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ARTHUR J. GALLAGHER AJGINTERNATIONAL.COM MARINE HULL & MACHINERY AND WAR RISKS MARKET UPDATE 2014 2

MARINE HULL & MACHINERY AND WAR RISKS MARKET UPDATESEPTEMBER 2014

MARINE MARKET REPORT

MARINE HULL & MACHINERY AND WAR RISKS MARKET UPDATE 2014 AJGINTERNATIONAL.COM ARTHUR J. GALLAGHER 3

Founded by Arthur Gallagher in Chicago in 1927, Arthur J. Gallagher & Co has grown to become one of the largest insurance brokerage and risk management companies in the world. With significant reach internationally, the group employs over 17,000 people and its global network provides services in more than 140 countries.

Outside the US, we use the brand name Arthur J. Gallagher.


CONTENTS

Hull & Machinery 2War Risks and other related News 3Hull & Machinery Casualties 4Latest War /Piracy Incidents 8Ship Security Questionnaire 16Sources 18


HULL & MACHINERY

Arthur J Gallagher has continued to expand its Marine presence from the new International headquarters at the Walbrook Building in London. Recent acquisitions include Wesfarmers/OAMPS in Australia and also the Noraxis group in Canada. Both companies have expertise in marine risks and will further improve the global marine presence of Arthur J. Gallagher. The annual global conference for Marine Underwriters (IUMI) takes place at the end of September in Hong Kong. This is against a backdrop of a continued softening in Hull & Machinery rates. We will be watching closely for any indications of changing trends going forward but the market is widely expected to remain relatively soft with some improvement in terms available when circumstances permit.

With prices of hull insurance at historical lows, it is difficult to see how reductions can be justified but the presence of so many players in the market continues to ensure healthy competition and a downward pressure on rates for the most sought after fleets. This available capacity is set to be further bolstered with the Standard Club due to begin writing H&M in Lloyd’s next year and rumours of future participation in Lloyd’s from a major Chinese insurer. Bernt Hellman has also recently joined the Dual Underwriting Agency after leaving Skuld. He is recruiting a team to write marine and energy risks.

As technical rating is largely considered too low in all areas, Underwriters are looking to risk selection as their most effective way to seek profitability. Traditional blue water Underwriters are looking to diversify away from some of their core business to find more attractive risks in the brown water, offshore, and ship construction sectors. Ancillary risks such as Increased Value, Mortgagees Interest and Loss of Hire are also sought after. Terms in these areas are generally subject to the most substantial improvements although there is downward pressure on conventional blue water accounts that have performed historically well as Underwriters seek to maintain their participation in the face of competition.

The most critical aspect of marine insurance is the swift settlement of claims, an area in which A J Gallagher continues to lead the way. We continue to see the majority of Hull claims arising from engine room machinery damages. In the first six months of the year, we would suggest these claims represented approximately 40% of claims reported. Collisions have been the next most frequent cause being approximately 15% of claims. In terms of the costs however, those engine room machinery claims represent in the region of 25% of all claims whereas collisions represents 15%. We can therefore infer that whilst collisions are less frequent they are generally resulting in a larger repair bill. Despite this it remains the frequency of machinery damage claims that primarily concerns underwriters. Going forward we will be issuing an annual Hull & Machinery claims report and our quarterly market report will include details of recent notable H&M casualties.

Our client base benefits from the strong relationships we have developed with international insurers and the in depth risk management expertise which our team provides. As always, we continue to advise and serve our clients within the prevailing market conditions. The plentiful capacity ensures a good environment for shipowners to keep insurance costs low whilst maintaining high quality coverage from A rated providers. We work tirelessly to ensure all options are explored but also encourage our clients where possible to focus on long term relationships and stability which will undoubtedly serve well when market conditions change.


WAR RISKS AND OTHER RELATED NEWS

Indian Ocean/Gulf of AdenThe incidence of piracy in the high risk areas of the Gulf of Aden and Indian Ocean continues to remain low with no successful attacks in the last 2 years. The threat remains, however, as shown by an unsuccessful hijacking attempt on the Italian tanker ‘Giacinta’ on 6th August. The attack was thwarted by armed security. Owners are advised to remain vigilant and to fully protect crew and assets against these risks, through physical security measures, best management practice, and maintaining full insurance protection.

Gulf of GuineaThe threat of piracy in the Gulf of Guinea remains high with Nigeria continuing to be the highest risk. Typical attacks involve violent robbery, theft of cargo, and kidnapping of crew in some instances. The situation is further complicated by the Nigerian navy forcibly preventing armed security onboard vessels from either private security firms or the Nigerian police force. We have recently issued a new West Africa security questionnaire which is attached to this report.

West Africa – EbolaA further peril currently facing ships, particularly in West Africa, is the recent outbreak of Ebola. It is possibly that we may see ships detained for quarantine purposes if the situation worsens. Various law firms are issuing advice in respect of the possible effect of detentions on charters. We are discussing protection against such risks with the market and owners are advised to consider their exposures in this area.

