New tanker standards to hurt LASCO

The disastrous fate of the sunken tanker Prestige and the call for increased vigilance toward aging vessels could have a detrimental affect on LASCO's operations and financials in a near future.

The Prestige, now laying 3,400 meters on the ocean bed off the coast of Spain, left Ventspils last month with 77,000 tons of Russian heavy fuel oil on board. The 26-year-old vessel flew under the flag of the Bahamas and had owners registered in Liberia.

These types of seemingly bizarre ownership and domicile arrangements are not foreign to LASCO, which currently owns a fleet of 52 vessels, including 37 product and chemical tankers.

In fact, 50 percent of LASCO's tankers have Liberian flags, the other 50 percent registered in Cyprus and Malta. The last two are notorious countries of convenience flags and are blacklisted by one of the world's leading port inspection authorities - the Paris Memorandum of Understanding on Port State Control - for their poor safety standards.

Convenience flag registrations allow shipowners and ship operators to minimize taxes and operational costs on such things as crew and safety.

Even the Latvian shipper's Web site admits that the company's fleet is flagged out since current tax policy in Latvia is unattractive for ship owners.

If the EU goes ahead with measures to restrict this practice - as France and Spain are gunning for - LASCO's already dire financials could worsen.

LASCO announced earlier that its losses this year could amount to $7.7 million.

The company currently operates five ships built in 1978 and before. Among those, four were built in Rijeka, Yugoslavia and two - Viktorio Kodovilja and Davids Sikeiross - were each detained twice in recent years after inspections by port authorities.

The Prestige, on the other hand, had never been detained.

International pressure on owners and operators of old tankers mounted, especially in the Baltic Sea area. The most pressure is emanating from Spain, where officials have been forced to increase a ban on gathering shellfish to the bays of Ferrol and Cedeira in northern Galicia, and from France, which suffered greatly from the wreck of another tanker, the Erika, in 1999.

Last week in Estonia two ships came under intense official and media scrutiny: the 22-year-old Express and 26-year-old Byzantio, both of which fly Maltese flags.

French authorities demanded and obtained an extraordinary inspection of the Byzantio before its departure from Tallinn.

Spanish Prime Minister José María Aznar and EU Transport Commissioner Loyola de Palacios called for a crackdown on non-seaworthy ships.

Other European countries have joined in the protest in an effort to find ways to increase environmental security of their coastlines.

German Chancellor Gerhard Schroeder and French President Jacques Chirac agreed to push for stricter measures at the European Union's Copenhagen summit this month. Chirac even said that, if needed, dubious ships could be excluded from the 200-mile zone around France's and Spain's coastlines.

Among regulations already discussed are an increase in frequency and intensity of inspections for old vessels, changes in registration requirements to clarify the actual owners and operators of vessels in international commerce, and laws to drive single-hull tankers from the seas.

U.S. and EU regulations call for the last single-hull tankers to be decommissioned by 2015. At that time only double-hulled vessels will be able to moor at EU ports.

Spain and France have agreed not to wait for the international agreement on the issue, and the two countries have begun to impose tougher restrictions on ships carrying dangerous cargo. Single-hulled vessels over 15 years will be subject to exhaustive checks.