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Oil marketers are feeling the pinch of rising piracy attacks as ship owners charge higher premiums to sail to Mombasa.
Oil marketers are feeling the pinch of rising piracy attacks as ship owners charge higher premiums to sail to Mombasa.

“Shipping operators will face higher insurance premiums due to the increased risk of piracy in areas such as the Gulf of Aden and the east coast of Africa,” Petroleum Focus Consultants director George Wachira said.

Mr Wachira said that the piracy threat could discourage ship owners from sailing the Indian Ocean route, disrupting availability of oil products both locally and regionally.

According to another consultant, marketers are now paying higher freight charges for delivery of crude oil and refined fuel to Mombasa.

“Marketers are incurring additional costs of $500,000 (Sh40 million) to $1 million (Sh80 million) to hire a tanker of 80,000 metric tonnes as piracy has spread further,” said Mr Robert Shisoka of Hydrocarbons Management Consultants.

Mr Shisoka said firms incur additional cost of $6.25 (Sh500) to $12.5 (Sh1,000) to deliver one metric tonne of crude oil to Mombasa as tankers sail farther away from the normal course to avoid the Somali pirates.

Changes course

A tanker sailing from the Middle East first sets sail towards India, then changes course towards Comoros and finally heads to Mombasa, taking about 11 days instead of the normal one week.

On October 23, Somali pirates seized a Singapore-flagged liquefied petroleum gas (LPG) tanker sailing to Mahe in Seychelles.

The vessel mv York, which had a crew of 17, was hijacked by Somali pirates about 166 kilometres from the Mombasa port.

This followed another attack on a cargo ship operated by Germany’s Beluga Shipping Company.

The company said the ship was heading to Richards Bay in South Africa from the United Arab Emirates.

Ships have marine (hull) insurance to cover risks, including grounding or damage from stormy seas. War risk covers acts of terrorism and increasingly piracy, while a third type of policy covers crew.

“The war risk policy includes a clause that requires extra insurance charges for ships that venture into areas considered as high risk because of geopolitics and piracy among others,” said Mr Wachira.

According to International Maritime Bureau, in the last nine months, pirates boarded 128 ships and fired at 52.  A total of 70 vessels reported thwarting attacks.

Pirates used guns in 137 incidents and knives in 66, killing one crew member, injuring 27 and taking 773 hostage.