Houthis’ Ship Seizure Is A Threat To International Trade
Unless Iran reins in its proxy force, the US and its allies may have to turn to the playbook that defeated piracy off East Africa a decade ago. By James Stavridis (Bloomberg...
by Captain John Konrad (gCaptain) Yesterday, while Joe Biden shutdown US ports to Russian oil, Frontline tankers (NYSE: FRO), founded by the billionaire John Fredriksen – Norway’s highest net worth person – sailed an oil tanker into the Russian Black Sea port of Novorossiysk to load Naptha – a highly explosive toxic liquid used by oil refineries – despite knowing the risk to his crew and the environment.
Novorossiysk is the closest Russian port to Ukraine’s war torn Crimean Peninsula and is within missle range of the war.
“Wish me good luck,” said Frontline CEO Lars Barstad in an interview with Tradewinds, which made no mention of the safety of the crew aboard his ship. Barstad did, however, say he would not want to disappoint his customers. “Failing to perform on the committed charters was not an option.”
While Frontline is not the only owner to trade in the Black Sea – NATO has warned there are no Navy ships in the Black Sea working to protecty shipping and the US Navy has not been willing to risk sending its own humanitarian ships into the area – it may be the only NYSE publically traded company with a major asset operating so close to Ukraine.
Knicknamed the “Ayatollah’s Lifeline” by some, Fredriksen has a long history of putting ships crews and the environment at risk. He first got into oil trading in the 1960s in Beirut, Lebanon, before buying his first tankers in the 1970s and made his fortune during the Iran–Iraq War in the 1980s, when his tankers picked up oil at enormous risk. He used his war profits to build a shipping empire that has included Frontline and ownership interests in Seadrill, Gonar LNG, Marine Harvest Seafood, and a number of other shipping companies.
Fredriksen who learned his favortie hobby – knitting socks – while in jail for months pending trial, has paid millions of dollars in fraud fines throughout his career and swapped his Norweigan citizenship for Cyprus to avoid paying taxes.
In 1986 Fredriksen paid a fine of 2 million NOK for risking his crew’s life and, in addition, had to pay his marine insurance company Gard, an amount of over $800,000.
Fredriksen and the Frontline board appointed Lars Barstad, a former Glencore trader and BI Norwegian Business School alumnus, as CEO in September of last year.
The Tradewinds article made no mention of dangers to the ship’s crew or the risk of spilling toxic cargo into the environment, but Barstad did say that Frontline will no longer trade to Russian ports for fear Frontline will incure “reputational risk” trading with Russia.
“We’re taking a very low-risk approach,” said Barstad. “We don’t want to meddle in this market.” He also admitted that he believes oil and products will keep moving as long as there is demand and a few daredevil shipowners eager for the risk premium. Again no mention of the seafarers who will be asked to sail into harm’s way by these “daredevils”.
“As long as oil and products and the molecules themselves are not sanctioned… there will always be owners who can manoeuvre within the sanction, because they don’t have any reputational risk,” Barstad said of other owners like those he dealt with as a trader for Glencore, the company that emerged from the ashes of Marc Rich + Co which made a fortune trading in war zones.
The ship Barstad ordered into the Balck Sea is the product tanker is the 2016 built, Marshall Islands flagged, American classed, Norweigan managed M/V Front Cougar. According to Marine Traffic the ship departed from Novorossiysk at midnight today and is currently sailing at 13.4 knots towards Istanbul.
Novorossiysk is just 60 miles from the Kerch straight, the narrow waterway that separates Russia from the Crimean Peninsula.
Frontline is not the only owner to load Russian cargo in Novorossiysk. MarineTraffic currently shows seven foreign flag tankers and a larger number of Russian flagged ships in the port.
Join the 96,595 members that receive our newsletter.
Have a news tip? Let us know.
Maritime and offshore news trusted by our 96,595 members delivered daily straight to your inbox.