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HNS … All You Need To Know

David Tyler, WLPGA Director, answers questions on the HNS Convention and why it is of major importance for the WLPGA and for the LPG industry.

WLPGA: What does HNS stand for?

David: HNS stands for Hazardous and Noxious Substances. HNS is one of the LPG industry’s best kept secrets! It is off everyone’s radar screen and yet it will have an impact on everyone involved with the global LPG industry. The HNS Convention (or the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea) is a convention on liability and compensation for damages in connection with the carriage of Hazardous and Noxious Substances (HNS) by sea.  It covers damage to persons, property and the environment arising from HNS spilled at sea and pollution damage and damage caused by other risks such as fire and explosion. It will be administered by the International Oil Pollution Compensation Funds (IOPCF) when the HNS Protocol, adopted in 2010 to facilitate the early application of the Convention, enters into force.

Petredec_Sunway

WLPGA: What does HNS stand for?

David: HNS stands for Hazardous and Noxious Substances. HNS is one of the LPG industry’s best kept secrets! It is off everyone’s radar screen and yet it will have an impact on everyone involved with the global LPG industry. The HNS Convention (or the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea) is a convention on liability and compensation for damages in connection with the carriage of Hazardous and Noxious Substances (HNS) by sea.  It covers damage to persons, property and the environment arising from HNS spilled at sea and pollution damage and damage caused by other risks such as fire and explosion. It will be administered by the International Oil Pollution Compensation Funds (IOPCF) when the HNS Protocol, adopted in 2010 to facilitate the early application of the Convention, enters into force.

WLPGA: Who pays for the compensation?

David: The physical receivers of sea borne cargoes that receive over 20,000MT of LPG a year will provide contributions to the HNS Fund. Currently there is no specific compensation regime available if there is a major incident with HNS cargoes, unlike what has been in place for 35 years for oil pollution damage from tankers through the 1992 Civil Liability and Fund Conventions which includes a mandatory form of insurance cover that ship owners are obliged to take out and a fund financed by the oil industry for larger incidents. Under the HNS Convention, the ship owner is liable up to a certain amount which is covered by insurance (1st tier) and a second tier of compensation is introduced, which will be funded by the LPG industry from the HNS Fund. Both compensation tiers have financial limits.  The ship owner’s limit will be up to (approx.) US$180m but the HNS fund will make available additional compensation, all together up to (approx.) US$380m to meet valid claims. The HNS Fund will be made available when the ship owner’s liability is insufficient to cover the costs of damages, is exonerated from liability or is financially unable to meet his obligations.

WLPGA: Why does this concern LPG?

David: LPG is classified as a HNS substance. All Liquefied Gases which are transported in bulk are included, such as Liquefied Natural Gas, Liquefied Petroleum Gas, ammonia, ethylene, butadiene, ethane and propylene.

WLPGA: How is LPG Classified and Treated?

David: HNS has established four accounts:

  1. General (bulk solids and other HNS)
  2. Oil
  3. LNG
  4. LPG

The WLPGA supported a decision to establish a separate account for LPG, which will result in claims only from incidents involving LPG cargoes being dealt with from the LPG account. It is vital that this separate account is maintained. Otherwise, the LPG industry could contribute to the damage caused by other, more noxious or dangerous cargoes which have nothing to do with our industry.

WLPGA: How and when will the HNS Convention come into force?

David: The protocol requires that 12 states are to ratify the convention before it comes into force. Currently eight states have signed the HNS 2010 Protocol, subject to ratification, and it is expected that a further four states will accede/ratify in the very near future. The Protocol will enter into force 18 months after the 12 ratifications have been secured.  The expectation is that the majority of some 100 member states will then sign up, rather like the oil convention that is already in place.

WLPGA: Who will be protected by the HNS Convention?

David: Any state that ratifies the Convention will be protected by the Fund.  The eight states that have signed subject to ratification are Canada, Denmark, France, Germany, Greece, The Netherlands, Norway and Turkey.

WLPGA: What is the WLPGA’s Role?

David: The role of the WLPGA is to observe and to represent the LPG industry at all meetings and coordinate responses and questions.  The WLPGA is represented at these meetings by myself, as a Director of the WLPGA, and Yuki Ihara, Secretary General, of the Japan LP-Gas Association. At the meetings held in London during October 2013, it was decided to establish a correspondence group to enable delegates to focus on HNS developments. I asked if the WLPGA could be included in this correspondence group and that was agreed. The next IOPCF meetings are scheduled to take place in London in October 2016 and I will be attending them representing the WLPGA as an observer.

Mr David Tyler, Director at the WLPGA and Mr Makoto Arahata, representing Japan

WLPGA: Why is the WLPGA involved?

David: The HNS Convention affects the global LPG industry and is not limited to the interests of one single nation.  The WLPGA is the only body to truly represent this group and this also enables strong links between the WLPGA and the International Maritime Organization (IMO).

The WLPGA has, in November 2015, secured a further three year observer status to the IOPCF who welcome the involvement of the WLPGA and stated ‘…WLPGA could make a significant contribution to the future work of the organisation in respect of HNS matters …’.  This observer status is a very strong membership proposition for our Association.

WLPGA will maintain its work here because withdrawing would send a highly negative signal not only to the industry but also to the IMO and member states. It would put at risk the separate LPG account. It would flag a disinterest in safety issues and should a major incident occur the LPG industry would not be properly represented.

Mr Makoto Arahata, Overseas Business Manager – Japan LPG Association, recently said:

“… In my view the WLPGA is the only organisation that can effectively represent the global LPG industry at the IOPCF meetings and to retain our observer status for a further three years is a vital achievement…”

I think this encapsulates the importance of our role as observer at these meetings.

WLPGA: where can we get more information about HNS?

A brochure explaining the benefits of the International Convention on Liability and compensation for Damage in Connection with the Carriage of Hazardous and Noxious substances by Sea, 2010 (2010 HNS Convention) has just been published and is now available. The leaflet encourages States to take the next steps to implement and accede to the Convention. It can be downloaded from the following link www.iopcfunds.org/publications/ where hardcopies can also be requested.

 

For more information about the WLPGA’s important involvement in the IOPCF meetings contact David Tyler (dtyler@wlpga.org) or visit www.hnsconvention.org