The Risks of Multi-Type Assumptions
A vessel owner sold two VLCCs for conversion to FPSOs. Although they were each over 20 years old, they had been maintained in excellent condition. The seller warranted to the purchaser that each vessel would not need more than 100 tons of steel, and guaranteed payment for any steel work in excess of that amount that was attributable to the condition of the vessels. However, it was later learned that each conversion to the FPSOs required over 1100 tons of steel work, thus placing the seller in an unexpected predicament.
Fisher Maritime was retained by the seller to analyze why there was such a discrepancy. Following review of the owner’s technical practices and the classification rules for both VLCCs and FPSOs, we were able to advise our client that the 100-ton amount was predicated only on each vessel going through a classification Special Survey for the vessel to remain as a VLCC. In contrast, nearly all the 1100 tons of new steel was required to satisfy classification as an FPSOs that would be on station 15+ years, not as a VLCC that is drydocked every 4-5 years.
We then supported our client in subsequent negotiations to resolve that misunderstanding between the seller and purchaser of the VLCCs . The lesson learned is that a reasonable expectation applicable to one vessel type undergoing conversion may not be a reasonable expectation applicable to the converted vessel type. This observation may also apply to emergency electrical requirements, fire-suppression systems, battery back-up requirements, redundancy of bilge systems, and other safety features.