A burning oil tanker in the South China Sea is a global problem

By Alex Longley and Yongchang Chin

(Bloomberg) – Off the coast of Malaysia, in one of the world’s busiest shipping lanes, an explosion aboard the aging oil tanker Pablo ripped her deck off like a sardine can and started a fire that sent plumes of dark smoke into the sky.

It was a tragic accident that could have turned into a much greater catastrophe. The Gabon-registered ship, which can carry around 700,000 barrels of crude oil, passed through the South China Sea after offloading a cargo in China – and was therefore nearly empty. Of the 28-strong international crew, officials report that 25 were rescued by passing ships. The blast happened just behind Singapore’s congested waters.

But for nearby maritime authorities, the headache has only just begun. There is little evidence of the owner, a Marshall Islands registered company with no other vessels in its fleet, and no trace of insurance. Both are important for a cleanup to begin.

The Pablo, an Aframax-class crude oil tanker spotted in Iranian waters last year, underscores the risks involved in expanding a dark fleet of aging ships transporting sanctioned oil around the globe. Since the wave of sanctions that followed Russia’s invasion of Ukraine – including price caps imposed by the Group of Seven to limit the flow of oil money back to the Kremlin – observers in the oil trading community have reported the purchase of hundreds of old tankers from unknown buyers.

Related article: “Shadow” tanker fleet increases accident risk

With limited details on who is responsible for this ship, there was no one to be held accountable as it burned down just 40 nautical miles off the Malaysian island of Pulau Tinggi. Oil, possibly from the wreck, was washed up on the coast of Indonesia.

“Pablo’s accident is tragic and a stark reminder of what we’ve been saying all along: Shadow Fleet poses a serious threat to both human life and the marine environment,” said Rolf Thore Roppestad, Chief Executive Officer by Gard AS. the largest of the Protection and Indemnity Clubs, which insure much of the world fleet against risks such as oil spills.

“What worries me is that ships like this are going through busy straits every day,” he added. “So the likelihood of more accidents like this happening is pretty high.”

The cause of the fire is still unclear, but vapors from the remains of the oil cargo may have played a role. Regardless, when ships like the Pablo explode, cleaning up the mess becomes harder. Often insurance companies, salvage companies, and various intermediaries begin dealing with the situation within hours.

But nearly a week after that blast, there’s little sign of the insurer getting the process started. The Pablo is not listed in an industry database of insured vessels and the Malaysian Maritime Enforcement Agency did not respond to questions about insurance.

In cases where shipowners are unknown, local authorities often press the crew for more information, as they are one of the few people who know where a ship’s orders are coming from. Whether that was possible is unclear.

If the owner cannot be contacted, local authorities can impound the ship and try to recover as many costs as possible, said Oon Thian Seng, founding partner of Singapore law firm Oon & Bazul LLP and associated Malaysian branch TS Oon & Partners LLP. However, it is highly unlikely that selling the charred Pablo’s remains would cover the cost of removal.

The dangers of Pablo and others of his kind emerge from his story. The tanker was flying the flag of Gabon, which is a very small destination for ship registration and falls outside the so-called Paris MoU set up to promote safe shipping. Built in 1997, it is well past the age at which most tankers are sold for scrap.

Had the Pablo been loaded with her recent cargo, it would have been a US-sanctioned major oil spill.

The tanker spent two months at a shipyard near Shanghai, but before that its last two voyages were expected to deliver crude oil to Chinese ports in Shandong province, ship-tracking data monitored by Bloomberg shows. Data analytics firm Vortexa identifies both shipments as Iranian heavy crude oil, which is sanctioned.

The question for authorities in Singapore, one of the busiest shipping hubs in the world, is how to keep legal oil cargoes moving while avoiding accidents like this one. The Maritime and Ports Authority said it had requested the assistance of 20 vessels in the area to report any sightings of the Pablo’s three missing crew and reported no disruption to service. Officials did not provide any further information.

Malaysian authorities said they suspended search operations Friday night as the effort turned up no signs from the crew members. The blast has made boarding the ship unsafe, leaving it stranded off the country’s coast for the time being.

The longer it stays there, the longer it remains a visible reminder of the risks that come with an expanding Shadow Fleet.

“Unfortunately, the crew, their families and the coastal communities are paying the price,” Roppestad said.

-Assisted by Ann Koh, Ravil Shirodkar, Eko Listiyorini, Norman Harsono, Alaric Nightingale and Julian Lee.

© 2023 Bloomberg LP

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