Havila Resumes Service While Norway Rejects Sanction Exemption

Norway’s Havila Kystruten resumed its coastal voyages today using the company’s second ship while it continues to seek a solution to an insurance problem created by the sanctions against Russia that is keeping its first cruise ship out of service. The company’s request for a temporary exemption so that it could obtain insurance for its first ship was turned down by the Norwegian Ministry of Foreign Affairs forcing the company to cancel an upcoming voyage for its first ship, the Havila Capella.

The challenges for Havila began in April when the EU included the Russian financial institution GTLK in the sanctions. The company had an agreement with GTLK and its subsidiaries to build four coastal cruise ships which it would be chartering and operating under the Norwegian registry. Havila was forced to cancel sailings aboard the Havilla Capella due to the sanctions and a loss of the liability insurance provided by Gard on the vessel.

Havila received a six-month exemption from the sanctions from the Norwegian government, but the company continued to face the lack of insurance on the vessel. They applied for an exemption to permit the vessel to be insured but the company said yesterday that the application had been turned down. According to Havila, the government decided that being able to take out insurance in itself would mean that a property is made available to the registered owner, which in the case of Havila Capella is GTLK.

“As the sanctions are set up, any insurance payment will not benefit the ship's registered owner. In the event of a total loss, other parties will receive the insurance payment,” said Havila while noting its disagreement with the government. “This is very disappointing and means that we still have an unresolved situation for Havila Capella,” said Bent Martini, CEO of Havila.

The company announced that it was canceling a third roundtrip of the vessel which had been due to sail on May 15 from Bergen. At this time, Havila Capella remains out of service with no clear solution to the problem. Havila has proposed buying the vessel out of its charter but that would also likely constitute a sanction violation as the company would be sending money to a sanctioned institution.

“We will not give up and will strive to find a possible way out of a very demanding situation. Until we have clarified the room for maneuver we are facing, it is difficult to provide any more information at this time,” said Martini.

The company’s second cruise ship, however, had not yet been delivered to GTLK so the Tersan shipyard in Turkey supplied a bridge loan to the company to acquire the second cruise ship directly. Havila is seeking to refinance its cruise operation before taking delivery on the third and fourth vessels due to be completed later this year.

The second cruise ship, Havila Castor, arrived in Bergen, Norway last week, and the crew, assisted by the crew from the Havila Capella and suppliers rushed to prepare the ship so that she could take over the passenger service. Havila Castor set off on Tuesday evening on her first, round voyage along the classic Norwegian coastal route from Bergen to Kirkenes.

The cruise ships are considered to be among the most environmentally friendly ships currently in operation. The ship's propulsion is a combination of natural gas (LNG) and a 6.1 megawatt hours (MWh)  battery pack, reported to be the world's largest battery pack on a passenger ship. Havila also plans the future blending of biogas to reduce emissions and next month, Havila Castor will sail into Geirangerfjord becoming the first ship to enter the world heritage fjord using just its batteries and producing no emissions.