Tankers moving through the Gulf of Guinea in West Africa are paying additional insurance premiums compared with relatively safer sea lanes due to escalation of piracy incidents and sea robberies in the region, and there will be serious concerns if these criminal activities become enmeshed with political disputes, a senior industry official said Tuesday.
Additional premiums have to be paid by shipowners if their ships move through, load or discharge cargoes from this region, Intertanko’s London-based Marine Director, Phillip Belcher, said on the sidelines of the International ‘Safety at Sea’ conference in Singapore.
He said these premiums have to be paid because Nigeria and a major chunk of the Gulf of Guinea are among the listed areas — for hull war, piracy, terrorism and related perils — of the Joint War Committee of the Lloyd’s Markets Association which comprises of underwriting representatives.
International Association of Independent Tanker Owners, or Intertanko, is one of the largest groupings in the shipping industry, with 210 full members and 268 associate members, and a registered fleet of over 3,600 tankers of over 312 million dwt.
Belcher said all shipowners whose vessels are passing through the Gulf of Guinea have to notify the insurer of the measures being taken to mitigate the risk and accordingly the premiums are finalized on a case by case basis.
Nigeria’s problems aren’t restricted to piracy and offshore robberies alone.
UNREST IN NIGERIA
According to market sources, West African crude loading has taken a severe beating due to the unrest in Nigeria.
A few weeks ago, Shell’s Nigerian unit declared force majeure for Bonny Light crude liftings. A month earlier the company ended its force majeure due to another leak on the same pipeline.
Nigeria’s crude output is at its lowest levels in 30 years. Forcados, Brass River and Qua Iboe grades have all been impacted by dreaded attacks and sabotage by terrorists, according to shipping industry officials and analysts. Compared with the beginning of the year, crude loadings in Nigeria are down by 500,000 b/d, they said.
Theoretically, this translates into disappearance of demand for one Suezmax every two days or 15 Suezmaxes a month, they added.
A Suezmax typically carries 1 million barrels of crude and is a popular mode for transporting cargoes from West Africa.
“We are closely monitoring the situation and will be very concerned if current criminal activities [around Nigeria] become a political football,” said Belcher.
A few years ago when piracy in the Gulf of Aden was at its peak, strategic experts had expressed similar concerns over potential linkages with Islamist terrorism in Somalia, though eventually no such major nexus was unravelled.
“Governments [in the region] should take all measures to provide security to ships moving in the region and if they can’t, they should allow private agencies to do so,” he said.
However, some initiatives have been taken recently which have instilled confidence among market participants and could help cap the shipping insurance premiums.
“There has not been any ‘drastic rise’ in these premiums recently because of the public-private initiatives taken to control the piracy” menace in the region, said Belcher.
At least two or three protected anchorages have been set up close to the ports in the Gulf of Guinea where ships are provided security by private armed guards, Belcher said.
“During delays at ports, ships will stay within these anchorages and will nip in quickly into their berths at the stipulated time,” he said.
Countries along the Gulf of Guinea do not permit private armed guards from outside on board the ships when they are in their territorial waters.
Under international law, territorial waters of a country are up to 12 nautical miles offshore. No such restrictions were in place to handle maritime security along the Gulf of Aden because Somalia had been stripped of its territorial water rights under international law.
“A model that has worked well is of unarmed private security contractors providing advisory and guidance to the local armed guards,” said Belcher.
However, shipping sources said there was an element of distrust with Nigerian government authorities concerned over “unarmed” guards actually being “armed”.
Belcher said insurance premiums and shipping costs will fall if shipping lanes are secured with active patrolling in the region.
“Situation has also shown some improvement with the setting up of a new piracy control system in region,” he said, referring to the Maritime Domain Awareness for Trade, or MDAT, that was set up by the UK and French navies in June this year.
It is aimed at coherent and quicker flow of information among all participants to tackle piracy in the Gulf of Guinea and replaces the Maritime Trade and Information Sharing Centre that was shut down in June due to political differences and lack of information sharing among member countries.