Oil spills like the Exxon Valdez incident off Alaska, Khark 5 off Morocco, and American Trader off California are concentrating the minds of oil companies on environmental and public relations repercussions from their world tanker operations.
One of the biggest oil transporters, Royal Dutch/Shell Group, has moved to ensure that tankers on charter to the company are adequately insured against the potentially crippling costs of cleaning up a major spill in a sensitive area and meeting any liabilities that might emerge from the incident.
Shell has a global interest in pollution-free tanker operations. On any day, the company has 50-60 of its own vessels on the high seas, 40 tankers on time charter, and another 40 on charter for single voyages.
BEEFED UP COVERAGE
Shell International Marine Ltd., London, has told owners of all tankers carrying crude or products for the company an additional pollution insurance clause has been inserted into contracts for voyage and time charters. It will take effect immediately. In the future, the clause will become one of the standard terms for obtaining business from Shell.
Tanker owners are required to show they have oil pollution insurance coverage of $700 million that will remain in place during the time the vessel is working for Shell.
The International Group of P&I (protection and indemnity) Clubs, which cover owners for risks other than damage to tanker hulls, increased the oil pollution coverage to $500 million from $400 million effective Feb. 20.
At the same time, the clubs offered members an additional voluntary portion of oil pollution coverage of $200 million to push total coverage to $700 million.
In a letter to tanker owners, Shell said responsible owners would want to acquire this additional coverage. And it reminded owners that recent events had shown that costs of pollution prevention/cleanup can on occasion substantially exceed the coverage presently available.
Oil pollution is also very much on the mind of the Royal Dutch/Shell Group's British affiliate, Shell U.K. Ltd.
The company has the dubious distinction of being the subject of the first major prosecution by Britain's newly formed National Rivers Authority.
RIVER MERSEY SPILL
The case arose over Shell's spill of 157 metric tons of very heavy Venezuelan crude into the River Mersey in Northwest England from a pipeline linking an import terminal to the 262,000 b/d refinery at Stanlow, Cheshire.
Cleaning up the mess in the Mersey estuary cost Shell U.K. 1.4 million ($2.38 million). The court case cost it another 1 million ($1.7 million) in fines, a substantial penalty by U.K. standards.
Imposing the fine, the judge criticized Shell for flushing a further 7 tons of crude out of the pipeline after the initial leak, against the advice of all local authorities.
The judge said the fine would have been higher but for Shell's good record on conservation and its support of the arts and other worthwhile causes.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.
