Friday, February 11, 2011

Somali piracy is a ‘threat to global oil supplies’


Ship hijackings could disrupt global oil supplies unless governments do more to combat piracy, the International Association of Independent Tanker Owners (Intertanko) says.

Intertanko’s warning comes after the supertanker MV Irene SL was hijacked in the Gulf of Oman on Wednesday whilst en route to the United States. The 300 metre long ship is carrying US$200 million worth of Kuwaiti crude oil (two million barrels). It is one of the largest ships ever seized by pirates. Joe Angelo, head of Intertanko, says the Greek-flagged crude oil tanker’s cargo represents roughly a fifth of the US’s daily crude oil imports.
"If piracy in the Indian Ocean is left unabated, it will strangle these crucial shipping lanes with the potential to severely disrupt oil flows to the US and to the rest of the world," said Angelo, whose members own the majority of the world's tanker fleet.

Shipping industry associations warn that more than 40% of the world’s seaborne oil passing through the Gulf of Aden and the Arabian Sea is at risk from Somali pirates, who are able to operate even further out to sea and for longer periods through the use of mother ships. Intertanko says that Somali pirates are now using more than 20 seized vessels as mother ships from which to launch attacks in the region.

The capture of the Irene SL is the second tanker hijacking in two days. On Monday pirates took control of the Italian MV Savina Caylyn in the Indian Ocean, with more than US$60 million worth of oil aboard. At least 30 ships are being held by pirates, together with more than 700 hostages.

Somali pirates have made millions of dollars capturing cargo vessels, especially oil tankers as these have high value cargo aboard. Last year pirates received a US$9.5 million ransom for the release of the South Korean Samho Dream oil tanker.

"What we are dealing with here is a business model that is so good, that for a matter of tens of thousands of dollars you can put together a pirate action group, you can send it to sea and if you are lucky and hit the jackpot, you can come back with a vessel that within six months will bring you a return of nine-and-a-half million dollars,” Wing Commander Paddy O’Kennedy, Navfor spokesman told the BBC. “We are the first to admit we are not deterring piracy."

With large financial rewards, piracy has become a highly organised business. Seagoing pirates make up a small part of the entire operation, as there are investors, accountants, leaders and recruiters on land. 

Andrew Palmer, from the security firm Idarat in London, told the BBC that each pirate is highly trained for their roles in things like navigation, equipment and weapons.

“We could very quickly be reaching a point where we’re going to have to call for seafarers to refuse to sail into this area,” said Mike Dickenson, from the Seafarer’s union Nautilus.

"Now what will that mean for the world economy? Well that means ships can't go into the area, that means we have an oil shortage again, maybe then people would take notice, maybe when the supermarket shelves start to empty, when there is no petrol in the forecourt, then people will realise how critical the shipping industry is."

The area north and northeast of the Somali coast is an important shipping route for oil. The Hormuz Strait in the Gulf of Oman carries around a third of all seaborne traded oil, or 17% of oil traded around the world, according to the US Energy Information Administration (EIA). Every day around 17 million barrels of oil is transported through the strait, with roughly 13 oil tankers passing through the strait a day.

The nearby Gulf of Aden, on route to the Suez Canal, sees up to 30 000 ships passing through its waters every year. The Suez Canal itself is one of the seven shipping choke points identified by the EIA, which says that such channels are critically important to the world oil trade and are also susceptible to blockages and pirate attacks. Roughly 8% of the world’s seaborne trade passes through the Suez Canal and of the cargo taken through the canal, 15% is oil and related products.

Piracy is costing the global economy between US$7 billion and US$12 billion per year and is raising costs along vital shipping routes between Europe and Asia, the Christian Science Monitor reports. Rerouting ships to avoid Somali pirates is costing between US$2.4 and US$3 billion a year, according to Oceans Beyond Piracy, as ships have to travel sometimes thousands of extra kilometres. International naval anti-piracy operations cost another US$2 billion, the group estimates.

Meanwhile, the European Union Naval Force Somalia (EU Navfor) said the Golden Wave, a South Korean fishing vessel seized in October off the Kenyan coast, was released from pirate control on Wednesday and the Danish warship Esben Snare released six suspected pirates as there was not enough evidence to try them in a Danish court. They were taken into custody aboard the ship following their attack on the Elly Maersk container ship last year.

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