Ukraine /RussiaThe current political environment in the Ukraine is a further area which we are closely monitoring. Ukraine is yet to be added to the JWC excluded areas, but owners are advised to consider their exposures and also to be aware of EU and US Sanctions against Russia in case any trading or activity is affected.

Other AreasAreas where breach rates are subject to some potential increase are Libya, Iraq, Syria and Israel due to ongoing conflicts. Owners should also be wary of sanctions affecting trade with Syria. As always, a collection of the latest war risks related news articles are attached to this report.

We have also seen a significant rise during 2014 of the instances of small tankers being hijacked in the Far East. The aim of these hijackings almost always is to steal the cargo rather than demanding payment of ransoms such as is the case with Somali pirates. These cases often involve the crew’s personal belongings also being stolen and ships navigation/electronic equipment being damaged. These pirates/robbers appear to prefer small tankers transiting coastal areas of Thailand, Indonesia and Malaysia.


HULL & MACHINERY CASUALTIES

Ag Marine (25th April 2014)The Togo flagged general cargo vessel (1964, 350gt) sank off the western coast of the Island of Crete. She was loaded with 6 vehicles that carrier cigarettes and was sailing from Montenegro to Odessa, Ukraine. Three out of the seven crew members (all Russian nationals) didn’t make it while the rest where saved by the bulker “Princess Maria”. The same vessel under a different flag and name was under investigation by the Greek authorities.

MOL Motivator/Zhong Xing 2 (5th May 2014)The accident involved the 9,400 ton Mitsui O.S.K. Lines container ship MOL Motivator and Chinese ship Zhong Xing 2, carrying a cargo of cement with 12 crew. The collision occurred around 2:30 local time on the morning of 5th May, southwest of Po Toi Island subsequently resulting in the cargo ship sinking with 11 of her crew trapped on board. Poor visibility has been blamed for the collision, after heavy rain fell through the night and Hong Kong experienced a “powerful” thunderstorm.

Suat Bey Grounding (15th May 2014)On 15th May 2014, the General cargo vessel “Suat Bey”(1993, 3,114dwt) grounded at Nea Moudania port, Greece. The vessel was refloated by own means on the same day and continued to the port for discharging her cargo (fertilizers). It is worth noting that the “Suat Bey” was detained the previous year in Catania, Italy following 57 deficiencies.

Saloos capsize (16th May 2014)Ro-ro cargo vessel Saloos, 6950gt arrived on Cabinda port road on 15th May from Pointe Noire, Congo listing portside, and capsized the same day. On board were 155 containers with mixed merchandise. Containers were washed ashore and looted by locals. It seems that water found way on the car deck leading to the listing and capsize.


Elinakos Grounding (26th May 2014)The Greek controlled bulk carrier Elinakos during her trip from Longview, Washington to Vietnam grounded on the Columbia River following loss of propulsion. The vessel was refloated and towed to Longview for repairs.

Le Sheng/Cape Med Collision (30th May 2014)On 30th May 2014, the 2006 built 93.003gt) Cape Med collided in the Strait of Gibraltar with the Le Sheng. The accident occurred at 4:05 when the Cape Med left the port of Gibraltar bound to Puerto Drummond, whereas Le Sheng had come from Huelva loaded with nickel and was heading to the Bay of Algeciras for provisioning operations.

Le Sheng, a general cargo vessel, which was on a voyage from China to Algeciras via numerous West African ports, ran into the port side of the Cape Med, and its bow was crushed. The Cape Med suffered a leak in a ballast tank and water ingress. It anchored in the Alpha area in the Bay of Algeciras, opposite the port area of Campamento (San Roque).

Shoko Maru Explosion (29th May 2014)The 1995 built product tanker ShokoMaru exploded while at anchor off the port in Himeji as a direct consequence of repair operations on board. More specifically, a spark from a grinder used to remove paint may have ignited gases in the vessel’s empty hold leading to a huge explosion that cause enormous damage on the vessel.

Even though the fire was extinguished following the efforts of local firefighters, the vessel sank ten hours after the explosion.

All the members of the crew were saved apart from Captain Masaichi Ando whose body was retrieved by divers days after the incident from the vessel’s hold.

Antonio Fire (6th June 2014)A similar incident took place in Corpus Christi, South Texas, USA on Friday 6th June. The 30,000dwt bulker Antonio suffered a fire in one of her cargo holds whilst she was docked as the welding works in the hold carried out by crew members set alight some of the cargo pallets.

Local authorities came immediately to assist and the fire was under control after two hours.

Both the Shoko Maru and the Antonio incidents highlight the need for crew members to be very careful during loading operations or when undertaking minor repair works on board.


