Piracy drives Indian coal importers away from West Coast.

Recent reports say that Indian coal buyers are looking to Russia and Australia for the much in demand commodity, because Somali pirate attacks on ships from South Africa and further west now involve higher risk and insurance costs that make the enterprise near unviable. The recent declaration by Lloyds that says the West Coast of India lies in a war zone will only reinforce buyers decisions, warn experts.


The move comes as analysts warn that Somali pirate attacks will widen, get even bolder, more organised and aggressive. "Given the amounts they have made recently, I would anticipate ever-better armed and trained pirate crews at the top end as well as a proliferation of wannabes at the lower end," said J. Peter Pham, Africa Director with U.S. think tank ‘The Atlantic Council’. Those in the business say that NATO actions in Libya will continue to divert naval resources away from the Indian Ocean, making sailing through this region even more hazardous. "NATO & EU NAVFOR were struggling with finding some slack to send some ships after pirates in the 'deep' Indian Ocean. After Libya, that's not going to happen," said Michael Frodl, founder and head of maritime risks consultancy C-LEVEL.

Indian coal demand has been increasing exponentially in recent times. More than half its electricity generation capacity is coal-based and growing as the country sets up more power plants to feed the never ending demand for power. Coal India, the world’s largest coal producer, supplies 80 percent of this demand, but its production targets this year have dropped 7 percent. The Government had said last month that Indian coal imports could shoot up 70 percent in 2011/12 to 142 million tonnes. Much of this demand has been traditionally fed by South Africa- close to a third of that country’s entire coal exports came to India last year.

But that is changing. "We are having to evaluate not just the least risky routes to take from South Africa to India but also the best Indian ports to discharge and also now, where are the least risky places to pick up a vessel to begin its voyage to South Africa," said an official at Indian coal importer Comtrade. With piracy hitting the Indian West coast, traders are looking at South and East India for unloading coal, and at Russia and Australia instead of South Africa to buy. Many importers say they have already done so."Piracy is a real and significant cost added to South African coal - around $2 a tonne. Given the quantities being shipped, this is a lot of money," the Comtrade official said. An official at Coal and Oil, a large Indian importer says that there are other factors that influence the decision. "Even the cost of bunker fuel at Richards Bay is higher than at Newcastle, so we're all looking hard at Australia and to a lesser extent, Russia."

Unfortunately for Indian importers- and not just of coal- security experts expect piracy to spread to the Southern coasts of India and Sri Lanka and east to Malacca. "I do expect to see more attacks on the Cape to Malacca as well as Cape to Bay of Bengal -- because we expect to see more attacks south of India and Sri Lanka," said C-Level’s Frodl. If this happens, buying coal from Australia may not help too much.
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Pirates release ship but keep Indian crew hostage

“We will keep these Indians until the Indians release our colleagues”.

In developments that promise to dramatically escalate the piracy crisis, Somali pirates have released a bitumen carrier but have kept back some- reports suggest seven- of the Indian crew as hostages. The Associated Press says that a pirate said that “the Indian crew members' hostage ordeal is being prolonged in retaliation for the arrests of more than 100 Somali pirates by the Indian Navy”.

"We decided to keep the Indian because India is holding our colleagues," pirate Hassan Farah said. "We released the other crew members who sailed away from our coast. We will keep these Indians until the Indians release our colleagues."


Another pirate said, “We need the Indian government to free our men so that we can release their citizens."


The Panamanian registered 3,884-deadweight tonne MT Asphalt Venture was on a passage from Mombasa to Durban when it was taken on September 29 last year. Unconfirmed reports say that a ransom of $3.6 million was paid before she was released on Friday. "We have received $3.6 million early this morning for the release of the tanker," said a pirate calling himself Ahmed. The ship is managed by Mumbai-based OMCI Ship management Pvt Ltd and owned by Bitumen Invest AS of the UAE, according to media reports.


Earlier reports had said that all Indian crew were kept back, but it now appears that all the 15 crew on the ship were Indians, and 8 of them have been released along with the ship. Six officers and one rating are still hostage. The pirates claim that the decision to hold the Indian crew back was taken collectively by the pirates, and that the hostages are being moved on land.


The Indian authorities have been especially aggressive in authorising the Indian Navy to pursue and fire on mother ships; around 120 pirates, mostly from Somalia, are believed to have been apprehended by the Indian Navy over the past few months and are detained in India. In just one incident last month, the country’s navy had captured 61 pirates and brought them ashore to face the law. Many were teenagers.


Stories of Somali pirates targeting Korean ships has been doing the rounds for some time, after Korean commandos retook a Samho vessel and either killed or apprehended the pirates on board. The murder of four American yacht sailors off Somalia this year is also seen by some as a reaction to the US navy’s actions in hostage situations, including those in the Maersk Alabama incident.


