COLUMN | The First Three Days of Christmas 2023: ferry fiasco continues at Ferguson; CMB doubles down at Damen; MOL takes two; three Azerbaijani reporters jailed [Offshore Accounts]

On the first day of Christmas my true love gave to me… a partridge in a pear tree, according to the ancient English carol, but here at Baird Maritime, that’s the cue for a dozen topical features on the offshore industry.

Lovers of yuletide traditions – and even those of you who are checking your phone screen – will note that it’s now December, so, for the fourth year in a row, we’ll be running through the Twelve Days of Christmas, but from a maritime perspective.

On the first day of Christmas, my true love gave to me… a bonus and a public rebuke from the First Minister of Scotland?! Oh no!

A ferry fiasco bonus in a Scottish pear tree

Three wise men, or indeed anyone with an ounce of common sense of any gender, appear to have been sorely absent from Scottish shipbuilder Ferguson Marine and its owner the Scottish Government.

Whilst it is a Christmas tradition that the Magi Melchior presented the baby Jesus with the gift of gold in the stable at Bethlehem, the tradition of presenting the boss of a nearly bankrupt Clydebank shipyard with a fat, annual bonus is less popular.

But this gift of a bonus from the Scottish taxpayer appears to be an established practice now, even as local media reports suggest that the cost of the two ferries being built at the state-owned yard is approaching the mind-blowing total of £600 million (US$760 million).

Glen Sannox, Glen mess

The Caledonian MacBrayne ferry Glen Sannox, March 7, 2023 (Photo: Coull)

Ferguson was bailed out by the Scottish taxpayer in 2019 with two partially completed ferry hulls in its facility, the future Western Islands service ships Glen Sannox and Glen Rosa. The ferries, which were ordered in 2015 when the yard was privately owned by a Monaco-based billionaire, are due to be delivered next year (maybe), at least six years late from the original schedule.

Over the intervening eight years, the cost of construction of the vessels at the “troubled” shipyard has soared at least five times from the original price of £97 million (US$123 million at today’s exchange rate). After the yard was nationalised in 2019, spending and, er, investment by the Scottish government have exceeded budgets by nearly £150 million (US$190 million).

The Scottish Auditor General has criticised the yard’s record keeping, as over US$150 million of expenses from before its nationalisation remain inadequately documented.

Silent bonus, holy bonus, all is calm, all is bright

Last month, The Herald revealed that a total of over US$100,000 had been paid in the 2022/23 financial year to executives at Ferguson Marine (Port Glasgow). The company’s CEO, David Tydeman, received just under half of the pay-out, with the balance paid to eight other staff. To be clear, the yard has no other orders apart from the two ferries, and has requested another £25 million (US$31 million) in state aid in order to continue its operations after the two ferries are delivered. Last year, the yard was reported to have held unsuccessful discussions with the Bangladesh Navy to build warships for Dhaka.

Ferguson has defended the decision to pay the bonuses, saying that the payouts were only 40 per cent of the potential, discretionary amount available, and that the cash was “part of a performance related bonus scheme aimed at incentivising and retaining staff.”

And there’s more

Last month, Andrew Miller, the shipyard’s chairman, confirmed Mr Tydeman will be eligible for another performance bonus in the new year. The Scottish auditor Auditor General, Stephen Boyle, is not a fan of the payments, given that his organisation has extensively documented the numerous problems with the ferry building programme. He previously described the bonuses as “unacceptable.”

“I won’t disagree with Douglas Ross or the Auditor General…who made it clear that those bonuses should not have been paid,” First Minister Humza Yousaf said in repsonse to criticism in the Scottish parliament. “I agree.”

Ferguson Marine itself invited two more of its managers to join the bonus scheme in 2022, despite the extra payments not being in their employment contracts. However, the company referred to the payments as “contractual retention payments” that are part of a “strategic mechanism for maintaining staff in the UK shipbuilding industry.”

This year, it says that only Mr Tydeman will be eligible.

Conclusion: Deliver the results before the taxpayer delivers the cash

I don’t think anyone would have any problem with the Ferguson yard staff receiving a bonus when the two ferries have actually been delivered, been accepted by class and the Maritime and Coastguard Agency, and have safely and successfully entered service.

Until that has happened, handing out more cash to Ferguson’s managers seems premature. Ferguson’s spineless chairman should be telling his team to show him the ships before he shows them the money.

On the second day of Christmas, Windcat Offshore orders two more turtle doves hydrogen-powered CSOVs!

The year 2023 was another transformational one for Belgium’s wealthy Saverys family, the controlling shareholders in Exmar and also, finally, now the controlling shareholders in Euronav. The family at last reached a settlement with John Fredriksen’s Frontline over the fate of the tanker owner, in shipping’s most exciting take-over battle.

