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Oil Tankers May Shun Somalia due Pirates/Insurance Risk

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This topic contains 1 reply, has 1 voice, and was last updated by  Charles Randall 12 years ago.

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  • #3308

    Charles Randall
    Participant

    Frontline Oil Tankers May Shun Somalia as Insurance Costs Rise

    By Alaric Nightingale
         Nov. 18 (Bloomberg
    ) — Frontline Ltd., the world’s largest
    operator of supertankers, may divert vessels away from Somalia
    after pirates captured a Saudi Arabian oil tanker and insurance
    costs advanced.
         The Sirius Star, the largest merchant ship ever seized, was
    taken Nov. 15 and is now anchored off the coast of Somalia, east
    Africa, along with its crew of 25. Supertankers cost about $148
    million and its cargo of 2 million barrels of oil about $110
    million. An attempted hijacking of Frontline’s Front Voyager
    tanker in the same area was thwarted in September.
         “When it comes to the safety of our crew, we don’t take any
    chances,” Jens Martin Jensen, interim chief executive officer of
    Frontline’s management unit, said by phone from Singapore today.
    The Hamilton, Bermuda-based company has yet to make a final
    decision, he said.
         There have been 88 attacks against ships in the area since
    January and Somalian pirates are holding 250 crew hostage on
    board 14 merchant vessels. To avoid Somalia, ships would have to
    go around South Africa’s Cape of Good Hope rather than use
    Egypt’s Suez Canal, increasing the cost of shipping crude.
         “Shipping costs will rise significantly as insurance
    premiums increase substantially,” IHS Global Insight Inc. said
    in a report today. The attacks are “likely to spur international
    efforts to secure the region’s shipping lanes.”
         The Joint Hull Committee, a group representing ship
    insurers, is advising shipowners to avoid Somalian waters,
    Chairman Simon Stonehouse said today. Insurance premiums will
    rise and unless the Egyptian government becomes “more actively
    interested” in combating piracy in the region they risk damaging
    the business of the Suez Canal, Stonehouse said.
         Odfjell SE, the world’s largest operator of chemical
    tankers, said yesterday it will divert ships away from Somalia.

                            Seaborne Petroleum

         About 11 percent of the world’s seaborne petroleum passes
    through the Gulf of Aden, using the Suez Canal. Ships also use
    the route to carry Asian-made goods to the U.S. and Europe.
         Routing vessels around Africa will lengthen journeys and
    effectively reduce ship supply, said Nikos Varvaropoulos, an
    Athens-based official at Optima Shipbrokers.
         December freight-derivative contracts tied to the price of
    shipping Saudi Arabian crude to Japan, the global benchmark,
    advanced 8.2 percent to 66 Worldscale points, according to data
    from Justin King, a London-based broker of the contracts at
    Tradition Financial Service.
         Worldscale points are a percentage of a nominal rate, or
    flat rate, for more than 320,000 specific routes. Flat rates for
    every voyage, quoted in U.S. dollars a ton, are revised annually
    by the Worldscale Association in London to reflect changing fuel
    costs, port tariffs and exchange rates.

                               Under Attack

         “Every single ship is coming under attack,” Captain
    Nasrollah Sardashti, chartering manager of the National Iranian
    Tanker Co., operator of Iran’s supertankers, said by phone from
    Tehran today. “That’s what the captains are saying to us.”
         Shipping lines are increasingly forming convoys to navigate
    the Gulf of Aden, he said. The European Union last month joined
    the North Atlantic Treaty Organization, India, Malaysia and
    Russia in deploying vessels to combat piracy.
         “Piracy like terrorism is a disease that affects everyone
    and we have to deal with,” Saudi Arabia’s Foreign Minister Saud
    Al-Faisal said today in Athens.

     

  • #6449

    Charles Randall
    Participant

    As article indicates if Egypt doesnt get off its but & protect the Suez then they will lose a lot of money and ships will just take long way around;  they price canal rates so that is usually ~cost neutral anyway, so its just time vs. risk……and now risk is too high (especially with insurance cost for trying added ontop).
     
    Someone somewhere is already saying ok lets just avoid the MidEast and Suez Canal because of insurance cost and risk going thru it.
     
    Regards

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