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The complexities of regulating FPSOs now confront Nigeria 01 May 2018

Efforts are being intensified by Total Upstream Nigeria and its partners to complete the full integration of some modules onto the company's multi-billion-dollar Floating Production, Storage and Offloading (FPSO) vessel before it sails to its final destination at the Egina oil field. The fabrication and integration are taking place at the LADOL Free Zone in Lagos, where the FPSO berthed on January 24, 2018 upon arrival from South Korea.

Members of the Senate Committees on Gas and Petroleum (Upstream) and House of Representatives Committee on Local Content have expressed satisfaction with the progress made towards getting the FPSO vessel fully operational. The vessel is expected to be operational in July 2018. The lawmakers have also commended the level of technology transfer being achieved through the project to enhance local industrial capacity.

The successful arrival of the giant FPSO to the territorial waters of Nigeria – from Samsung Heavy Industries' (SHI) Geoje shipyard in South Korea where it first sailed on October 31, 2017 – demonstrates the viability of the Nigerian maritime industry. With the international attention that the country's maritime sector has attracted with the Egina FPSO arrival, it is important that the sector is properly positioned to leverage emerging opportunities. Last month, Executive Chairman of LADOL, Ladi Jadesimi, disclosed that some West African countries have initiated discussions to use the island logistics base to develop their own offshore assets.

There needs to be a workable regulatory framework that is created to contain all activities pertaining to FPSO vessels. Nigeria has scarcely had any regulations or a specific agency to regulate the operational activities of FPSOs in the country. What we do have are agencies such as the Nigerian Maritime Administration and Safety Agency (NIMASA), Nigerian Ports Authority (NPA), Nigerian Customs Service (NCS) and the Nigeria Export Processing Zones Authority (NEPZA), among other agencies, with disparate mandates in the maritime sector.

These agencies have declared their commitments to ensure the smooth running and administration of the Egina FPSO. There is also the Nigeria Content Development and Monitoring Board (NCDMB), which is ensuring local content requirements are met. But the issues are beyond these. For instance, there is a need to ensure that the marine environment remains conducive for the ecosystems.

A set of premier global framework for the regulation of maritime activities is the United Nations Sustainable Development Goals (SDGs). Goal 14 of the SDGs emphasises the conservation and sustainable use of the oceans, seas and marine resources. It has as one of its targets the implementation of international law as reflected in the UN Convention on the Law of the Sea. The Convention provides the legal framework for the conservation and sustainable use of oceans and their resources.

But the complexities to regulating FPSOs remain. At the 56th session of the International Maritime Organization's (IMO) Marine Environment Protection Committee (MEPC 56) in May 2007, the International Confederation of Free Trade Unions (ICFTU) expressed its concern over the unclear status of FPSOs and Floating Storage Units (FSUs). The ICFTU wondered whether these offshore facilities fit the definition of a ship under MARPOL (The International Convention for the Prevention of Pollution from Ships, 1973 as modified by the Protocol of 1978) and other IMO Conventions.

ICFTU asked MEPC 56 to confirm that Article 2 of the MARPOL Convention, on the definition of a ship, was entirely applicable to FPSOs and FSUs. Article 2 (4) provides that "Ship" means a vessel of any type whatsoever operating in the marine environment and includes hydrofoil boats, air-cushion vehicles, submersibles, floating craft and fixed or floating platforms.

The Marine Environment Protection Committee, at its forty-ninth session (14-18 July, 2003), agreed that FPSO's can be regarded as ships. But it also noted the complex issues involved in applying the requirements of MARPOL Annex I (which was particularly created for oil tankers) to FPSOs and FSUs.

The issues were complex because, among other reasons, an FPSO's arrangements, functions and operations fall under the overriding control of coastal states. (In our case, the Egina is under the overriding control of the Nigerian government, hence the involvement of Customs, NPA, NIMASA, etc.) This is opposed to oil tankers whose control lies in the hands of the vessel owners (such as Maersk, Grimaldi and the likes).

The Committee also found that the role of FPSOs in operation does not only include transport of oil. Accordingly, FPSOs are a form of floating platform and do not lie strictly within the definition of oil tanker in MARPOL regulation I/1(4). This means that FPSOs are also subject to the provisions of Annex I that relate to fixed and floating platforms.

Despite this battle to give proper definition to FPSOs, the Committee, in the bid to address issues relating to safety of the marine environment, noted that the environmental hazards associated with the quantities of oil stored on board FPSOs are somewhat related to some of the hazards associated with oil tankers. Therefore, relevant requirements of MARPOL Annex I in relation to oil tankers could be adapted to address those hazards in an appropriate manner, pending when an appropriate protocol is created specifically for FPSOs.

Based on the above and recognizing that these floating platforms are stationary when operating, the Committee recommended that coastal states, flag states and others associated with the design, construction and operation of FPSOs should apply the relevant MARPOL Annex I regulations referred to in the Guidelines.

The requirement of Annex I provides for issues such as the Particulars of the Vessel, equipment for the control of oil discharge from machinery space bilges and oil fuel tanks. Other issues provided for in the Guidelines are the means for retention and disposal of oil residues (sludge) and bilge water holding tank(s); Standard discharge (pipeline) connections; construction; retention of oil onboard; pumping, piping and discharge arrangements; ship board oil pollution emergency plan; surveys, equivalents and certifications.

Proper attention must be given to Annex I of the MARPOL convention in Nigeria, given the circumstances faced by the maritime industry as we are sure that this will definitely not be the last FPSO to sail into Nigerian territorial waters.

Suffice to say it is not enough for the federal government to ratify international conventions. We must also incorporate these frameworks into the Nigerian legal system. We also need to put visionary factors into consideration. For instance, there are other frameworks and practices that are not yet operational but may become applicable in the years to come.

The industry players should be farsighted enough to see the great potentials in operating an FPSO as opposed to installing oil rigs and other platforms in offshore fields. Today, there are about 180 FPSOs and 100 FSOs in operation worldwide.

FPSOs are cost-effective assets sometimes used in offshore oil fields, especially where the location is in deep water a la the Egina project, an ultra-deep offshore project located some 130km off the coast of Nigeria at water depths of up to 1,750m. Also, because FPSOs are not fixed installations, they can be moved from one location to another and reused. Sometimes, such movements could be tactical, designed to avoid impending attacks on the vessel. For example, the Niger Delta is occasionally subjected to oil pipeline vandalization and other criminal activities that cause immense damage to oil installations.