Viet Log grounding (9th June 2014)The general cargo vessel grounded on a reef near Summer Island, Maldives on her way to Male. The crew abandoned the vessel following water ingress subsequent to the event. Originally the vessel was loaded with cement and steel in Tuticorin, India. According to reports, fuel or oil spilled into the sea following the grounding.

Explorer Fire (14th June 2014)The LNG tanker Explorer (2008, 100,325t) suffered a fire in its engine room on 14th June 2014, en route from Dahej, in ballast, towards a loading port in the Middle East. The fire broke out in its engine room at 20:40 LT off the coast of Mumbai. The 31-member crew, managed to extinguish the fire using portable fire extinguishers, but the propulsion was lost. The vessel had to be towed by an Indian flagged offshore tug to a repair yard. No casualties were reported.

Elpida GR/Sea Rose Collision (16th June 2014)On 16 June 2014 the 2003 built handymax Elpida GR (52,579dwt) dragged its anchor whilst at Chittagong outer Anchorage and struck the Sea Rose (1995, 45,700dwt) resulting in severe damage for both vessels. It is worth noting that according to our AJG marine casualty database; this is the 7th collision incident occurring in the area.

Universal Brave (17th June 2014)During her voyage from Singapore to Ras Tanura, 35 miles off Cochin port, the 1997 built VLCC was disabled from a fire caused in the engine room.

AMT Explorer Capsize (3th July 2014)The DWT 13,980-tonne Cable barge AMT Explorer capsized and sank 50m southwest of Sardinia, while being towed, after a heavy listing. The barge was en route from Naples cable factory to Bremenhaven with a cargo worth euro 28 million, which was to connect wind farms in North Sea offshore. According to news reports, the weather at the time was moderate with a strong swell.

Bremen engine breakdown (11th July 2014)The 7,819dwt general cargo vessel was stranded during her voyage from Ceuta, Spain to Fort de France, Martinique due to engine problems. It was towed by the tug Massai to Fort de France.


Lady Rosebud engine breakdown (14th July 2014)During her voyage from Abidjan, Ivory Coast to Port Vendres, France, the Africa Express Lines reefer suffered problems with her engine shortly after departing Abidjan.

Despite the efforts of the ship’s crew, the vessel was unable to restore power and had to be towed back to Abidjan, later that week.

The vessel was carrying soft fruit (bananas and pineapples) and cocoa and it may have had issues with the refrigeration system. It is suspected that the engine failure was caused by diminishing fuel reserves which were used during the period of the problem.

RHL Fidelitas water ingress (30th July 2014)The fully cellular container ship “RHL FIDELITAS”, built in 2010 with a TEU capacity of 5,100, which is operating on a liner route between China, Korea and USA East Coast ports, sustained water ingress in the engine room shortly prior to departure from the Yangshan Container Terminal in Shanghai on 30th July 2014, after completing cargo loading operations. The cargo was subsequently discharged at Shanghai before the vessel was towed out to the anchorage for repair works.

It is worth mentioning that RHL was involved in a collision incident with a bulk carrier in 2013 resulting in serious hull damage and 18 containers, whereas in 2011 she tore up a seawall and a pilot boat when her reverse throttle failed to engage at the Port of Odessa.

Hafnia Crux engine Failure (7th August 2014)The chemical tanker Hafnia Crux suffered engine failure while transiting the English Channel on her way from Ijmuiden Netherlands to Tome Logo, around 55 nautical miles from Dunkirk.

Flag Gangos/Pamisos collision (12th August 2014)On August 12th near 97.4 mile mark lower Mississippi, the Greek controlled bulk carrier, Flag Gangos lost power and steering and collided with Aframax tanker Pamisos and a barge, both in port at the International Matex Tank Terminals. Both the tanker and barge suffered damages. An oil boom was deployed and the Coast Guard implemented one-way traffic in the vicinity of the International Matex Tank Terminals.


LATEST WAR/PIRACY INCIDENTS

Navy Kills Two Pirates in Gun Duel, Arrest Six (18th May 2014)Nigerian Navy (NN) personnel drawn from Nigerian Navy Ship (NNS) Benin and NNS Ikot-Abasi, have rescued a distressed oil tanker, MT SP Brussels at the Lagos anchorage, killing two of the pirates who had hitherto hijacked the vessel and killed two crew members. This is just as THISDAY checks revealed that the naval authorities, who also rescued 15 out of the 17 crew members and the two police escorts onboard, are yet to release the vessel in its custody to the vessel’s agent, Super Maritime Nigeria Limited. Brussels with International Maritime Organisation (IMO) and MMSI numbers 9387164 and 538003624 respectively, is an oil tanker registered in Marshall Islands with a length and beam of 118 and 18 metres respectively. With its call sign reading as V7MI7, the 35 gross tonnage vessel and 14 metric tonnes container capacity of products, had last communicated its position on April 11, when it was at UTC terrestrial heading to its destination at Lagos offshore when it was hijacked. It was gathered that the oil-laden vessel was accosted at about 120 nautical miles outside Lagos waters, en route from Port Harcourt, by eight heavily armed pirates who overtook them in two speed boats While two of the pirates remained on each of the speedboats to man it, six others boarded the oil tanker vessel and in an exchange of gun fire with the two police escorts attached to the vessel, shot dead two of the crew members; an Indian and the Captain. It is understood that after the pirates had successfully disarmed the police and taken possession of the vessel, the frightened crew members made up of Indians, Pakistanis and Ghanaians had fled to the citadel (a “safe room” on board ships) to hide. However, having immediately searched the vessel and discovered it devoid of human life, the pirates went straight to the Citadel and brought the crew out. The pirates set sail to offload the stolen products onboard the vessel, but unfortunately for them, the NN had gotten wind of the attack and gave them