Last month, Frontline announced that it had sold its 13.7 million shares in Euronav to the Saverys family’s Compagnie Maritime Belge (CMB) and had acquired Euronav’s fleet of 24 VLCCs with an average age of 5.3 years, for an aggregate purchase price of US$2.35 billion. Frontline and Mr Fredriksen’s Famatown Finance had agreed to sell all their shares in Euronav (which represented 26.12 per cent of Euronav’s issued shares) to CMB at a price of US$18.43 per share.

With one predator seen off, CMB then announced last week that its offshore wind support subsidiary Windcat Offshore has declared options on two more commissioning service operation vessels (CSOV) at Damen Shipyards.

More elevation required?

Photo: Damen

The original order for two CSOVs at Damen featured in last year’s Twelve Days of Christmas, so like bonuses at Ferguson, perhaps this has also become an annual tradition. The new order increases Windcat’s CSOV orderbook to a total of five vessels, with one more option currently undeclared.

Damen is constructing the first three vessels in Vietnam, which is fast emerging as Asia’s dominant CSOV builder for European markets. The first trio will be delivered in 2025 from Ha Long Shipyard. The delivery of the fourth and fifth CSOVs is scheduled for the second and third quarters of 2026.

These “Elevation” series vessels measure 87 metres long by 20 metres wide and can accommodate up to 120 total personnel, as per the published specification. In line with CMB’s commitment to green hydrogen, the ships have integrated hydrogen-powered propulsion (dual fuel with conventional marine diesel engines), a battery hybrid system, and an electric power connection on deck. This means that they will be able to charge their hybrid batteries from both shore power and from offshore charging buoys like Maersk’s Stillstrom system, which is undergoing testing to permit vessels to plug in at sea.

First fully electric SOV design

Damen, the designer and builder of the five Windcat CSOVs, has also launched a fully electric SOV designed for long-term life of field operations. The 7017 E design features either 10MWh batteries for 75 per cent electrical operations or a 15MWh battery, which the company says is sufficient to power the vessel on 98 per cent of daily operations offshore with 40 technicians and 20 crew aboard, using four azimuth thrusters.

The proposed batteries are lithium iron phosphate, which, Damen says, increases safety whilst reducing the ecological footprint. For backup, emergency, and mobilisation purposes, the vessel will also be equipped with two diesel generators to continue all operations, even with depleted batteries.

According to the company, the new e-SOV is designed with a charging system developed in partnership with UK-based MJR Power & Automation, a company that has previously developed an offshore charging system for smaller crewboats.

The Low Countries’ Maritime Cluster delivers again

Hydrocat 48 (Photo: CMB.Tech)

The Windcat vessels are also equipped with an active heave compensated gangway from SMST. The gangway is combined with an access and cargo tower and what the company describes as the “world’s largest” 3D motion-compensated crane, with a 10-tonne capacity.

Meanwhile, Damen’s fully electric design SOV charges via a receptacle on the vessel’s stern using a 4MW/11kV connector. Transfer of a charge cable is by means of a manipulator attached to the tip of the motion compensated gangway. The company says that the connection and disconnection can be performed without manual intervention and is fully controlled by the gangway operator from their position. This extends the gangway functionality from simply the transfer of people to the transfer of power.

Sister company Windcat Workboats owns and operates 52 offshore crewboats, including Hydrocat 48, the first hydrogen-powered crewboat, with an additional five vessels being built, mainly for the European offshore wind sector. CMB originally bought Windcat from Seacor Marine in 2020 – as we featured at the time.

The crew transfer market already shows the development of vessels with full battery power and others with full hydrogen power or methanol. Now, that variety of future power sources has entered the larger windfarm market. Just as Ocean Infinity seems to be hedging its bets on both methanol and ammonia in its subsea survey and inspection vessels, so too there is a lack of clarity in the CSOV and SOV markets.

Which future fuel will decarbonise the marine sector? Your advent take-away is that nobody knows yet!

Second Turtle Dove CSOV for Ta San Shang Marine

TSS Pioneer (Photo: Ørsted)

Another company ordering CSOVs is Ta San Shang Marine (TSSM), a joint venture between Japan’s Mitsui OSK Lines (MOL) and Ta Tong Marine of Taiwan, which placed an order for its second unit in Vietnam last month.

The company’s first windfarm vessel, TSS Pioneer, was delivered by Vard in Vietnam in 2022. The latest newbuild is scheduled to become operational in late 2025, according to MOL’s announcement.

The new 90-metre LOA vessel of Damen CSOV 9020 design will also be built in Vietnam and flagged to Taiwan to support offshore wind farms off the Taiwanese coast once delivered. The ship will be fitted with diesel-battery hybrid power generation systems and also delivered fully prepared for future use of green methanol fuel, MOL says.

“The addition of this new SOV to TSS Pioneer will consolidate TSSM’s position as a leading SOV player in Taiwan,” said Masayuki Sugiyama, MOL executive officer responsible for the wind power project unit. “We also intend to use this project as a steppingstone for MOL’s business development in the Asian region, including Japan,”

Three French hens Azerbaijani journalists… oh, wait, now it’s five

The Organized Crime and Corruption Reporting Project (OCCRP) has reported yet another crackdown on investigative reporting in Azerbaijan, which produces over half a million barrels of offshore oil a day. Azerbaijan ranks 151st among 180 countries in the 2023 World Press Freedom Index of the Organization of Reporters Without Borders.

