Sanchi’s expanding oil slick raises environmental concerns

The spill from the stricken oil tanker Sanchi has created an oil slick that has trebled in size since the ship went down in the East China Sea in a ball of flames more than a week ago, and is threatening to make it the costliest marine disaster in recent memory. China’s State Oceanic Administration reported on Sunday that it had surveyed three oil slicks with a combined surface area of 332 sq km, more than three times the 101 sq km slick seen on Wednesday. The slick could still get worse if, as some experts fear, the ship starts to leak its own fuel, a heavier and more persistent substance than its cargo. This possibility has raised fears that the slick and the environmental damage could exceed that of the Exxon Valdez disaster in 1989. The Sanchi, a Panamanian-flagged supertanker, was on its way from Iran to South Korea to deliver almost one million barrels and 136,000 tonnes of condensate (a mix of petroleum liquids) when it crashed into a US freight ship just off the coast of China, east of Shanghai. A combination of bad weather and toxic gasses hampered efforts to rescue crew members and put out the fire on the tanker and after a week floating in the East China Sea, a final explosion on the ship’s deck sent the boat to the bottom of the ocean. All crew members are presumed dead (only the bodies of three of the 32-strong crew have been recovered) and the oil slick is causing considerable environmental concern. The high winds that hampered any rescue efforts also caused the stricken ship to float away from the Chinese coast into Japanese waters and its exclusive economic zone. The area is a rich marine ecosystem and an important spawning ground for numerous fish and sea creatures, and is also on the migratory pathway of many marine mammals including humpback and grey whales. Aside from the concern over environmental damage, the Sanchi disaster has also provoked some criticism of the authorities involved and their apparent inability to adequately deal with the aftermath. The criticism has bene particularly strong in Japan, which could now bear the brunt of any marine pollution. An editorial in the national newspaper Japan Times stated that “this incident must be (a) wake-up call to officials and public bodies in northeast Asia and compel them to better prepare for such accidents”. The paper reported that Chinese officials stated that “there was no precedent for this accident”, referring not only to the fact that this was the first time a tanker carrying this particular cargo had crashed, but also that conditions were far worse than anything the rescue teams had trained for, while the remote location of the ship meant rescue teams had to undergo a 20-hour round trip to replenish their equipment and supplies. Japanese authorities are also concerned about how soon any pollution reaches the country’s shores. According to the Japan Times, it was initially thought that any pollutants would take a minimum of months to reach land, if at all, but that forecast has since been revised to within a month. Should there be widespread pollution and fouling of Japanese beaches, the insurance implications could be severe. As was reported in Commercial Risk Online earlier this month, both boats involved in the original collision, the Sanchi and the US freight ship SF Crystal, have hull insurance in place. But it is the liability claims that are likely to have the most impact – Steamship Mutual P&I Club is believed to be the lead liability insurer for the Sanchi. As Rahul Khanna, global head of marine risk consulting with German insurer Allianz told Reuters: “The value of the cargo and the value of the hull itself would be one major impact but I think the oil pollution liability aspects are probably the largest elements.” The cause of the collision is still unknown, but the black box, or voyage data recorder, has been recovered and examination is due to begin this week. Whatever the outcome of this examination, the incident is also likely to intensify calls for stricter shipping safety standards, particularly in busy waters such as the East and South China Sea, such as a requirement for double-hulled vessels only or improved traffic separation schemes. It will also throw a spotlight on some of the mitigation measures in place for marine disasters. For one, the insurance of any Iran-based commercial ships has long been a complex issue due to some of the economic sanctions imposed on Iran. However, the landmark deal of 2015 between Iran and other countries had seen large reinsurance deals back in place for Iranian oil tankers. Whether any Sanchi-related claims will impact these arrangements remains to be seen but there are also likely to be some complications with any compensation due to Iran-based claimants or involving any Iran-based entities, given the reluctance of many banks to deal with such bodies due to sanctions. This is especially so in the US and could create lengthy delays in the claims process. There are also some political elements. The Japan Times editorial suggests that the trilateral cooperation framework between Japan, China and South Korea on maritime affairs must be revised. The paper also reports that the latest consultation between Beijing and Tokyo on maritime affairs only took place in December. One of the measures agreed from the talks was the resumption of the Japan China Shipping Policy Forum, which would in turn address areas of concern such as a search and rescue agreement between the two countries. However, the paper reports that the same agreement was announced during the previous round of talks almost six months prior.

Sanchi’s expanding oil slick raises environmental concerns

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