Some analysts have been critical of the Indian Navy’s recent aggressive posture, saying that firing on mother ships that have hostage crews aboard, often being used as human shields, would put crews at grave risk of torture or death and dramatically escalate violence against them. It appears that these fears have not been unfounded.


This weekend’s pirate action means that there is now a major change in their normal practice of releasing crews and ships after ransoms have been paid. What the pirates seem to be saying is that they will henceforth target crews depending on the anti-piracy actions that their governments and navies take, and that pirates will target any country’s sailors if that country’s navy is aggressive. Pirates will become even more hostile and violent with hostages, analysts warn, saying that the situation has escalated beyond control.


These unacceptable developments also mean another thing: that sailors who are taken hostage will remain on tenterhooks even if ransoms have been paid and their ships are about to be released. Their ordeal may yet get worse.

Post tsunami, floating debris a maritime hazard

Japanese fisheries, food exports hit as contaminated water dumped in ocean.

Gigantic islands of rubbish in the Pacific- that include entire houses, bodies, scrap, boats and cars - have been swept out to sea after the earthquake and tsunami in Japan last month. This huge patch is reported to be heading west slowly, causing chaos in shipping lanes as vessels try to keep clear to avoid damage to hulls or the fouling of propellers. The largest floating island is said to be sixty nautical miles long and covers an area of 2.2 million square feet, warns the US 7th fleet on monitoring duty. Observers have seen whole buildings, boats and cars floating off the coast of Eastern Japan.

"It is very large and it's a maritime hazard," Lieutenant Anthony Falvo, deputy public affairs officer for the US Navy's 7th Fleet, told the Daily Telegraph. "The damage it can cause is anything from piercing the hull of a ship to leaving dents or getting wrapped up in propulsion systems." The US navy is involved, along with construction firms from Japan, to see if this ocean debris can be cleaned up. The US is particularly concerned because scientists have predicted based on ocean and weather patterns, that the debris could reach the US West coast in three years, and the Hawaiian Islands in two. Modelling done at the University of Hawaii confirms this, with experts saying that some of the debris could break up in storms before it reaches the coast.

"In a year, the Northwestern Hawaiian Islands Marine National Monument will see pieces washing up on its shores. In two years, the remaining Hawaiian islands will see some effects," the researchers say. "In three years, the plume will reach the U.S. West Coast, dumping debris on Californian beaches and the beaches of British Columbia, Alaska and Baja California. The debris will then drift into the famous North Pacific garbage patch, where it will wander around and break into smaller and smaller pieces," they said, warning that the bigger patch thus created would wash up ‘stronger and longer lasting’ in Hawaii after five years.

Meanwhile, Japan’s neighbours, led by China, are getting increasingly concerned at the 11.5 million liters of radiation-contaminated water that Japan has dumped into the Pacific Ocean. China urged its neighbour last week to "act in accordance with relevant international laws". The Japanese say that the contaminated water poses no risk to human health, and it did not consult its neighbours before the dumping. The Chinese have already asked Japan to “provide China with timely, comprehensive and accurate information." Xinhua, the Chinese official news agency, has reported small amounts of radioactive Iodine-131 on spinach plants in Beijing and Tianjin, but officials said that the trace amounts posed no danger.

To add to Japan’s woes, some countries, including the US, China and Singapore, have blocked food imports from some parts of Japan amidst radiation contamination fears. Many are concerned about high radiation levels of Iiodine-131- 4000 times the legal limit was detected in one measurement. Fishing has been banned within 20km of Fukushima, the affected nuclear plant. Observers say that the deliberate dumping of radioactive water into the sea- which has angered the powerful fisheries industry in Japan- may result in compensation claims of more than 10 trillion yen ($120 billion) against the operator TEPCO. Environmentalists have expressed grave concerns at the threat to marine life in the region due of water contamination.

India has imposed a blanket ban on all food imports from Japan. An Indian government statement said all food imports from Japan "stand suspended with immediate effect" for three months, or until "credible information is available that the radiation hazard has subsided to acceptable limits".

Some good news amidst the havoc: A dog rescued from drifting ocean debris was reunited with her owner last week at an animal shelter in Japan. The owner of the 2-year-old ‘Ban’ happened to see the rescue operation on television, and was obviously thrilled to find out that the pooch was alive.

Billionaire Branson’s ‘Virgin Oceanic’ will plumb deepest ocean depths.

The final frontier: tourism at the bottom of the sea?

Billionaire Richard Branson announced plans this week that will see him and others pilot a one of a kind single person submarine to the deepest points of the earth’s five oceans, including the 36,200 foot Mariana’s Trench, where the pressure is over a thousand atmospheres. "The last great challenge for humans is to explore the depths of our planet's oceans," he said at a press conference at the Newport Harbor Yacht Club in California. A news release said there was only one frontier left for Branson's Virgin brand, which has reached "the seven continents of the Earth, up into the jet stream and soon, even into space."