pursuit. Both naval vessels had cut off the escape route for the pirates and a gun duel ensued. The navy had the upper hand with the level of weapon handling and marksmanship gained from their frequent Small Arms Firing Exercise (SAFEX) trainings.

Pirates attempt to hijack tanker off Nigeria (22nd May 2014)Two pirates were killed by onboard security when they attempted to hijack a tanker off the coast of Lagos in May 2014. According to This Day, the vessel was hijacked around 120 nautical miles offshore, en route from Port Harcourt to Lagos, by eight heavily armed pirates in two speedboats. In a statement, the managers of the Medallion Reederei ship said the vessel was attacked on 29th April 2014. One of the crew members suffered fatal injuries while another suffered minor injuries. Two of the pirates died in crossfire with security guards on board the vessel, the company said. The crew and armed guards retreated into the ship’s citadel after the attackers boarded the vessel, but two of the 17 crew were unable to reach the citadel. The next morning the security guards searched the ship and discovered the pirates had left. A Nigerian Navy vessel came to assist the petroleum products tanker on 30th April 2014. SP Brussels then proceeded under its own power to the port of Lagos, Medallion Reederei said.

The SP Brussels has previously been the victim of maritime crime off Nigeria. In December 2012 pirates attacked and looted the vessel off the Niger Delta, taking five crew members hostage in the process. The kidnapped crew was released in January 2013. Maritime crime is a large problem off the coat of Nigeria, with pirates often robbing vessels or hijacking them for their cargoes. On 13th May 2014, two robbers boarded an anchored tanker off Port Harcourt and took two crew members hostage before releasing them after stealing cargo. Earlier this month Chief of Naval staff (CNS), Vice Admiral Usman Jibril, said the Nigerian Navy has impounded


about 38 ships involved in criminal activities since his assumption of office in January this year. Eight of the ships were Chinese fishing vessels illegally fishing in Nigerian waters. Jibril expressed that the government was committed to supporting the Navy by providing equipment and support. He noted that the first of two offshore patrol vessels ordered from China were delivered in August 2014 and the second sometime next year.

Orapin 4 (Thailand) – Missing Vessel (30th May 2014)Product tanker Orapin 4 (2176gt, built 1983) departed Singapore for Pontianak with 3,377 tonnes of Automotive Diesel Fuel (ADF) on board at approximately 1500 hrs, local time, on 27th May. The vessel was scheduled to arrive in Pontianak, about 1300 hrs, local time, on 29th May. Around 1200 hrs, local time, 28th May, the shipping company tried to contact Orapin 4 via email but did not receive a reply. The tanker did not arrive in Pontianak as scheduled. The last known position of the vessel at 1730 hrs, 27th May, was approximately 3.64 nautical miles north of Pulau Batam, Indonesia, in lat 01° 14.68N, long 104° 03.10E. There were 14 crew, all Thai nationals, on board. Maritime authorities in the area were alerted, including the Malaysian and Indonesian authorities, to look out for the missing vessel. A press report, dated 1st June confirmed that the tanker arrived at Sri Racha Port, bordering Laem Chabang Port, Gulf of Siam, on that date. As presumed, vessel was hijacked for stealing its cargo of 3,377 metric tonnes of Automative Diesel Fuel (ADF). Also, the pirates destroyed the communication equipment of the vessel; however, left the vessel with enough bunker to reach the port. All 14 crew members were safe.

Vale VLOC targeted (30th May 2014)A Vale VLOC was targeted by robbers in the traffic separation system just west of Singapore. The 233,016dwt Ore Vitoria (built 1989) was boarded by four men in the early hours of 28th May while underway southwest of Nipa Anchorage. Reports say nothing was stolen from the Liberian-flagged ship and the crew was unharmed, but the robbers managed to escape. Approximately

four hours later a Malaysian-registered tug, the Kien San 1, towing the barge Kien San 8, was boarded by four men. The two vessels were loaded with scrap metal underway northwest of Nipa Anchorage in the westbound lane when the incident occurred. The four men escaped despite the Singapore Police Coast Guard deploying a patrol craft to the location of the incident. Less than 24 hours later what was believed to be the same four men boarded a Vinalines handysize bulker underway southwest of Nipa Anchorage. The robbers were reported to have entered the engine room of the 23,724dwt Eastern Star (built 1994) but failed to steel any equipment. Details of the three incidents came in an alert from Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP) Information Sharing Centre. “Including these three latest incidents, a total of 14 incidents involving ships while underway have been reported in the vicinity this year,” ReCAAP stated. “It is possible that the robbers had boarded one vessel after another when they were unsuccessful in stealing anything from the previous boarding.” Three vessels had been targeted by what is suspected to be the same gang of robbers in less than a week off Singapore.

