Sanctions against Russia increase the threat of an oil spill
The managing director of one of the world’s largest shipping insurance companies has warned that sanctions against Russia increase the risk of a catastrophic oil spill.
Insurance experts consider the area of greatest concern to be the straits between the Baltic Sea and Denmark and Sweden.
Last December, the Turkish government required insurance coverage for crude oil tankers passing through the Strait, and the traffic created by the tankers caused severe congestion in the Bosphorus.
CONCERN ABOUT ‘SOCIAL AND ENVIRONMENTAL DISASTERS’
Rolf Thore Roppestad, chief executive of Norway-based insurance company Gard, said the sanctions have deprived thousands of ships of insurance company liability: “A social and environmental disaster is looming. “This should be a big concern for all of us,” he said.
Unrest in the energy sector has also increased due to the sanctions. Potential threats were also increased by the fact that smaller and less experienced traders were transporting crude oil over longer distances in older ships and with unknown levels of insurance.
COMPANIES WITH EXPERIENCE CANNOT MAKE INSURANCE
Over 90 percent of the world’s ocean shipments were made by companies that are members of the ‘International Group’, which consists of large insurance companies. However, Russian products were no longer insurable by these companies due to the sanctions.
Ropestad also expressed concerns about the reliability and capacity of insurance companies outside of this group. Speaking to the Financial Times, Roppestad estimated that since the start of the Russia-Ukraine war, thousands of ships have traded precariously around the world.
IF SOMETHING IS WORTH IT…
Roppestad said that after a potential accident, “no one will be there to pay” and the risk of a worst-case scenario is much higher. “I am not convinced of their ability to handle an accident effectively if something goes wrong,” Roppestad said, noting that Russian fleets are insured by local insurance companies.
According to insurance experts and ship records, many ships that evade sanctions rely on other insurance companies in Russia and the Middle East. Iran and Venezuela have also long used their own shadow fleets of several hundred ships to avoid sanctions.