Branson’s ambitious project- called Virgin Oceanic- will use the only submarine that boasts of ‘full ocean depth’ capability today. The one person sub has an operating depth of 37,000ft (7 miles) and is capable of operating for 24hrs unaided. Once fully descended, the submarine’s hydroplanes (the equivalent of wings for submarines) and thrusters will allow it to ‘fly’ up to 10km over the ocean floor whilst collecting video and data, something submersibles could only dream of.  The sub uses ‘flying wings’ to propel it downward, mirroring the way dolphins and rays swim.

Virgin Oceanic will, over the next two years, go to the bottom of the Mariana’s Trench in the Pacific Ocean, the Atlantic's Puerto Rico Trench and South Sandwich Trench, the Diamantina Trench in the Indian Ocean and the Molloy Deep in the Arctic Ocean. Scientists will research the tectonic plates at the bottom of the oceans and hope to later bring back water, microbes and small creatures from the depths. “We have 800 pounds of moon rocks and not one drop from the bottom of the ocean," bemoans Virgin’s Alex Tai. The submarine pilots know that the dives are dangerous- they will be down at the bottom of the ocean for hours and rescues will be impossible. At those kinds of operating depths, each individual part of the sub must be able to withstand enormous pressures, 1500 times that of an airplane.

Branson and his team of scientists, explorers and adventurers will “collate data and catalogue life forms that will never have been seen before by human eyes and are unknown to science”, he says. Branson, known for his flamboyant lifestyle, is also partnering with Google. Google Maps will stream his team’s dives, which will also be added to Google Earth. Virgin says that the project will break up to 30 Guinness world records, and will produce “previously unachievable detail and documentation of one of the most unexplored areas of Earth.”  Virgin’s research partners include the Scripps Institution of Oceanography in San Diego, Monterey Bay Aquarium Research Institute and Moss Landing Marine Labs in Northern California.

 “Each dive will be the world’s first solo dive to the bottom of the five deepest trenches in the world” Branson blogged in early April. “We will discover a whole new world. A world full of undiscovered species and for those who dream, a world where Spanish galleons have lain unplundered for centuries!”

True to form, Branson has ambitious business plans with the project. Later, he plans to roll out a $17 million 18 foot  submarine that will carry a half dozen tourists who will pay an undisclosed- but extravagant- fee to tour ocean depths. Branson already has a space tourism venture on in New Mexico, USA, from where he expects the first suborbital flight to take off later this year; he expects many of the people signed up to tour space will sign up with Virgin Oceanic too.

Professor Rober Rieich from Berkeley says that the super rich are getting richer even in an economy that is struggling in the US, and Virgin Oceanic should not face great difficulty in selling tickets to wealthy wannabe ‘aquanauts’ .  "People who are selling to the super-rich basically can't lose," he says. "Richard Branson can dig a hole to the center of the Earth and charge a million dollars a day to go through it and he'd find people to take him up on the offer."

Indian Government wants to help create jobs for Somali pirates

Is this appeasement of ‘out of control’ criminals?

Even as reports out of the UK say that the country is upping its budget by 9 million dollars to fight piracy, Tehelka in India reports that New Delhi is planning to engage Somali pirates by ‘engaging them in projects and creating jobs for them in Somalia’.

Indian Minister for External Affairs SM Krishna said after meeting Somali Deputy Prime Minister Abdiweli Ali in Delhi recently that job-generating projects in Somalia would help tackle piracy.“We have suggested to the Somali government through its Deputy Prime Minister that they should endeavour to create more jobs by taking up projects which the Government of India would be willing to help in implementing," Krishna is quoted as having said. As for the 53 Indians the government says are held hostage by pirates-unofficial figures are much higher-, Krishna commented, “"I did bring about the issue of 53 of our hostages with the pirates. And I have requested the good offices of the Somali transitional government be used for the release of these Indian hostages." Krishna also revealed that about 100 Somali suspected pirates were in Indian custody, where “the law would take its course.”


The Ministry of External Affairs says that 124 Indians have been released by pirates in the last three years: 21 in 2008, 34 in 2009, 56 in 2010 and 13 in 2011.


Elsewhere, Britain said that it was throwing in an extra $9 million to fight piracy in the Indian Ocean amid warnings that hijacking is increasing beyond control. With 150 ships having been hijacked in the last two years and well over 500 hostages being held currently. A London law firm says that matters were “deteriorating at every level”. "The number of crew and vessels captured is increasing, size of ransom is increasing and the length of time of capture is increasing," says Richard Neylon, a security expert involved in the release of the Chandlers who were taken from a yacht by pirates in 2009 and held hostage for over a year in Somalia. Neylon said that nowhere in the Indian Ocean was safe.