In early March two crude tankers and a capesize bulker were targeted by robbers within the vicinity of Nipa Anchorage within a few days of each other. The ships involved were the 107,506dwt tanker Sea Voyager (built 2009), the 167,282dwt tanker Orpheas (built 2007) and the capesize bulker Cape Veni (built 2007). ReCAAP said it encourages all vessels to enhance vigilance while transiting the area and to report all incidents to the nearest coastal state.


Dryad in piracy alert (4th June 2014)Shipowners operating small tankers in waters around Singapore have been warned to keep their operational details secret.

Dryad Maritime says information on vessel movements and cargoes must be restricted to those that need to know. It argues that insider information may be at the heart of several recent attacks involving cargo thefts in Southeast Asia. Dryad said the recent hijacking of the Orapin 4 prompted it to issue the advisory to its shipping clients, on the basis that the crime follows a pattern, which has seen up to six such attacks over the last nine months. “The vessel’s last communicated position report, just two hours after departing Singapore, suggests that the hijackers most likely boarded the ship in the Singapore Strait, a body of water densely populated with shipping as well as police and coastguard vessels,” said Dryad’s chief operating officer Ian Millen. “We believe that the criminal gang involved either had prior knowledge of the ship’s intended movements or followed her out of the anchorage. Whilst details at this stage are sketchy, there is good reason to believe that the incident may be linked to other similar crimes over this period.” Dryad’s senior analyst, Stephen McKenzie, expressed concern over the under-reporting of such crimes, detailing the similarities between a number of other incidents. “We believe that this type of organised crime is far more prevalent than reporting would suggest. It is clearly well organised and executed, orchestrated by criminal gangs who are involved in the marine fuel black market across Asia.” “Although we don’t yet know the full details of what happened on Orapin 4, it is likely that the vessel has been the victim of one of these gangs. In previous incidents, crew members have reported

bunker barges and other small tankers waiting to transfer fuel at predetermined rendezvous sites. The hijackers clearly have knowledge of the operation of radio and satellite communications, along with some proficiency in handling fuel lines other ships’ equipment. Violence is often used against crew members and vessels are often ransacked for cash, personal belongings and portable electrical equipment before the criminals depart. This might suggest that those involved in the hijack are not particularly well paid for their part in the operation. This latest hijack is clearly not an isolated event and it is likely that such crime will continue to be perpetrated to feed the black market. The unfortunate victims we have seen tend to be small, local product tankers, mainly working out of Singapore, with no obvious threat of this type of crime against larger tankers transiting through the area. The key to defeating the criminal gangs involved lies in comprehensive reporting of all such incidents to the IMB and appropriate regional authorities, alongside the sharing of information with local law enforcement.”

“This kind of threat ultimately needs to be tackled at the point of criminal origin ashore. Once in control of a vessel, it’s just too late.” added Millen.

Fair Artemis – Liberia (7th June 2014)A press report, dated 7th June 2014, states: Fairdeal Group Management S.A., owners of product tanker Fair Artemis, confirmed that they were unable to contact their vessel since 4th June and that the last contact with the vessel was at 1800 hrs, 4th June. The last known position of the vessel at the time was lat 04° 47N, long 00° 12W, approximately 40 nautical miles South of Accra, Ghana. Fairdeal’s Fleet Director, said that a number of authorities were notified including the ICC in London and the NYA Operations Centre. He also added that their local agents were closely coordinating with the Ghanaian Coast Guard Director General of the Ghana Ports and Harbours Authority to mobilize the Navy patrols to assist in locating the vessel. The captain contacted the company that managed the ship on 12th June and confirmed that the cargo was stolen.


