Tanker Rates Skyrocket To Fill Colonial Pipeline Shortages
By Elizabeth Low (Bloomberg) Oil tanker charter rates skyrocketed in the U.S. with refiners scrambling for ships to store fuel that has nowhere to go due to a cyberattack on...
Moving oil from the Middle East to Europe isn’t as easy as it used to be.
For many European nations, sourcing oil from countries such as Saudi Arabia or Kuwait is becoming increasingly tricky because crude tankers must travel through areas such as the Gulf of Aden, a region prone to Somali hijackings.
And the situation demonstrates no signs of cooling off.
Piracy hit an all-time high in the first six months of 2011, with 266 attacks worldwide, up from 196 a year earlier, according to statistics from the International Maritime Bureau. Of the 266 attacks, a whopping 60% were carried out by Somali pirates.
Efthimios E. Mitropoulos, Secretary-General of the United Nations maritime body, on Thursday told a press conference in London that Somali pirate activity was “a stigma of the 21st century’s civilization.”
Mr. Mitropoulos said threats of pirate hijackings have increased voyage times as vessels are forced to take significantly longer routes, avoiding where possible transit through the piracy zone. “Longer, diverted routes mean delays in the replenishment of European energy stocks,” he said.
Dr. Christopher Spearin, Department of Defense Studies at Canadian Forces College, argues that European trade is “heavily reliant upon the timely, unhindered movement of vessels in the waters between the Indian Ocean and the Suez Canal.” Dr. Spearin adds that 80% of total trade that passes through the Gulf of Aden is in fact with Europe. This also includes one-third of Europe’s oil supplies.
On July 20, 22 ships remain in the custody of Somali pirates and 464 seafarers are held currently as hostages.
While once upon a time hijackings would involve knives and playground tactics, Somali pirates now embark on violent attacks with the use of guns and in some extreme cases have even resorted to the execution of hostages.
On April 8, Somali pirates released Greek-owned oil tanker Irene SL after 58 days in captivity. Published reports claim a fee of more than $13 million was negotiated. The hijacking marked a significant escalation in Somali piracy, taking it into the main sea lanes of the Arabian Gulf. The crude-oil tanker hijacking represented 20% of total U.S. daily crude oil imports, or 5% of total daily world sea-borne oil supply.
The global shipping community blames the reluctance of international governments to prosecute Somali pirates, even after they’ve been caught in the act of hijackings. Ship brokers say fears that pirates could claim asylum mean governments are reluctant to put pirates on trial.
Shipping associations such as the International Association of Independent Tanker Owners, or Intertanko, argue that governments must prosecute detained pirates rather than embrace a head-in-the-sand approach to the situation.
But one thing is sure. This problem is not going to vanish overnight.
– by Neena Rai, Dow Jones & Company
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