IMO ballast water rules in focus as OceanSaver files for bankruptcy

Shipowners face uncertain outlook on support for systems already installed on their vessels

Shipowners and operators including BW LPG, Latsco Shipping and Archer Daniels Midland face an uncertain payback on their investment in ballast water management systems (BWMS) after a leading manufacturer filed for bankruptcy.

OceanSaver filed a petition to liquidate with Norway’s Register of Bankruptcies last week, shortly after losing an arbitration fight against a supplier over claims of defective parts.

The company is said to be exploring a sale, according to one person familiar with the company.

The episode highlights the risk shipowners face in whether the BWMS vendor they choose will be around to provide after-sales support. At the same time, the many delays to ratifying ballast water rules have made system suppliers much more vulnerable to cash-flow problems.

OceanSaver’s bankruptcy comes three months after the International Maritime Organization (IMO) allowed shipowners a further two years to install ballast water systems.

While the IMO put back its deadline, the US pressed ahead on enforcing its own rules. OceanSaver won a toehold in that key market after securing type approval for a second-generation BWMS product from the US Coast Guard (USCG) in December.

OceanSaver has not disclosed its customer list for USCG-type approved systems, but data from the National Ballast Information Clearinghouse shows the company sold systems onboard at least 26 ships trading in US waters.

BW LPG has OceanSaver products installed on five of its gas carriers. BW Group’s venture capital fund was also one of the manufacturer’s backers.

UK-based Latsco Shipping, which is controlled by the Latsis family, used OceanSaver systems on four of its ships. US commodities trader Archer Daniels Midland’s shipping division had OceanSaver systems on three of its bulkers.

One shipowner with four tankers equipped with OceanSaver equipment who spoke on background says the company did contact them with regard to the bankruptcy, but did not say how it planned to provide after-market support for its product.

The delay in enforcing IMO ballast water rules was one trigger for the bankruptcy filing, according to an OceanSaver founder.

Aage Andersen, chief executive of Mentum Maritime Innovations, backed the privately held company in 2003. In a blog post about the company's demise, he blamed “a reckless IMO process eliminating huge markets for many years”.

Andersen also said the Drammen-based company underwent a “harsh” takeover that forced out its founders and original owners.

Its first-generation product, which won IMO type approval in 2008, was at the centre of an arbitration case filed in 2013 against Danish firm Bollfilter Nordic.

OceanSaver claimed that Bollfilter supplied it with defective filters that were part of BWMS devices sold to South Korean and Chinese shipyards in 2010 and 2011, and installed on 26 ships.

In July this year, the Norwegian arbitration court decided in Bollfilter’s favour, requiring OceanSaver to pay both sides’ legal costs. It was unclear whether there were additional costs for repairing the systems already installed on ships.

At the same time, OceanSaver faced internal turmoil due to leadership changes that were made due to what the company described as “difficult market conditions”.