LONDON – London’s marine insurance market has added Libya to a list of areas deemed high risk as violence escalates in Africa’s third-largest oil producer, a senior market official said. Heavily armed rebels clashed with forces loyal to Muammar Gaddafi on the outskirts of the key oil terminal of Ras Lanuf as the head of Libya’s rebel council vowed “victory or death”. “The emerging risk had reached a level where as a matter of prudence insurers will require notification from vessels calling to Libyan ports or waters,” said Neil Roberts, a senior technical executive with the Lloyd’s Market Association (LMA), which represents the interests of all underwriting businesses in the Lloyd’s market.
“On the issue of pricing, that’s a matter for individual negotiation on a voyage-by-voyage basis. It’s likely that things will change on a day-to-day basis,” he told Reuters. Overseas Shipholding Group, the world’s No 2 independent tanker company, told Reuters this week that some tanker rates had tripled as owners jack up rates and port operators struggle to load crude due to the uprising.
The Joint War Committee, which groups syndicate members from the LMA as well as representatives from London insurance company market, added Libya to a list of areas it considered high risk for merchant vessels and prone to war, strikes, terrorism and related perils on Thursday. Other countries on the list include Iran, Pakistan, Ivory Coast, Somalia and Yemen.
The London marine insurance market plays an influential role in the global industry. “With reports of air strikes, if things go off target or even if ships are targeted deliberately, then underwriters will have quite serious concerns about their exposure on any vessels there or trying to call there,” Roberts said.
“It’s a reactive list, so if things improve to a point where underwriters are comfortable, then certainly Libya will come off,” he said. Rebels on Friday attacked a military base on the outskirts of Ras Lanuf, a major oil port on the Mediterranean Sea, which has a refinery, pipelines and a terminal, and the army responded with artillery fire and helicopters firing machineguns.
Maritime sources said there were no indications so far that tankers had been affected by violence across Libya. “If aerial forces decide to bombard shipping interests, the risk will change considerably,” said John Drake, senior risk consultant with security firm AKE Ltd. “But at present, pro and anti-regime forces are not expressing any specific intent to target the international shipping sector.”