Tanker attack foiled (16th June 2014)A daring raid on a small tanker off southern Malaysia was thwarted in the early hours of the morning on 15th June 2014. Navies from Malaysia, Singapore and Indonesia combined to foil the attack on the 1,007gt product tanker Ai Maru (built 1978). Pirates boarded the product tanker from three speed boats in position at 02° 06.90’E, 104° 39.80’E at about 2030 hrs on Saturday. The Honduras-registered ship had 1,520t of MGO onboard when it departed western Singapore OPL for the Gulf of Thailand. Whilst the vessel continued to head south-easterly at a speed of about 4.5 knots, the maritime authorities from the three nations deployed assets to the location. At about 0050 hrs on 15th June 2014, the Ai Maru was observed to be drifting with its shipboard lighting turned on, as authorities closed in. Initial investigations revealed that seven pirates armed with pistols and knives boarded the ship, tied the crew and locked them in a room. They damaged the ship’s communication equipment, reportedly siphoned 620t of the MGO, stole the crew’s personal belongings and reportedly fled after seeing the naval forces closing in. The crew was not injured. Details of this incident came in an alert from the Singapore-based Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP) Information Sharing Centre. “The same vessel, Ai Maru had been boarded by pirates in 2012 in the South China Sea with the same intention of siphoning,” said ReCAAP. “However, the pirates plan was foiled when the authorities were in the vicinity. This time round, the pirates plan was again foiled owing to the quick response from regional maritime authorities.”

Manyplus 12 – Malaysia (17th June 2014)Tug Manyplus 12 (198gt, built 2004), towing barge Hub 18 loaded with 138 containers, which had departed Sibu, Sarawak, for Port Klang, was scheduled to arrive at Port Klang on the morning of 13th June 2014. However, the vessels did not arrive at Port Klang on the scheduled date. The shipping company’s last contact with the vessels was at 1210, local time, 9th June, when they were approximately 61.37 miles west of Tanjung Datu, Sarawak. There were 11 crew on board the tug, comprising Indians, Malaysian and Myanmar nationals.

Protest in eastern Libyan oil port town Brega, airport closed (17th June 2014)Protesters closed an airport used by oil firms in the eastern Libyan port city of Brega over the appointment of a new head of a state oil guard force, senior members of the force and state media said. It was not clear if this had any impact on the nearby Brega oil port, now mainly used to ship crude cargoes to the Zawiya refinery in western Libya and the Libyan Norwegian Fertiliser Co (LIFECO) owned by Tripoli and Norway’s Yara. The airport is part of the oil facilities complex in Brega and used by firms operating in the port and connecting oilfields to fly their workers in or out. The North African country is struggling with turmoil as the government is unable to control militias, armed tribesmen and Islamists who helped to oust strongman Muammar Gaddafi in 2011 but now defy state authority.

Libya’s oil production has fallen to less than 300,000 barrels a day due to a wave of protests at oil ports and fields, drying up vital state revenues in the last year. The protest in Brega was aimed against the appointment of Ali al-Ahrash as new head of the Petroleum Facilities Guards, a force in charge of protecting oil facilities and residents, the state news agency LANA said. The government appointed Ahrash as part of a deal with a group of rebels in the volatile east to reopen four key oil ports they have occupied for approximately a year to press Tripoli into granting regional autonomy and financial


benefits to their area. The Brega protesters opposed the removal of the previous force head Idris Bukhamada, who comes from the area, Bukhamada and Ahrash told Reuters by telephone. Ahrash said the protesters had closed only the small oil airport but Bukhamada and a port engineer, who asked not to be named, said harbour operations had also been affected. State- run Sirte Oil, which runs oil operations in Brega, could not be immediately reached for comment. Implementation of the oil port deal signed in April has been slow. The rebels have so far reopened only two ports, Zueitina and Hariga, but the latter has been closed again because of another protest, reflecting growing chaos in Libya. The two bigger ports, Ras Lanuf and Es Sider, have remained shut by rebels who objected to the election of Prime Minister Ahmed Maiteeq in May by parliament in May. The Supreme Court ruled in June that the vote had been unconstitutional. Maiteeq quit as a result, which raised hopes that the oil port deal would finally be implemented fully. (Reporting by Ulf Laessing, Ayman al-Warfalli and Feras Bosalum; Editing by Tom Heneghan)

Nigeria kills three piratesNigerian forces killed three pirates who attacked a joint task force (JTF) patrol boat.

JTF spokesman Mustapha Anka told all Africa Global Media that 30 men armed with AK-47s in two speedboats took on its troops.

A soldier and two vessel operators were injured in the incident. The JTF was raiding an illegal oil bunkering site at Okpoko Creek in Warri. It seized nine boats loaded with stolen crude oil and impounded seven speedboats. Five suspects were arrested.

Nigerian navy preventing use of armed guards (26th June 2014)Nigeria’s navy forcibly prevented the use of security guards from either private military companies or the country’s own police force on ships within the country’s exclusive economic zone, despite high levels of piracy in West Africa, according to an advisory note from shipowner association BIMCO.

