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Insurers Underwrite FSO Safer Salvage as Recyclers Express Interest

Safer insurance and recycling
Insurers wrote coverage for the salvage operation while a recycling group is expressing interest in the ship (photo courtesy of Boskalis)

Published Jun 12, 2023 3:27 PM by The Maritime Executive

The United Nations Development Programme (UNDP) announced the successful binding of insurance coverage for the FSO Safer salvage operation that is underway off the coast of Yemen. At the same time, a newly formed green recycling operation Elegant Exit Company stepped forward to express its interest in recycling the FSO Safer using its team in the Middle East. All of this comes as Boskalis reported at the end of last week that the inspections and preparations for the ship-to-ship transfer of the oil are progressing well.

UNDP is coordinating the salvage and removal operation having hired Boskalis’s SMIT Salvage. They are highlighting that the operation is highly complex and involves a range of environmental, geopolitical, financial, and humanitarian risks. UNDP said the significant support of engineers, naval architects, chemists, surveyors, and oil spill response organizations, as well as government entities and various UN agencies, is helping to reduce the operational risks. 

“Insurance became a critical element of enabling this salvage operation to proceed. Without it, the mission could not go forward,” said UNDP Administrator Achim Steiner. He noted the importance of finalizing the insurance policies, both in terms of financially de-risking the operation, and for protecting millions of lives, livelihoods, and aquatic species. 

UNDP highlights that complicating matters further, FSO Safer sits in waters that are designated as “high risk” by the Joint War Committee in London. Despite the problems, they are reporting that London’s Howden Group facilitating the process with the insurance industry. Howden, appointed in an open tender as UNDP’s broker, packaged, structured, and then syndicated the various risks across thirteen insurers in the Lloyd’s, London, and P&I markets.

“Without insurers offering their balance sheets to underwrite the residual financial risk, the mission could not progress,” said UNDP.

At the same time, Elegant Exit stepped forward to express interest in collaborating with the United Nations and taking charge of the vessel's recycling process. They highlighted the support from the Kingdom of Bahrain while saying that the Arabian Shipbuilding & Repair Yard (ASRY) in Bahrain is also extending its support and is ready and willing to accept the FSO Safer. ASRY they noted is the only facility in the Gulf region that possesses full licenses and certifications, meeting all international standards, including HKC (Hong Kong Convention) and EU SRR (European Union Ship Recycling Regulation).

Elegant Exit said it has a team of partners to address the environmental concerns and challenges in recycling the FSO Safer. They also said that SULB, Bahrain's steel producer was committed to ensuring that the carbon footprint of any new steel produced from the vessel is minimized as much as possible.

SMIT’s plan shows that it would be at least a month barring any developments or changes in the plan until the FSO Safer will be ready to explore recycling. They are still completing inspections and preparing the equipment and stabilizing the oil tanks for the ship-to-ship transfer. Then plan calls for cleaning the tanks to remove residue oil and transfer all the contaminants for storage along with the oil on Euornav’s VLCC the Nautica. The anchor process for the Nautica also has to be completed to secure it as the replacement for FSO Safer. The oil will remain aboard and the property of the Houthi government which controls that area of the country.