An Unprecedented Tin Cup From Lloyd’s List

An oil tanker that has been rotting in the Red Sea off the coast of war-ravaged Yemen since 2017 is in danger of breaking apart and releasing its cargo of more than a million gallons of oil, four times the amount released by the Exxon Valdez in 1989. The ship is long past being towable, so the remedy, if there is one, is to get the oil off the crippled ship and into another tanker while it’s still possible. It would be a delicate, dangerous and extremely costly project, and Lloyd’s List (a publication separate from Lloyd’s insurance, but sharing common roots that go back to the 18th century) is asking for a donation, with an ask that could make a Salvation Army Santa Claus drop his cup. “What is needed,” it says in a recent post, “is the provision of a VLCC to participate in one of the most risky and complex salvage operations in history.” (A VLCC is a “very large crude carrier,” defined as a vessel capable of carrying up to 250,000 tons.)

Companies that don’t have a spare VLCC laying about are asked to make a donation to a UN fund that has already collected millions, but is said to be millions of dollars short. It sounds like a lot of money, but compared to the cost of a “clean-up” (surely a euphemism in situations like this), it’s minor. A conservative estimate is said to be around $20B.

The Lloyd’s post briefly summarizes the potential effects of a spill, which include the collapse of the fishing industry in an area already ravaged by famine. Other sources, including The Guardian, have detailed other likely fallout, including the loss of drinking water for millions of people as the result of a cascade of events that include the closing of ports and the pollution of desalination plants. A more recent account from the co-chair of the International Crisis Group, writing in the Toronto Star, details other predictable effects, including devastation of a unique ecosystem and the world’s “only known temperature-resistant coral system.”

“We will spare readers a crash course in the backstory of the conflict. This is no call to take sides,” says the Lloyd’s post. “The UN itself cannot own a VLCC, and so Lloyd’s List is looking to help the UN find a shipowner – or potentially a group of industry philanthropists – to either put up a generous direct financial subvention or to enter a charter arrangement at well below cost. Marine insurers are also asked to assist in providing cover.” -Today’s General Counsel/DR