February 9, 2001

PGS president quits
Petroleum Geo-Services ASA today announced the resignation of its President and COO, Bjarte Bruheim.

Chairman and CEO Reidar Michaelsen said, "We remain committed to our strategy and we are determined to increase our focus on operational and financial performance to deliver the results the market expects. Bjarte Bruheim was one of the founders of PGS and a visionary in developing new marine seismic technology. We wish him well for the future."

The executive team of the company will report to Michaelsen until a successor for Bruheim is appointed.

Castor: The unanswered questions
With the final discharge of all cargo from the damaged tanker Castor, and its pending redelivery by the salvors to its owners for repair, a 39 day saga that has involved eight nations and raised serious concerns within the maritime industry has been successfully concluded.

With a 20-meter crack in its deck, the Castor was refused refuge by Morocco, Gibraltar and Spain as it sailed through storms in search of sheltered water in which to offload its 30,000 tons gasoline cargo. The cargo was eventually pumped onto another tanker offshore Malta late on Wednesday.

"It is unfortunate that political intervention into what should have been a purely technical challenge, put so many elements at risk," said Nicolas Hondos, chief executive of Athenian Sea Carriers, owners of the Castor.

The unwillingness of Morocco, Spain, Algeria, Gibraltar, Greece, Tunisia and Malta to grant the vessel access to sheltered coastal waters turned the tanker into a pariah, buffeted by gale force winds while waiting sufficiently calm weather to undertake an open water, ship to ship transfer of the cargo.

Many of the coastal states that denied the Castor access to their territorial waters did so from a belief that the vessel posed an unacceptable hazard, either from explosion or cargo spill. Yet independent scientific analysis of both scenarios clearly showed that the risk of an explosion was minimal and that the potential pollution threat was far worse if the vessel was to sink in deep water.

Throughout the salvage operation ABS, the classification society of record for the Castor stressed the difference between a damaged vessel and one that is substandard. "Since suffering the initial heavy weather damage this vessel has been subjected to an extreme Force 12 gale with wave heights in excess of 8 meters without any further deterioration in its structural condition," Robert D. Somerville, President of ABS, emphasized.

"Over the last 39 days it has been towed 1,000 miles across the Mediterranean, remaining intact without losing any cargo or causing any pollution. Only a remarkably robust, well maintained vessel in stout structural condition could withstand such a beating and still deliver its cargo safely," he insisted.

"The facts speak for themselves," said George Tsavliris, a principal in the salvage firm Tsavliris Towage & Salvage. "The allegations regarding the condition of the vessel were completely without foundation."

"This has been one of the most challenging salvage operations our company has ever undertaken," Tsavliris added. The salvors took control of the vessel on January 2 and anticipate redelivery of the Castor to its owners on arrival in Piraeus. Tsavliris paid particular tribute to the team of salvage experts attending the vessel. "The successful completion of this operation would not have been possible without the outstanding courage, professionalism and teamwork of our salvage team who worked under the most trying conditions for more than a month."

From a technical point of view the cargo transfer should have been a straightforward operation. "Given the traditional maritime courtesy of access to a sheltered area, this incident would have been over within three days," Tsavliris said.

All the parties involved in this incident are fearful that the political treatment of the Castor may become a precedent for future casualties and believe it is imperative that sensible, risk based guidelines on sheltered areas be developed at an intergovernmental level within IMO.

These must respect the rights of coastal nations but also provide adequate protection for damaged vessels, their cargoes and their crews. "IMO Secretary general William O'Neil is to be applauded for his swift response in placing this issue on the organization's future agenda," said Somerville.

The incident saw a remarkable level of cooperation between the owner of the vessel, the salvors, the classification society and Cyprus, the flag state. "We worked as a team," said Tsavliris. "Without the total commitment and cooperation of all parties, it would have been impossible to successfully complete the salvage operation."

