Alang Awaits Arrival of Sanctioned Dark Fleet for Scrapping
The seizure of an oil super tanker loaded with Venezuelan crude by the US Coast Guard has generated interest among ship recyclers at Alang in Gujarat, as many sanctioned ships from the global dark fleet are expected to make their way to the world’s largest graveyard for ships. The development could force those operating the so-called dark fleet carrying sanctioned oil cargo to scrap the vessels rather than run them.
The global dark fleet comprises 1,423 tankers, of which 921 are sanctioned by the US and European nations. It is likely that more than 40 per cent of the business at Alang will be from sanctioned vessels in the new year. This year till date, some 23 per cent of the business came from sanctioned ships.
Financing Bottlenecks
Ship recyclers in Alang have been facing significant disruption due to the impact of sanctioned vessels, creating a challenging environment for operators dealing in regular, compliant tonnage. Indian banks are refusing to open letters of credit (LCs) for the purchase of sanctioned ships bound for Alang for recycling. To overcome this hurdle, ship recyclers have started using Russian banks to transfer funds, as they are said to be more willing to open LCs in Indian rupees.
Sberbank and VTB Bank already have branches in India, while Gazprombank and Alfa Bank, both sanctioned by the West, have sought approvals to start operations there. According to a December 4 Reuters report, these Russian banks are set to open branches in India, facilitating deals involving sanctioned ships.
Scrapping Sanctioned Vessels
Most sanctioned vessels are more than 25 years old and scrapping them is beneficial for all as operating them would not be a good idea, said a shipbroker. Ship recyclers at Alang have already beached 118 ships for dismantling since January, of which 16 were sanctioned ships. Tonnage-wise, the 118 vessels accounted for 12,02,005.594 million tonnes (MT), of which the 16 sanctioned ships – which are bigger size ships – accounted for 2,80,872 MT.
One sanctioned ship of 20,001 MT is under court arrest and anchored at Alang since June. Alang recyclers benefit from US OFAC-sanctioned oil tankers as they get such ships at discounted prices, much like Indian refiners bought Russian crude at heavily discounted rates.
The seizure of the Venezuelan oil super tanker could be music to the ears of Alang recyclers, as it may force those operating sanctioned vessels to scrap them rather than run them. The development has the potential to create a new business opportunity for ship recyclers in Alang, who have been struggling with low supply and high demand for regular tonnage.
Original Article: Alang awaits arrival of more sanctioned dark fleet for scrapping — Indiatimes