Industry-Accepted NOR Procedure Tested by Oiltanking Texas City

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[dropcap]T[/dropcap]endering a valid NOR for Oiltanking Texas City just got a little harder to do thanks to a recent change of policy for the 555,000 cbm storage facility. On Wednesday, 13-Jan-2016 an Oiltanking representative released a new “Oiltanking Texas City’s ‘NOR’ Acceptance Procedure” that is in direct opposition to the current NOR tender policy for the Houston / Texas City area:

“Oiltanking Texas City is a public terminal. We accept all barges and tankers to the docks, in the order of legal NOR (Notice of Readiness). An NOR will not be accepted until the following conditions are met:

  • Product is available for loading, or tank space is available for unloading;
  • Product to be loaded or unloaded meets quality specifications of the customer.
  • All required wall washes have been completed and are lab approved;
  • Pre-arrival documents for vessel have been received by OTTC.
  • Vessels must be in Texas City or Bolivar Anchorage / Pilot’s Station. NOR’s from Houston docks will no longer be accepted.

If another vessel tenders legal NOR before all of the arrival prerequisites are met for your vessel, the other vessel will be brought to dock first.”

No longer can vessels tender NOR from Houston docks for Oiltanking Texas City. Instead, a vessel must first proceed out to the customary anchorage and then tender. The effect that this change has on demurrage has yet to be felt by HC staff, however it shows that other members of the industry are aware of ongoing maritime ambiguities. And ignoring the real-world logistic issues like pilotage and port congestion, it ultimately begs the question, is Oiltanking legally right?

And with that lead-in, I have the unfortunate duty to inform you that it is currently open to interpretation (sorry)…For port charters (such as Asbatankvoy), legal precedent dictates that the Vessel must arrive at the customary place of waiting within the geographical confines of the port before tendering a valid NOR (be it the anchorage or alongside another berth in the port). And due to the close proximity of Houston and Texas City, the industry has historically treated Houston and Texas City as the same port for the sake of NOR tenders.

However, that treatment stops there. Each port has its own pilot association, port authority, and most importantly, worldscale freight rates. For example, if a charterparty is fixed “1sp/2sb Houston,” and Charterers nominate berths in Houston and Texas City, that second berth will not be covered by the fixture. The Texas City berth would be considered an additional port call. So if Houston and Texas City they are being billed and administered as two separate ports, why do NOR tenders not follow that same logic?

Asbatankvoy Cl. 6 states that a valid NOR can be tendered “upon arrival at the customary anchorage at each port of loading or discharge…” But there are practical exceptions to every rule, and court cases have helped decide what is acceptable. For example, can a Vessel tender NOR at EOSP if the anchorage is not in a direct line to the berth? Or can a Vessel tender NOR outside of the port if there is a safety threat to the Vessel? In both cases, the panel looked at the geographic aspects of the port in conjunction with commercial reasoning to decide what was acceptable. And in both cases, the Vessel was ruled to be fully arrived at the time of tender.

But in this situation, not only does this concern two ports rather than one, but which of the two options is more commercially reasonable? Should a Vessel be able to tender NOR to a different port when Charterers are paying additional freight for that port call? Or should a Vessel have to divert out to anchorage before being able to tender a valid NOR?

Each one clearly has its downsides. And regardless, opinions are mixed as to whether this new procedure is going to have the necessary staying power and reach to change the stubborn shipping industry. But at the end of the day, Oiltanking has succeeded in bringing attention to an underlying conflict that has existed for years. And in the coming months it is important to remember that Oiltanking is not the source of this conflict, but rather, they are making a bold attempt to solve it.

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