Oil Tanker Bombed at Libyan Port as Supply Threat Increases

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Bloomberg

 

by Naomi ChristiePaul Tugwell

12:17 PM CET
January 5, 2015

 

  

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(Bloomberg) -- A Greek-operated oil tanker was bombed near a port in eastern Libya, killing two sailors and underscoring a growing threat to shipments from the country with Africa’s biggest crude reserves where violence is escalating.

 

The Araevo, flying a Liberian flag, was struck by a rocket during an airstrike on Jan. 4 in front of Derna port, killing two crew members and seriously injuring two others, according to an e-mailed statement yesterday from Libya’s state-run National Oil Corp. The attack didn’t result in a leak and the vessel is now in Tobruk port also in the east, Ilias Syrros, the safety manager for Aegean Shipping Enterprises Co., the Piraeus, Greece-based firm operating the tanker, said by phone.

Libya is split between the United Nations-recognized government of Abdullah al-Thinni in the east and Islamists who control Tripoli in the west. Al-Thinni’s forces bombed the ship after it failed to provide details on its itinerary, said Ahmad al-Mismari, a spokesman for the military. NOC said it told all appropriate authorities about the tanker’s movements.

“It’s clear that ports in the east of the country are extremely hazardous to shipping and owners and masters have to be extremely careful as to what arrangements they make,” Neil Roberts, the London-based senior executive at the Joint War Committee, an adviser to insurers, said by phone.

Brent crude added 18 cents to $53.29 a barrel on the ICE Futures Europe exchange at 12:27 p.m. Singapore time. Yesterday the global benchmark grade declined $3.31, or 5.9 percent, to $53.11, the lowest close since May 1, 2009.

Sailors Killed

One of the sailors who died was Greek and the other was Romanian, according to Aegean.

Militants set oil storage tanks on fire at the eastern port of Es Sider last month and the country pumped an average of 450,000 barrels a day of crude in December compared with as much as 1.78 million in 2008. Libya had about 48.47 billion barrels of unextracted oil reserves at the end of 2013, more than any other nation in Africa, according to data from BP Plc.

Araevo has a transportation capacity of 28,610 deadweight tons and is registered in Liberia, according to data from IHS Maritime. The ship is on a charter to Libya’s NOC and has operated without incident between Derna and Marsa El Brega for several years, Greece’s Foreign Ministry said in a statement. It was hauling 12,600 tons of crude, Konstantinos Koutras, a spokesman for the ministry, said by phone.

Bombing Impact

The tanker was booked by NOC to ship 13,000 metric tons of heavy fuel oil to feed power and desalination stations, according to the NOC statement. The bombing will “negatively” affect traffic at Libyan oil ports and the distribution of fuel in the local market, which in turn will affect electricity production in winter, it said. NOC says it is neutral in Libya’s political dispute.

The incident is also likely to prompt insurers to reconsider terms for Libya-bound ships, Andrew Bardot, secretary of International Group, said by e-mail. IG member organizations cover most of the world’s tankers against risks including oil spills.

“Shipowners are likely to think twice before contracting to trade to/from Libya,” Bardot said. “War-risk underwriters will be likely to reconsider the terms, if any, on which they are prepared to provide war risk cover for vessels engaged in such trade.”

To contact the reporters on this story: Naomi Christie in London at This email address is being protected from spambots. You need JavaScript enabled to view it. ; Paul Tugwell in Athens at This email address is being protected from spambots. You need JavaScript enabled to view it. ; Saleh Sarrar in Tripoli at This email address is being protected from spambots. You need JavaScript enabled to view it.

To contact the editors responsible for this story: Alaric Nightingale at This email address is being protected from spambots. You need JavaScript enabled to view it. Nayla Razzouk, Rachel Graham