Shadow Fleet’s Dark Legacy: Who Pays for an Oil Spill?
In March, I wrote in Fortune that the shadow fleet exists because the rules of the sea are fundamentally voluntary. Ships can opt out. They can switch off transponders, fly flags bought from registries that never inspected anything, and hold insurance nobody can trace. I noted that when one of them has an accident, there may be no one standing behind the policy.
The dark fleet vessel in question is the Caroline Bezengi: a Suezmax built in 2001 carrying roughly 800,000 barrels of Russian Urals crude. The ship loaded at Novorossiysk on May 11 and was destined for Sikka, in Gujarat. On June 8 an explosion flooded her engine room off southern Yemen and left her adrift. No group has yet claimed responsibility and no government has stated a conclusion about the cause. Security sources and Greenpeace have both pointed to a limpet mine, but that is not yet confirmed. Her crew abandoned ship three days later, and on June 30 she hit the rocks of Al Qibliyah, in the Hallaniyat archipelago, and grounded.
Oil Spill’s Devastating Consequences
Oil reached the mainland at Ras Madrakah. Oman’s Environment Authority assessed the affected area at 390 square kilometers on August 10; satellite analysis by SkyTruth’s John Amos suggested a figure of more than 2,000 square kilometers two days later. Dimitris Maniatis, who runs the maritime risk firm Marisks, told Bloomberg Television that cleanup alone could run $200 million to $500 million.
The Shadow Fleet’s Insurance Conundrum
The Caroline Bezengi’s last registered owner of record is Rentoor Shipmanagement Ltd, a Marshall Islands company dissolved on February 24. Its Shanghai correspondence address is, Maritime Executive reports, a dead-letter box in a residential block. The ship claimed Cameroonian registry, but Cameroon suspended its international register on February 6 after discovering its flag was being issued through two fraudulent websites. In June Cameroon told the IMO it had struck 39 ships off its registry. No International Group club (whose members insure roughly 87% of oceangoing tonnage) is likely to insure a ship without any approved classification. The ship had no publicly identified insurer. That isn’t supposed to be possible.
Oman’s Dilemma: Who Pays for the Cleanup?
Oman is running the shoreline response on its own dime: booms, dispersants, and crews hand-clearing some twelve kilometers of coastline. Despite being a party to the 1992 Civil Liability Convention and the 1992 Fund Convention, Oman will not receive compensation from the International Oil Pollution Compensation Fund (IOPC). A spokesperson for the Fund told Reuters in August that it would not be involved in cleanup costs because the incident “was being treated as an act of war,” a category the convention excludes. No reasoned determination has been published. The Fund’s governing bodies have not yet met on the incident. Under the convention, the burden of proving that exclusion falls on the Fund, not the claimant, and Oman has three years to force the question in court.
In this situation, it seems that no one will pay for the oil spill‘s devastating consequences.
Original Article: Who pays for a shadow fleet oil spill? No one — Fortune