Iran oil ship at risk of sinking as buyer seeks other supply

Hanwha Total Petrochemical Co bought alternative supply after a fire on board an Iranian oil tanker that was destined for the South Korean company. Crew members of the vessel were still missing following a collision in the East China Sea with another ship that’s left it in danger of sinking. The Sanchi is still ablaze and may explode after colliding on Saturday with the bulk carrier CF Crystal about 160 nautical miles off the coast of Shanghai, Chinese state media reported, with images showing the ship shrouded in thick black smoke. China, South Korea and the US sent vessels and planes to search for Sanchi’s missing crew – 30 Iranians and two Bangladeshis, the Associated Press reported.
This handout from the Transport Ministry of China taken on January 7, 2018 and released yesterday, shows a Chinese firefighting vessel spraying water on the burning oil tanker Sanchi at sea off the coast of eastern China. Sanchi was ferrying 1mn barrels of condensate – a hydrocarbon liquid that’s used to make petrochemicals – to Daesan, according to a Hanwha Total spokesman.
One of the 32 missing sailors was found dead, Tasnim News Agency reported, citing Mohammad Rastad, the head of Iran’s Ports and Maritime Organization. The ship was throwing off poisonous gases, hindering rescue efforts, Tasnim said, citing Sirous Kian-Ersi, managing director of National Iranian Tanker Co. Sanchi was ferrying 1mn barrels of condensate – a hydrocarbon liquid that’s used to make petrochemicals – to Daesan, according to a Hanwha Total spokesman. The firm plans to use its stockpiles as a replacement for the supply, and is considering whether to make additional purchases, he said, asking not to be identified because of internal policy.
Hanwha yesterday also issued a tender and bought five 25,000-metric-tonne cargoes of naphtha – another feedstock involved in petrochemical production – for delivery next month, paying a premium of about $10 a ton over benchmark prices for four of the shipments. It didn’t issue tenders to buy a similar grade of the oil product for delivery in January, according to data compiled by Bloomberg. Hanwha Total purchased a total of about 64mn barrels of condensate in the January-November period last year, of which 39.4mn barrels came from Iran, according to the state-run Korea National Oil Corp data compiled by Bloomberg.
The Panama-flagged Sanchi is owned by state-run NITC and departed Assaluyeh port on December 16 for Daesan, according to data compiled by Bloomberg. All aboard the CF Crystal, a Hong Kong-registered cargo vessel that was carrying grain from the US to China, were rescued, according to China’s Ministry of Transport, which said oil was on the water. Hanwha plans to claim compensation for the cargo’s loss under its own insurance programme, according to the South Korean company’s spokesman.
The Sanchi has full protection and indemnity insurance through the Steamship Mutual P&I club, according to its executive chairman Gary Rynsard. The incident is being treated as a “normal casualty” although it is too early to assess the size of any possible claim, he added. The cover spans oil pollution, damage, collision, death and injury to the crew. Iran, the third-largest oil producer in the Organization of Petroleum Exporting Countries, sells most of its crude and condensate to Asia, exporting about 2mn bpd. Condensate is a light oil produced along with natural gas, mainly at Iran’s offshore South Pars fields. The port of Assaluyeh is the main loading point for Iranian condensate.
Sources and photo-creidts: Bloomberg, Gulf Times