Separately, the West of England P&I Club highlighted the arrest of a vessel sailing in Nigerian waters by the Nigerian navy for employing armed guards provided by the Nigerian police. The International Maritime Organization approached the Nigerian authorities with a request for clarification, the club understands. There are also reports of “blue on blue” violence, where police have opened fire on naval vessels believing them to be pirates, resulting in death or injury to seafarers caught in the crossfire. The clear indications of increasing inter-service rivalry come at a time when two British former marines employed by security contractor Port2Port are facing trial in Nigeria after being arrested in Warri in March while waiting to board a product tanker. The Nigerian navy’s policy is only to provide vessel escorts, at charge to owners, and regards itself as having sole authority in territorial waters and the Exclusive Economic Zone (EEZ). “BIMCO has been advised that the Nigerian navy does not provide or permit armed guards on merchant vessels,” BIMCO said in its circular. This applies both to private contractors and marine police, who only have primacy in river areas and ports and harbours out to the fairway buoy. “The navy has seemingly begun enforcing its alleged authority to prevent the employment of armed guards on board and this has resulted in the arrest of members of the Nigerian marine police and consequent delays to the vessel and unresolved liabilities placed on the owners,” BIMCO added. BIMCO’s chief maritime security officer Giles Noakes said that BIMCO was aware of the situation and that potential liability issues were arising for owners. Mr Noakes added that Nigerian police were being used as armed guards by some operators, even though they do not have the necessary authority to do so outside of ports. The navy had arrested


some policemen, he confirmed. It appears to be the case that only the navy can provide protection for vessels, and that this protection is limited to escorts rather than provision of guards, although clarification is being sought. PMSCs are thought not to be allowed to provide armed guards in Nigerian territorial waters. An IMO spokesperson said that Nigeria and other countries had been asked to provide further information on their policies towards armed guards on ships. “IMO does not have a position on the carriage of privately contracted armed security personnel on board ships,” he said. “However, we would welcome clarity from all coastal states as to what is their position, so that merchant ships do not inadvertently fall foul of coastal state laws.”

Seventh tanker attacked (8th July 2014)Another small tanker was hijacked in the South China Sea, and had its cargo stolen.

The 2,400dwt product tanker Moresby 9 (built 1977) was boarded by nine perpetrators at around 1938 hrs on 4th July. The ship, which was carrying 2,200t of MGO, was intercepted by the robbers in position 03° 23.32’E, 105° 08.90’E about 34 nautical miles from the Anambas Islands. The Indonesian navy reportedly deployed their ships to the location of the incident, but were unable to locate the Moresby 9 off Pulau Anambas. The ship’s owners were later able to establish communications with the Honduran-flagged ship and are currently investigating what occurred onboard the vessel. The Moresby 9 was involved in a similar incident in 2013, but the presence of the Malaysian authorities at the location of the incident caused the robbers to flee empty handed. Details of this latest incident came in an alert from the Singapore-based Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP) Information Sharing Centre. This is thought to be the seventh known case of coastal tankers being hijacked for their cargoes of diesel or gas oil reported since April this year, sparking fears of a new trend in pirate attacks in the area. The International Maritime Bureau (IMB) has urged owners of small tanker owners to maintain strict anti-piracy measures in the South China Sea following this spate

of hijackings. Maritime security analysts Dryad Maritime recently said that they believe the hijackings are being carried out by organised gangs involved in the marine fuel black market in the region.

Trio hit off Indonesia (8th July 2014)Three ships were subjected to robbery attempts in Indonesian waters latest intelligence reveals.

At Priok anchorage, five armed robbers boarded the anchored vehicle carrier Barcelona (built 1994) and took one crew member hostage temporarily while they stole engine spares before escaping. In the second incident six armed robbers boarded the VLGC G Commander (built 1995) about 5 nautical miles east of Karimun Kecil Island. They took one crew member hostage temporarily in the engine room while they stole engine parts. They then escaped after the crew mustered and raised the alarm. In the final incident two armed robbers in a wooden fishing boat boarded the 2,500-teu containership Hanjin Qingdao (built 2007). However, they escaped empty handed after the alarm was raised and the fled the ship which was anchored around 15 nautical miles north east of Pulau Bintan. All three reports took place in early July according to a piracy report from UK-based security consultants AKE Maritime. Instances of low level robberies at Indonesian anchorages continue to figure prominently in maritime reports. “They underline the requirement to maintain an alert duty crew at all times, and ensure basic security measures are well-rehearsed and adhered to,” said AKE Maritime. “Almost all attacks are opportunistic ‘smash and grab’ type robberies on vessels in port or at anchor.”


Last month Indonesian authorities reportedly said they would establish a series of safe anchorages within ports in an attempt to combat pirate gangs. These designated areas will reportedly be “monitored and patrolled regularly” by the Indonesian Marine Police.

German passenger cruise ship under rocket attack in Israel (7th July 2014)AIDAdiva, a cruise ship carrying German passengers on board was under rocket fire attack when leaving the Israeli port of Ashod. Ashod is the fifth-largest city in Israel, located in the Southern District of the country on the Mediterranean coast.

