…As Shipping Firm Fined USD 1 Mn for Pollution Crimes***
The likely oil exports decline from Iran stemming from the planned reimposition of sanctions against the country by the United States could leave up to 20 Very Large Crude Carriers (VLCCs) without work, according to Drewry.
Curbing of Iran’s oil production would come at a very bad time for the tanker market with supply being very tight taking into account restrictions of OPEC production and declining Venezuelan output.
“If we consider a situation similar to the 2012 sanctions, it will wipe-out all the gains of close to 1.0 thousand barrels per day (mbpd) in Iranian production which came after the nuclear deal. The potential impact on oil and tanker market this time around would be more severe,” Drewry said.
Even in the absence of sanctions, the call on OPEC crude and stock change for the remainder of the year will be about 0.6 mbpd higher than OPEC’s March production levels of 31.8 mbpd not-withstanding the rising US-led non-OPEC production. In 2019 the situation should ease as further gains in US production will bring down the call on OPEC crude, the UK shipping consultancy said.
“Theoretically, OPEC producers have more than enough spare capacity (3.4 mbpd) to fill the possible void created by Iran sanctions. The majority of this spare capacity lies with Saudi Arabia and other Middle Eastern producers,” Drewry went on to say.
Consequently, should Middle Eastern OPEC producers ramp up production to fully compensate for any decline in Iranian supply, the sanctions would have no impact on oil trade and tanker demand.
However, if that is not the case, the market could be in deep trouble, as the gap will have to be met by inventory drawdown, which in turn will curb trade by an equivalent volume.
“In this scenario, we could see a decline in seaborne crude oil trade close to 50 million tonnes (equivalent to 2.2 pct of 2017 trade). Or put another way, 15-20 VLCCs, could be without employment,” Drewry said.
In the meantime, japanese shipping company Nitta Kisen Kaisha Ltd. was sentenced for obstruction of justice and falsification of an Oil Record Book to cover-up intentional oil pollution from its vessel Atlantic Oasis.
Nitta Kisen Kaisha Ltd. (Nitta), that delivered steel products to Wilmington, NC, admitted that its engineers failed to document the illegal discharge of oily wastes from the vessel’s fuel and lubrication oil purifier systems, as well as discharges of oily bilge waste from the bilge holding tank and from the vessel’s bilges.
During a U.S. Coast Guard inspection of the vessel on May 17, 2017, a junior engineering crewmember provided information to the inspectors about how the oily wastes were being discharged by the order of Chief Engineer Jihnyun Youn.
The crewmember also showed U.S. Coast Guard inspectors where the hoses that were used for the discharges were hidden.
Chief Engineer Youn lied to the inspectors about the existence of a Sounding Log, which is typically used in the industry to record the fluid levels of various tanks in the engine room. By the end of the inspection, Chief Engineer Youn had admitted to ordering the illegal discharges and admitted that there was a Sounding Log.
Nitta was ordered to pay a fine of USD 1 million, placed on probation for a period of three years and further ordered to implement a court-approved comprehensive Environmental Compliance Plan as a special condition of probation, which will be audited throughout probation.
Youn had previously been convicted and sentenced for falsification of the vessel’s Oil Record Book. He was placed on probation for one year and ordered to pay a fine of USD 5,500.
WMN.
