How is the Ebola crisis impacting oil shipping?

As the deadly outbreak of the Ebola virus, which has already killed more almost 5,000 people in West Africa, shows no sign of slowing, the global oil shipping industry has already seen a shift in its approach to dealing with vessels that have called in the region.

Since the crisis began in West Africa in August, affecting mostly the countries of Liberia, Sierra Leone and Guinea, the shipping community has had to insert certain clauses into its charter agreements aimed at mitigating the risk of vessels being quarantined.

Some ports have also applied restrictions and quarantine processes of their own to vessels coming from West Africa.

Last week, Turkey’s directorate general of health for border and coastal areas applied restrictions to vessels entering Turkish waters from some West African countries due to the risk of Ebola.

Vessels entering Turkish waters from Sierra Leone, Liberia, Ghana and Nigeria are now prohibited from having contact with the mainland for crew change, provision supply, bunkering and other similar procedures, according to a circular issued by the directorate.

STRINGENT MEASURES AT WEST AFRICAN PORTS

West African ports have already seen new restrictions imposed on traffic, with almost all of the region putting strict measures on vessels that have either come from or have called in a country where there is an Ebola outbreak.

Some countries in the region like Equatorial Guinea and Gabon are not allowing vessels that have called in a country affected by Ebola to berth, according to an update circulated by the London P&I Club.

Other countries, such as Cameroon, Gambia and Ghana, have all said that vessels that have been in the affected counties of Sierra Leone, Liberia, Guinea or Nigeria will have to be screened by health officials within the 21 or 31 days preceding their arrival, depending on each country.

Most sea borders between Cameroon and Guinea, Sierra Leone, Liberia and Nigeria have also now been closed, according to the London P&I Club.

Despite being initially affected though, Nigeria is no longer an Ebola-hit country, according to the World Health Organization, meaning that there has been minimal impact on its crude exports because of Ebola.

A majority of the oil exports from Nigeria and Angola are from offshore terminals, which is also one of the reasons there has been no restriction or impact on the export of oil from the two.

‘EBOLA CLAUSES’

At many crude loading areas in West Africa, agreements between shipowners and charterers set out in voyage charterparties have enabled shipments to run relatively smoothly since the outbreak of Ebola.

“We use an Ebola clause for all WAF loading voyages and it’s slowly becoming standard [in the shipping industry],” a shipowner said.

In such a clause, seen by Platts, it is specified that if a charterer orders a vessel to load or discharge at any port or place where cases of Ebola have been reported, the shipowner shall be entitled to take precautions which they deem prudent or necessary to protect the vessel’s crew and other persons on board.

If any extra time is spent in the port for this reason, it will count as time on demurrage.

The charterparty clause also specifies that should the vessel load or discharge at a West African port and health authorities at a subsequent discharge port impose special precautions against the vessel for having been in West Africa any delays will count as demurrage and any extra expenses involved will be paid for by the charterer of the vessel.

PRODUCT TRADING

Trading of oil products in the WAF region has also been affected, with sources saying that keeping track of vessels and their historical ports of discharge had created new logistical challenges.

The logistics of oil product trading in West Africa can be particularly complex with ship-to-ship transfers a frequent mechanism used to transport product from larger arbitrage vessels onto smaller vessels which can fit into the majority of the ports.

These smaller “shuttle” vessels will frequently do several routes into multiple countries loading product from the same arbitrage cargo.

However, the restrictions imposed by several countries is causing logistical hurdles for traders faced with chartering ships that can only discharge in certain locations.

“It forces us to leave our boats in certain zones. If I have boats that discharged in Ebola zones then I separate them from the boats and the regions that did not enter these zones,” one trader said.

This is leading some traders to charter more vessels to cover a wider range of ports.

Traders also added that spot chartering had become more expensive in the region, particularly for vessels going into Ebola zones.

“There’s a premium on the boats that go in the countries affected by Ebola, at least on spot deals, because they know that they won’t be able to discharge in certain ports after,” the trader said.
Source: Platts