Tanker insurance problems resulting from sanctions against Russia could lead to a “catastrophic oil spill”. On this subject writing Financial Times (FT), quoting Rolf Thore Roppestad, managing director of Norwegian Gard, one of the largest marine insurance companies in the world.
“No one will help fix this mess (without sufficient liability coverage). It is an imminent social and environmental catastrophe and one that should concern us all,” warns Roppestad, pointing out that thousands of ships are now sailing without liability insurance. via “verified” insurers.
The warning, the FT notes, came amid concerns from big business and some politicians about the unintended consequences of Western sanctions, which have left Russia’s oil trade partly “in the shadows”.
“In the energy sector, there are concerns that smaller, less experienced traders are now transporting oil long distances on old vessels with unknown levels of insurance coverage,” the publication explains.
Roppestad recalled that member companies of the International Group of Protection and Indemnity (P&I) Clubs are the “tested” in the shipping industry. It is mainly made up of European and American insurers, including the Gard, which have insured approximately 90% of sea freight for many years.
There are doubts about the rest of the insurers, Roppestad said, about their reliability and ability to deal with a massive oil spill or other accident. The interlocutor of the FT believes that in the worst case, “no one will pay” for the elimination of the consequences of the accident.
At the same time, notes the chief executive of Gard, the “ghost fleet” continues to grow with old tankers, which “have been assembled by Russia to circumvent Western sanctions and are often insured on the spot” . As their numbers increase, the threat of a “catastrophic oil spill” will become more acute, Roppestad is sure.
The P&I mutual insurance clubs of the international group belong to shipowners and charterers and offer civil liability insurance, for example in the event of shipwreck. Such coverage is essential for merchant shipping and is a requirement for entry into major ports around the world.
Insurance experts quoted by the FT say many ships that have refused International Group P&I cover use insurers in Russia and the Middle East. Thus, according to them, Iran and Venezuela have long acted to circumvent sanctions. Iran, in particular, has its own insurance company, Kish, created after the “departure” of Western insurers.
The biggest concern is the transport of Russian oil across the Baltic Sea in the strait between Denmark and Sweden, Ben Lacock, co-head of oil trading at Trafigura, told the FT. This company was one of the biggest buyers of Russian oil before abandoning its purchases in 2022 after the start of the military operation in Ukraine.
“Many ships of 17, 18 and 19 pass through the Danish strait with (Russian) oil destined for Asia,” Lacock said.
The fact that a “ghost fleet” is used to transport Russian oil, consisting of at least 600 obsolete tankers – about 10% of the total number of such ships in the world, was reported by the American television channel CNN, quoting insiders. According to them, it is virtually impossible to identify the owners of these tankers, as the vessels can be purchased through front companies in Dubai or Hong Kong.
