OPEC+ Extends Oil Cuts, With Russia Bolstering its Effort
(Bloomberg) — OPEC+ extended its oil supply cutbacks to the middle of the year in a bid to avert a global surplus and shore up prices. The curbs — which...
An operation is finally underway to transfer the oil from a stricken tanker off the coast of Yemen that maritime salvage experts have called a “ticking time bomb.”
The decrepit vessel has been lying idle for years with more than a million barrels of crude sitting on it, but it hasn’t been accessible because of Yemen’s civil war. The Houthi rebels that control the region around the ship agreed in September to back a United Nations effort to move its cargo onto another, younger tanker that will remain there instead.
An on-board appraisal found that the 47-year-old FSO Safer, which is owned by Yemen’s national oil company, is in such a state of disrepair that it could blow up or fall apart at any moment, causing an environmental and humanitarian catastrophe that could cost tens of billions of dollars to clean up.
That’s heightened international concern and precipitated plans for a team from the Netherlands-based SMIT Salvage BV to start work on the vessel as part of a mission that eventually will cost more than $140 million.
When engineers and underwater bomb disposal experts boarded the tanker two weeks ago, they found its overall condition wasn’t as bad as feared, but it’s still “the worst example of a live oil tanker we have ever seen,” Peter Berdowski, chief executive officer of SMIT parent company Royal Boskalis Westminster NV, said at an event in The Hague on Monday.
An initial assessment found that oxygen is present in all of the Safer’s fuel tanks, making them highly explosive, said Berdowski. “Every small spark could completely destroy the vessel and lead to a huge disaster,” he said. “It’s not a matter of exaggeration, it’s a matter of fact that the tanker is in such a poor state that it is literally a ticking time bomb.”
SMIT specializes in responding to extreme shipping incidents such as collisions, fires and shipwrecks. Its team helped free the Ever Given, a ship that closed the Suez Canal in the spring of 2021 when it got stuck at both ends.
The next challenge will be sailing the replacement vessel, the 15-year-old Nautica, alongside the Safer for the oil to be transferred. The risk in that exercise is if there’s a crack in the hull of the old tanker and the oil spills. The United Nations Development Programme has secured insurance cover for the operation, allowing the ship-to-ship transfer to begin.
The UN has raised $115 million for the mission, though still needs another $28 million more to meet the total costs, UN representative David Gressly said on Monday. The Nautica cost $55 million, roughly double what the UN originally expected as ship prices surged following Russia’s invasion of Ukraine.
The Netherlands has provided the most funding for the mission, while Saudi Arabia is the fourth-largest donor to the project despite leading a coalition that’s at war with the Houthis.
Indeed, the mission’s biggest hurdle so far has been the nine-year-old civil war. The Houthi rebels have restarted back-channel talks with Saudi Arabia, fueling optimism about an extension of the longest truce in the conflict to date. The mood, though, could shift at any time. Tim Lenderking, the US special envoy for Yemen, traveled to Saudi Arabia on Monday as part of the peace negotiations.
That makes it even more vital to grab the window of opportunity. As part of plan, the UN will hand the Nautica over to the state-owned oil company as soon as it arrives in Yemen. Then the Houthis will effectively take control of the ship in the same way that they held the Safer.
“We’re essentially purchasing the vessel, but we’ll only own it for five seconds,” said Russell Geekie, senior communications advisor to the UN Resident and Humanitarian Coordinator for Yemen. “There’s distrust between the sides and there’s going to be problems and hiccups and headlines, but it’s all stuff we can resolve.”
–With assistance from Mohammed Hatem.
© 2023 Bloomberg L.P.
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