ABS President Somerville agreed. "It was essential that the responsible members of this industry stand together as a forceful reminder that it can effectively and professionally take care of its problems within a self regulated environment," he said. "At ABS we are as committed to eliminating the substandard operator and the substandard ship from this industry as the most vociferous legislator. But the difference between these rogues, who form such a tiny minority within our ranks, and the responsible members of the maritime community must be emphasized.

"Well found ships can suffer heavy weather damage in extreme circumstances," Somerville pointed out. "That is not an indication of a weakness within the industry's self regulating mechanism. Rather the manner in which all the parties concerned with the Castor have responded should reassure the public and concerned governments that we are their partners in seeking to protect life, property and the environment."

Trico Marine reports
Trico Marine Services, Inc. has announced net income for the fourth quarter ended December 31, 2000 of $1.4 million, or $0.4 per share (diluted), on revenues of $41.7 million. This compares to a net loss of $7.4 million, or $0.26 per share (diluted), on revenues of $28.2 million, for the fourth quarter last year.

For the fiscal year ended December 31, 2000, Trico reported a net loss of $12.7 million, or $0.39 per share (diluted), on revenues of $132.9 million, compared to a net loss of approximately $33.4 million, or $1.33 per share (diluted), on revenues of $110.8 million for 1999. The net loss for 2000 includes an extraordinary one-time gain of $715,000, net of taxes, resulting from the early extinguishment of debt. In addition, 2000 results also include a gain of $3.9 million, pre-tax, from the previously announced sale of the company's liftboats. The net loss for 1999 includes an extraordinary one-time charge of $1.8 million, net of taxes, related to the write-off of unamortized debt issuance costs resulting from the prepayment of bank debt.

The increase in revenues for the 2000 fourth quarter was due to increased day rates. Day rates for Gulf supply boats averaged $6,027 in the fourth quarter 2000, compared to $3,250 in the fourth quarter last year. North Sea day rates averaged $10,367, compared to $8,761 for the 1999 fourth quarter.

Utilization for the Gulf supply boat fleet was 73% for the 2000 fourth quarter, compared to 67% for the fourth quarter of 1999.Utilization for the North Sea fleet for the fourth quarter of 2000 was 85%, compared to 74% for the year-ago period. During the 2000 fourth quarter, the company dry-docked two of its North Sea anchor handling/towing supply vessels and the Stillwater River SWATH crew vessel in Brazil.

Direct vessel operating expenses increased in the fourth quarter 2000 to $17.8 million, compared to $16.7 million for the fourth quarter 1999, due to the reactivation of two vessels in the North Sea that had been idle, and increases in labor, supplies and maintenance expenses.Interest expense decreased for the fourth quarter 2000 to $6.4 million, compared to $7.9 million for the fourth quarter 1999, due to the reduction of debt.

"Despite a slow start in 2000, we are pleased with the increased demand we've seen throughout the past several months, both in the Gulf and internationally. We're encouraged by the strength in oil and gas prices which historically has led to increased capital spending by our customers and strong demand for marine services," said Thomas E. Fairley, president and CEO.

Hong Kong bill seeks to make register more user-friendly
The Xinhua news agency reports that Hong Kong's Chief Executive (who is, of course, C.H. Tung) has formally endorsed a bill and a set of regulations to improve the registration procedures for the Hong Kong Shipping Register. The aim is to make the register more user- friendly and attractive to shipowners..

The Merchant Shipping (Registration) (Amendment) Bill 2001 is part of the government's on-going efforts to streamline ship registration procedures in Hong Kong.

To proceed from one port to another, a ship is required to carry on board a certificate of registry issued by the flag administration.

Currently, when a ship is reflagged, Hong Kong requires the original title document in order to process a provisional ship registration. This often delays the registration since delivery of the document from the place of sale to Hong Kong can take several days. This can unnecessarily delay the ship's return to service.

The new legislation proposes that a copy of the original title document be acceptable for provisional registration. The bill would also reduce the period of provisional registration from three months to one month. The tonnage charge for provisional registration would be correspondingly reduced.

Continuing efforts to enhance the attractiveness of the Hong Kong register have seen the fleet reach 581 ships totaling 10.71 million grt..

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