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Friday, August 23, 2013

'Desh Shanti' detained illegally by Iran - on grounds of pollution...

In my post on Indian interest in Persian Gulf, I had started with - “Desh Shanthi” – would literally mean ‘peace of Nation’…but had not dwelt anything later…. Desh Shanthi is a ship which is troubled waters making news !

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We read so much about pollution now-a-days. Pollution is the introduction of contaminants into the natural environment that cause adverse change.  Pollution can be caused by chemical substances, noise, heat, or light.  Pollutants, the source can be either foreign substances/energies or naturally occurring contaminants.  Many water bodies are polluted ~ water pollution is the contamination of water bodies  occurring due to pollutahts directly or indirectly discharged into water bodies without adequate treatment to remove harmful compounds. Water pollution affects plants and organisms living in these bodies of water. Petrol / oil slick is a major threat to water bodies. 

The UN and European sanctions on Iran and subsequent non-support of reinsurance has affected coverage and eventually import of crude from IranIndia has been a major consumer from Iran and the trade relations between the Nations have been good….. but for this incident -  recently, Iranian naval authorities detained an Indian oil tanker carrying Iraqi oil through the Persian Gulf on its way to India.  The  vessel in news is ‘MT Desh Shanti’ a 158,030- DWT oil tanker built in 2004,  owned by the Shipping Corporation of India ~ Iranian authorities  allege that  the Suezmax crude-oil tanker was polluting Iranian waters, though the company denies the allegation. Suezmax tankers are medium-sized oil tankers capable on average of carrying 1 million barrels of oil. Further the ship owners claim that the ship was not in the vicinity of Iranian water."

Reports quoting Nima Pourang, head of the maritime pollution department of the Iranian Environment Protection Organization, stated that the tanker had been detained because it discharged its oily ballast water 30 miles away from Iran's Lavan island, in Persian Gulf. That discharge, "caused a 10-mile length oil stain on the sea," and experts from Iranian ports were inspecting the tanker, he told Fars. The Marine Traffic commercial ship-tracking website showed the company's MT Desh Shanti vessel, at 0605 GMT Thursday, was traveling southeast at a speed of 11.5 knots off Iran's coastline in the Persian Gulf.

Indian authorities state that Iran has detained the ship without any provocation, especially when the United Nations Convention of the Laws of the Sea 1982 guarantees passage of the ship. Iranian vessels had been given blanket permission to sail in Indian waters after sanctions imposed by the European Union and the United Nations on Iranian crude imports made it nearly impossible for Indian vessels to get protection and indemnity cover. The latest development has taken the shipping industry by surprise. Most are reading this as a pressure tactic by Iran to discourage India from importing crude oil from other countries. India had considerably brought down its crude purchases from Iran following the sanctions and the cargo, if at all, was being brought in Iranian vessels only. Earlier this year, the SCI also decided to dissolve its joint venture with the Islamic Republic of Iran Shipping Line, Irano Hind Shipping. The purpose of the JV in 1970s was to boost economic ties between the two countries.

  It is learnt the SCI’s ship had received the clearance from the port state control officer before leaving Iraq.  The detention and the act of Iranian Revolutionary Guards getting on board the vessel have become a great cause of concern for the Nation.  Reacting angrily to the virtual hijacking of the Indian oil tanker MT Desh Shanti by Iran, New Delhi has provided proof that the ship was at least 400 nautical miles away from the area it is being accused of polluting. The ship was forcibly intercepted by the Iranian Revolutionary Guards Corps (IRGC) in the Persian Gulf last week and taken to the Iranian port of Bandar Abbas. New Delhi has also told Tehran that the charge that oil spill from MT Desh Shanti polluted Iranian waters was absurd because the vessel was not carrying any crude at that time. In fact, the ship was carrying sea water as ballast when the IRGC intercepted it in international waters and forced the captain to move it towards Bandar Abbas.

These make it apparent that Tehran is trying to bully New Delhi unsatisfied with the decrease in quantum imports.  As a natural corollary, India had to move towards Iraq and this is more unacceptable to Iran. More worrying news were to follow as after the impasse of illegal detention, there are reports suggesting that Iran wants $1m as guarantee money for releasing the tanker.

All along India had considered Iran a friendly country with good trade relations and had supported despite UN Sanction but still are facing this conflict.   The Wall Street Journal quoted an official of the Shipping Corporation of India (SCI) on Wednesday as saying that Tehran wanted the guarantee money as compensation for the environmental damage allegedly caused by the ship. Maintaining that the detention was purely a technical issue, Iranian authorities continue to insist that the ship caused widespread pollution in Iranian waters on July 30,while it was on its way to Iraq. Iran claims that they followed the alert of the Bahrain based Marine Emergency Mutual Aid Centre (MEMAC).

Here is something more on the Insurance angle extracted from……  the demand by Iran for a letter of undertaking worth $1 million to release an Indian ship has put the ship’s owner and its insurer in a tight spot and could well test the sanctions regime imposed by Western governments on the West Asian country.  The article states that in shipping insurance, such letters are always given by the ship’s insurer.  MT Desh Shanti, the detained double hull tanker owned by Shipping Corp, was reportedly  insured with The Steamship Mutual Underwriting Association (Bermuda) Ltd.  The Steamship Mutual is a member of the International Group of Protection and Indemnity Clubs (I G Clubs).

The letter of undertaking would guarantee payment for clean-up operations and to me it contradicts our stand that the vessel was not polluting.  Western nations imposed sanctions on Iran because they suspect Tehran is developing nuclear weapons. Iran says its nuclear programme is intended for peaceful purposes. The European Union has banned the purchase, transport, finance and insurance of Iranian oil since  July 2012. Following the ban, IG Clubs has stopped providing third party liability cover to ships transporting Iranian crude. The 13-member IG Clubs, a London-based group, insures close to 95% of the world’s tankers against claims involving pollution damage and wreck removal. Each of its members is termed an IG Club. The news report also states that IG Club could give such a letter of undertaking if the voyage was not covered under sanctions.  MT Desh Shanti was carrying Iraqi crude and is not subject to sanctions. “In such a case, it would be treated like any other voyage, provided there are no international sanctions against the country asking for the letter of undertaking. Here, the case is complicated because there are sanctions against Iran which has sought the letter of undertaking.

For Insurers as also for most other entities, there has to be a legal mechanism even when they chose to pay and recipient has to be an approved party.  The Insurers might find it too difficult to consider any payment until the legality of the detention and the cause of the same is established.  This time as the proverbial ‘devil and deep-sea’ ~ Indian vessel  is entangled in the “cross-fire” of a border dispute between Iran and Iraq.

India is the world’s fourth-largest oil importer and was until June 2012 the second biggest customer of Iran, the world’s fifth biggest oil producer. Iran has been struggling to sell its crude in the face of sanctions. Iraq has now overtaken Iran as the biggest supplier of crude to India.
 Ms Praneet Kaur, Minister of State MEA receiving Iraqi PM
At a time when the impasse is troubling India,  Iraqi PM Nouri Al Maliki landed on a 3 day official trip.   Official statement would read that the two countries are keen to enhance their economic relations and are looking to sign an agreement on energy cooperation during what is the first visit at this level by a leader of either country in 38 years.  The visit is the first high-level bilateral trip in 38 years. Then Indian prime minister Indira Gandhi visited Iraq in 1975.  Iraq seeks to become the highest supplier of crude to India

With regards – S. Sampathkumar

23rd Aug 2013.

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