The director, the deputy director, and the editor-in-chief of Abzas Media, one of the few independent news sites operating in Baku, were imprisoned for over one hundred days as “pre-trial detention” on November 21. Separately, Azerbaijani police arrested Aziz Orujev, head of the Kanal 13 online video channel a week later, then also jailed Abzas journalist Nargiz Absalamova on November 30.

12 days of Christmas, 12 years of possible sentence

Abzas Media’s Director Ulvi Hasanli, his deputy, Mohamed Kekalov, and editor-in-chief Sevinj Vaqifqyz were sentenced to four months’ detention in jail on charges of currency smuggling. If found guilty, they could be sentenced to up to 12 years imprisonment. The Baku police say that €40,000 (US$44,000) in cash was found during a five-hour search of Abzas Media‘s office, which published a journalist investigation into corruption amongst the Azerbaijani authorities on November 20.

British oil major BP is the largest foreign investor in the country in the Caucasus mountains and, with it partners, has invested over US$84 billion in the country to produce over four billion barrels of oil from the offshore ACG project since first production in 1997, and over 164 billion cubic metres of total gas from the Shah Deniz project in the Caspian Sea since first gas in 2006.

So many gifts left in the presidential crib

Ilham Aliyev, President of Azerbaijan (Photo: Office of the President of the Republic of Azerbaijan)

The country’s independent media has queried how President Ilham Aliyev and his family and friends have seemingly attained significant personal wealth over this period of vast oil and gas production, despite low official salaries. Abzas Media has accused the police of deliberately placing the cash into its office to justify the arrests. Police have not allowed other media representatives to capture footage of the journalists detained.

In a voice-recorded statement, Ulvi Hasanli alleged that police ill-treated him during and following his detention. His lawyer, Zibeyde Sadighova, confirmed to Human Rights Watch that she saw bruises on Hasanli’s face. In 2021, Sevinj Vagifgizi was one of the journalists whose phones were found to have been compromised by Pegasus, the spyware program developed by an Israeli spyware company, the NSO Group.

Abzas has published stories about corruption in the highest echelons of power in Azerbaijan, publishing investigations directed at individuals close to President Aliyev, including Baylar Eyyubov, head of the president’s security service, and current Foreign Minister Jayhun Bayramov (Its investigation of Mr Bayramov is here.). Mr Mayramov’s predecessor as Minister of Foreign Affairs, Elmar Mammadyarov, was put on the no-fly list in connection with a criminal investigation into corruption in the Azerbaijani Foreign Ministry in 2020 after his unexpected dismissal from his role.

The track record of Azerbaijan’s presidential family in offshore business dealings – a track record that cannot be explained by their official salaries – has been documented at length by the International Consortium of Investigative Journalists. In 2021, OCCRP reported that the family held London property worth nearly US$700 million.

If only the police in Baku were as diligent as looking for how those hundreds of millions of dollars got offshore rather than imprisoning those who are investigating embezzlement, money laundering, and corruption…

Accountability for oil and gas revenues, and transparency in the dealings of the ruling families in countries like Azerbaijan, would be the best Christmas present.

Unfortunately, you’d have to believe in Father Christmas to expect that President Aliyev and his family are going to change their behaviour anytime soon.

Background reading

Read here, here , and here for the second, third, and fourth parts of this year’s Twelve Days of Christmas.

Our most recent coverage of Ferguson and the Ferry Fiasco was in September. For the rest of the sad saga, Wikipedia has a succinct summary.

Our 2021 survey of offshore wind highlighted how the low countries are leading the way in wind, with a cluster of renewable-oriented contracting companies and equipment suppliers.

The British National Crime Agency (NCA) made an Unexplained Wealth Order against the wife of the jailed former boss of Azerbaijan’s biggest bank, Zamira Haciyeva, who spent more than US$21 million over a decade in London’s Harrods department store. She forfeit her properties in the UK.

Transparency International reported in 2021 that Izzat Khanim Javadova, a cousin of Azerbaijani president Aliyev, and her husband, Suleyman Javadov, lost efforts to fight the confiscation of more than US$3 million after they were hit with Unexplained Wealth Orders from the NCA. Their identities had previously been protected by a court anonymity order that was later lifted, revealing the illicit wealth of Ms Javadova, who performs at parties in London and Ibiza as DJ Mikaela Jav, and who obtained a “golden visa” to reside in the UK by investing over US$2 million in the country.

Hieronymus Bosch

This anonymous commentator is our insider in the world of offshore oil and gas operations. With decades in the business and a raft of contacts, this is the go-to column for the behind-the-scenes wheelings and dealings of the volatile offshore market.