Singapore faces insurance problems after oil spill

Singapore faces insurance problems after oil spill

LONDON (Reuters): Singapore, scene of one of the worst oil
spills to hit southeast Asia, is not a member of the
International Oil Pollution Compensation (IOPC) agreement and
will only be eligible for a limited payout under a separate pact
if the disaster causes economic or environmental damage to the
island state, officials said Friday.

Joe Nichols, technical manager of the International Tanker
Owners Pollution Federation (ITOPF), said Indonesia and Malaysia
would be eligible for up to $86 million between them in insurance
compensation, while Singapore could not be awarded more than
$12.4 million.

The IOPC groups countries, while the IOTPF is a federation of
shipping companies.

Some 25,000 tons of fuel oil spilt into the Singapore Strait
on Wednesday after the 140,218 dwt tanker Evoikos was in
collision with the empty very large crude carrier (VLCC) Orapin
Global.

Mans Jacobsson, director of the London-based IOPC Funds, told
Reuters Malaysia and Indonesia were members of his organization,
but Singapore was not. "Singapore will not be compensated."

The managers of the Thai-flagged VLCC said the Cyprus-
registered Evoikos was to blame for the collision, and that the
Orapin Global was on a correct course through the strait, one of
the busiest shipping lanes in the world.

A spokesman for the managers of the Evoikos in London declined
to respond to the charge by Denholm Ship Management Ltd.

ITOPF's Nichols said that under complex international
compensation arrangements, Singapore was entitled to less
compensation than Indonesia and Malaysia because although it was
a signatory to the 1969 Civil Liability Convention, it had not
signed up to the 1971 Fund Convention.

Nichols also said the weather and wind direction would be
crucial factors affecting the environmental damage caused by the
spill.

It had occurred at a transitional period between the northeast
and southwest monsoons.

If northeasterly winds prevailed, the oil would be blown onto
the Indonesian coastline, but if the wind direction was mainly
southwesterly it much of it would be flushed into the South China
Sea and cause less of an environmental disaster.

Nichols also noted that marine fuel oil is heavy and
persistent, unlike light crudes which can evaporate quite quickly
in stormy weather.

He said that even in ideal conditions, no more than 15 to 20
percent of the oil was likely to be recovered.

Nichols and Jacobsson both said it was unclear why Singapore
had not decided to protect itself fully against oil spills as it
is one of the world's biggest refining centers.

Some 30 percent of the 600 ships passing through the Singapore
Strait each day are tankers, and 80 percent of Japan's crude
imports go through the strait.

"I'm sure this spill will have concentrated their minds," said
Nichols.

Roger Kohn, spokesman for the London-based International
Maritime Organization, said there had been intensive discussions
with southeast Asian nations on preventing oil spills in the
region.

There had been proposals to introduce a mandatory ship
reporting system and to establish the latest radar and other
navigational technology, but the cost was a problem.

He said there had also been proposals to divert shipping
further south, away from the shallow and narrow Singapore Strait,
which is only 25 metres (80 feet) deep in places. A fully laden
VLCC has a draft of 30 metres (100 feet).

But diverting traffic would add two days' journey for a tanker
bound for Japan, and would potentially move the problem elsewhere
rather than solve it, Kohn said.

"Everyone's aware of the problem, but you can't just stop 600
ships a day. You can't cause the entire Japanese economy to
collapse because of the danger of oil pollution," he added.