The insurance is supported by significant engineering expertise, which has been mobilised to undertake the movement of the oil, and includes naval architects, chemists, surveyors and oil spill response organisations, as well as government entities and the UN
London:
The United Nations has secured insurance coverage to start a ship-to-ship transfer of 1.1 million barrels of crude from a rusting tanker moored off the coast of war-torn Yemen — oil that could cause a major environmental disaster.
The United Nations Development Program described the insurance as a “pivotal milestone” in a yearslong effort to evacuate the cargo of the FSO Safer, which is at risk of rupture or exploding.
The U.N. agency has been trying to start a salvage operation to avert what it says could amount to “one of the world’s largest, man-made disasters in history.” It secured tens of millions of dollars in pledges for the operation, which started late in May with experts pumping inert gas to remove atmospheric oxygen from the oil chambers of the vessel.
“Insurance became a critical element of enabling this salvage operation to proceed. Without it, the mission could not go forward,” said Achim Steiner, a UNDP administrator.
Transferring the stored oil is expected to start later this month, according to David Gressly, the U.N. humanitarian coordinator for Yemen. After completing the transfer of oil, Safer would eventually be towed away and scrapped, he has said.
“Work is progressing well,” Gressly told the Yemen International Forum on Monday at The Hague.
The U.K.-based insurance broker Howden group, which was appointed by the UNDP to identify the insurable risks and arrange coverage, said Monday it secured “successful binding of insurance coverage that enables the UN to proceed with FSO Safer Ship-to-Ship transfer.”
The first phase of the salvage operation would see oil being transferred from the Safer to the Nautica, a super tanker the U.N. purchased for the operation. In the second phase, the U.N. will facilitate the installation of a replacement storage vessel, according to a deal the U.N. struck with the Houthi rebels, who control the area where the tanker is moored.
The tanker was built in Japan in 1980, and the Yemeni government purchased it in the 1980s to store up to 3 million barrels of oil pumped from fields in the eastern province of Marib.
Yemen, the Arab world’s most impoverished country, has been engulfed by civil war since 2014, when Iran-backed Houthi rebels seized the capital, Sanaa, and much of the country’s north, forcing the government to flee to the south, then to Saudi Arabia.
The following year, a Saudi-led coalition entered the war to fight the Houthis and try to restore the internationally recognized government to power.
The Safer is 360 meters (1,181 feet) long with 34 storage tanks. The vessel is moored 50 kilometers (31 miles) northeast of Yemen’s strategic port of Hodeida.
The tanker has not been maintained since 2015, and in recent years, seawater entered its engine compartment, causing damage to pipes and increasing the risk of sinking. Experts have said maintenance is no longer possible because the damage to the ship is irreversible.
Rust has covered parts of the tanker and the inert gas that prevents the tanks from gathering inflammable gases has leaked out, prompting the U.N. to warn that tanker could release four times more oil than the notorious Exxon Valdez disaster did, off Alaska in 1989.
Achim Steiner, Administrator, United Nations Development Programme, says: “FSO Safer is an ecological and humanitarian timebomb. Without urgent intervention, the damage to the environment, lives and livelihoods could be immense. Insurance became a critical element of enabling this salvage operation to proceed. Without it, the mission cannot go forward. UNDP has been broadening and deepening its work with the global insurance community over recent years. That collaboration is delivering impact in many ways. We are especially grateful to Howden for facilitating this process with the insurance industry on this critical initiative to ensure that coverage has been secured in the most challenging of contexts.”
David Howden, CEO, Howden comments: “This is the perfect example of the power of insurance to be a force for good in the world. By de-risking the investment required and mitigating the risks involved in this complex and delicate operation, insurance is playing a central role in preventing one of the largest, man-made disasters the planet will have ever faced. As unique as the FSO Safer operation is, there are a whole host of scenarios where insurance plays a crucial role in protecting our planet and its inhabitants. I hope that, as an industry, we can all be inspired to do everything within our power to help build a more resilient future.”
John Neal, CEO, Lloyd’s commented,“Following the success of the Black Sea grain corridor, this pioneering coverage again shows insurance play a leading role in helping society not just respond to disasters, but prevent and prepare for them. It’s encouraging to see the knowledge and expertise held in the Lloyd’s market being used to protect what matters most – in this case, our natural environment and the economic activities our world relies on.”
Richard Brindle, Group CEO and Chairman, Fidelis MGU, said: “Whenever the insurance industry has the opportunity to play its part in vital efforts on behalf of the environment, it must step up. This is one such opportunity and we are very pleased to be able to work alongside Howden, UNDP and our industry peers to provide the protection necessary for the successful outcome of this important project.”