Security company Risk Intelligence says that there has been a noted increase in the use of violence and firepower deployed against ships. In the last six months, reports of RPG fire have increased; in one case in November, a pirate vessel was seen for the first time with a heavy machine gun fixed on deck. Pirates are engaging shipboard armed teams in direct fire today, a departure from the time when warning shots fired in the air were enough for an attack to be aborted. Risk intelligence says that pirate strategy and tactics are changing, with reports of them training on hijacked ships on ways to breach citadels. “There will be new additions to patterns in trends and tactics on behalf of the pirates and the need to adjust to combat. Unfortunately, however, it will be another round of much of the same on land – a lack of progress.”

A Times report in the UK says that the crew are held in ‘horrific conditions’ by pirates in Somalia, with the average period of capture having gone up to six months. During this time, the crew typically ends up with “a range of physical illnesses including skin diseases and malnourishment, as well as psychological trauma”. The report does not mention the torture of crews, their use as human shields or the regular threats of execution hostage crews routinely face.


Analysts say that Krishna’s diplomatic statements following the Somali Deputy PM’s visit to India do not count for much, given that the Transitional government in Somalia has ceded large swathes of the country to terrorist groups and pirates, some of whom are in cahoots. Moreover, any initiative that presumes to think that the creation of jobs in coastal areas will wean away the youth there from the criminal enterprise of piracy, where millions of dollars are involved in ransoms, is just wishful thinking.


Krishna’s statements seem to reflect a desire by the Indian authorities to be seen to be doing something and not much more than that. Perhaps Mr Krishna’s External Affairs Ministry should be concentrating more on its citizen seafarers- including their lives and jobs- instead of finding misguided ways of creating jobs for Somali pirates.

LNG shipping sees long term demand after Japanese earthquake

Market reports indicate that spot rates asked for LNG ships have risen about twenty percent in the aftermath of the earthquake in Japan earlier this month. Sources say that owners are demanding about $80,000 a day for the Atlantic and Pacific routes as nuclear energy in Japan continues to be severely disrupted and power shortages continue. Another factor driving this development is that many countries in Europe and Asia have increased curbs on pollution this year. Natural gas, emitting about half the carbon dioxide of coal, is consequently in greater demand. LNG owners are now sailing their vessels at maximum speeds to take advantage of the conditions, market reports say, and share prices of LNG companies have risen sharply across Europe.


Although no ship has been hired at the higher rates, it is believed that the tight LNG market, with more than three quarters of the tonnage on long term charters, is at least partly responsible for the present shortage; with much of the gas fleet being controlled one way or another by a few companies, not many are available on the spot market. Experts say that summer is usually the lean season as power demand in colder countries slows down, but the supply of LNG vessels is now very tight.

Oyvind Hagen, an analyst at ABG Sundal Collier in Oslo, told Bloomberg that the cost of shipping LNG may advance to a five year high as fossil fuel comes back in use in Japan; LNG tanker rates will average $100,000 a day in the fourth quarter, he estimates. Operator Golar LNG- with about a dozen LNG ships- has raised its own earnings estimates for the year by 24 percent in the last month.

“There’s no vessel available in the spot market,” said Martin Korsvold, an analyst at Pareto Securities AS in Oslo who agrees with the $100,000 a day forecast. “In a shipping market where you have capacity utilisation of 100 percent, it’s almost ‘pick a number’” for rates.”

Japan, the world’s biggest buyer of LNG, is facing severe power shortages, with Credit Suisse estimating that LNG will probably be used to compensate for about half of the lost nuclear energy capacity; this stood at 34% of the country’s total energy need before the tsunami. The additional gas to Japan will probably be supplied by Russia, Qatar, Indonesia, South Korea, Brunei and Nigeria, besides others. LNG now costs almost half as much as crude, another factor in its favour.

Other countries may shut down at least some nuclear plants or cancel new orders, analysts say. Germany has suspended half a dozen old reactors already, and China has expressed a desire to rethink its nuclear energy policy. Europe is planning stress tests on about 140 reactors. Barclays Capital estimates that global LNG demand will be up at least 5 percent this year as a result.

There are about 350 LNG vessels in the world, according to data compiled by ABG Sundal, with just 27 new builds ones on order, thanks no doubt to the steep costs involved- a new LNG carrier can cost around $200 million. Analysts expect that the new build situation may change quickly, with enquiries already being made from shipyards. Arctic Securities analyst Erik Stavseth says that most shipyards will be unable to deliver until early 2015 n any case, “Shipping will be the LNG industry’s Achilles heel for the next two to three years,” he forecasts.
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