability 41 5.24 Crew 42 5.25 Management System Audits 43 Chapter 6 MEETINGS BETWEEN THE OPERATOR AND THE VETTING COMPANY 47 Chapter 7 GENERAL COMMUNICATIONS BETWEEN THE OPERATOR AND THE VETTING COMPANY 49 Contents ix Chapter 8 VETTING TERMINOLOGY 53 Chapter 9 THE FUTURE OF VETTING 55 REFERENCES 57 GLOSSARY 59 5 Chapter 2 WHO MANAGES THE VETTING PROCESS? CHARTERER OR TANKER OPERATOR? 2.1 Management of Tanker Vetting by the Charterer Tanker vetting is carried out by the oil majors, charterers and independent vetting companies. Oil majors generally have their own in-house vetting department, while others use independent vetting organisations. 2.1.1 In-house Vetting In-house vetting was established by the oil majors during the 1980-90s and was initially either linked to the chartering department or existed as a group within it. However, today it is not unusual for the vetting function to be devolved from chartering to provide and demonstrate independence from commercial considerations. The staff are often former seafarers or, in some cases, are on assignment from the marine department to the vetting group. This mix of personnel has the advantage of bringing current marine expertise to the vetting process and provides seafarers with experience in the activity to better understand its impact on marine operations. The advantages of internal vetting are that it brings control of the process within the oil major, it offers greater confidentiality and activities can be focused on those companies in which the oil major has a charter interest. Tanker Vetting 6 However, vetting can be an expensive business process and, though most consider the expense to be justified, the cost is still a major factor when deciding whether to go in-house or out. 2.1.2 External Vetting Some charterers, often those without a marine operational section to their business or those who do not wish to carry the financial burden of a vetting function, seek external services from a vetting company. These external companies gather vetting data in the normal way and ‘sell’ the vetting decision on a case by case basis to the Company requesting the data. This may simply be in the form of a ‘yes’ or ‘no’ vetting decision, but in some cases they provide information that enables the potential charterer to make its own decision. Some tanker operators also buy this service to gain an ‘external’ view of their own charter acceptability. 2.2 Management of Tanker Vetting by the Tanker Operator The operators’ approach to vetting varies. There are some operators who appear to pay very little or no attention to vetting issues, while there are others who pay a great deal of attention and approach the subject professionally. Author’s NoteMy own estimation, after visiting many operators and observing the vetting processes, is that approximately 10% pay little attention to vetting, 10% pay a great deal of attention and the majority pay some, but insufficient, attention to the subject. If it is the case that vetting acceptance is the key to successful chartering, the question may reasonably be asked, “Why do so many operators not address the subject adequately?” I suspect there are a number of reasons. These operators: Do not understand it regard it as boring work do not understand its impact on their business Who Manages the Vetting Process? Charterer or Tanker Operator? 7 think it’s too difficult or complex think it’s a cost they can do without believe they are managing it correctly do not have the funds from the ‘owner’ to make improvements etc. Author’s NoteIf an operator takes the time to look at the impact of vetting on its business, carries out objective research into the issues involved in the vetting process, selects the right people to manage its vetting activity and gives those involved the necessary training, authority and support, they will find many of these reasons are no longer there.