It is located 32 kilometres south of Tel Aviv, 20 kilometres north of Ashkelon, and 53 kilometres west of Jerusalem. The Port of Ashdod is Israel’s largest port. It is unclear if the rockets were those from the Israel Defense Force or from Hamas, the radical Palestinian organization. When the cruise ship left Ashod, sirens were sounding in Ashod and other Israeli cities warning of attacks by the radical Palestinian Hamas organization. German tourists cruising on AIDAdiva were in a state of shock when talking to the German News channel Tagesthemen. Rocket parts landed on the cruise ship. Fortunately the rockets exploded before hitting the vessel deck. No casualties or significant damages to the cruise ship were reported. The ship was on its way to the next port of Crete in Greece.

A statement released by AIDAdiva voices its regret. The cruise liner said no travel alert was issued by German authorities prior to them sailing to Israel. After the incident, German authorities issued an alert.

Tanker cargo stolen (16th July 2014)Pirates have hijacked a Malaysian tanker in the South China Sea, stealing its gasoil cargo before setting it adrift with a damaged engine. The 3,000dwt Oriental Glory (built 1993) was attacked off south-east Malaysia, the country’s navy said. The gunmen also damaged communication equipment. The crew were unhurt, AFP reported. The vessel was heading from Singapore to Borneo. The attack highlights the increasing frequency of incidents in what is becoming a piracy hotspot.

Giacinta (11th August 2014)A pirate attack against the Italian tanker Giacinta has been foiled by armed guards onboard the vessel. The incident happened on 6th August at around 11 a.m. LT in the Gulf of Aden. The Giacinta was en route to Fujairah (United Arab Emirates) when it became surrounded by eight suspicious boats. The armed security guards and the crew members onboard Giacinta followed the procedures against piracy. According to ASSIV, they fired a rocket but the pirates were pushed back after the guards fired warning shots. The incident was immediately reported to the Maritime Security Centre – Horn of Africa (MSCHOA) and to Mimbelli, an Italian military vessel patrolling in the area (deployed with NATO’s counter-piracy Operation Ocean Shield). The Italian tanker continued towards its destination in safe conditions.

Giacinta (IMO number 9433509 and MMSI 247239600) is a product tanker built in 2010 at GSI Shipyard (China). The DWT 50,308 tonne vessel is 182 meters long. It is operated by Motia Compagnia di Navigazione SpA (based in Venice).


Operation Dignity reaffirms that it will attack ships trying to enter Benghazi port (12th August 2014)By Noora Ibrahim.

Benghazi Port (Photo: Bridgette Auger)

Ships attempting to enter Benghazi Port will be attacked by Operation Dignity, regardless of orders to the contrary by Benghazi Municipal Council or the government, the head of Operation Dignity air force has said. Air Force Brigadier-General Saqr Adam Geroushi told the Libya Herald that the decision by the municipal council had put the lives of the port’s workers at risk. The city council decided 8th August 2014 that the port would remain open for business despite an order by Dignity forces that it closes. The Ministry of Interior later confirmed that it had been kept open Geroushi stated that Operation Dignity would deliver on its promise to attack any ships entering the port as it sought to stop the resupplying by sea of weapons and troops to Islamist brigades in the city. He claimed the reinforcements were arriving to Benghazi form the ports of Mirsata, Ras Lanuf and Derna. The spokesman for Operation Dignity Mohamed Hejazi said all shipping to and from Derna and Misrata would also be fired upon. It is reported that today Operation Dignity carried out its threat as far as Derna is concerned and bombed its Port. Operation Dignity has said all marine traffic into Benghazi should be redirected to its stronghold of Tobruk.

Iron Baron V – Panama (6th August 2014)A press report, dated 5th August, stated that a fighter aircraft of the Libyan Air Force allegedly opened fire on bulk carrier Iron Baron V (33093gt, built 2014), which was located in the outer anchorage of the Port of Derna, at around 14:00 hrs, 5th August. According to early reports, there were no injuries; however, property damages were noted. An announcement is expected soon from the Ministry of Shipping regarding the incident.

Sea Soul I – Tanzania (15th August 2014)Forty containers with an arms shipment bound for Mali, were lost when general cargo with container capacity Sea Soul 1 (2472gt, built 1985) was deliberately sunk by its Egyptian crew of 15 about ten miles from Goree at 1400, 12th August. The ship was reportedly carrying containers loaded with 10,000 guns and ammunition. The Senegalese Navy on patrol off Almadies spotted the ship on 8th August and raised alarm. During a check the weapons were found. The Senegalese customs was alerted, but docking at the Port of Dakar was delayed, giving the crew the chance to scuttle the vessel which had left Iraq to transit Turkey before heading to Senegalese waters. Arrangements were made to allow recovery of all the weapons and put them in a safe place. The crew was taken in custody at the Port Office. However, it was found out that two containers of the cargo disappeared before the sinking.


SHIP SECURITY QUESTIONNAIRE

West Africa/Gulf of Guinea

Vessel details

Name:

GT:

Speed (Laden):

Speed (Ballast):

Freeboard (Laden):

Freeboard (Ballast):

Transit /Destination details

1. Please provide full details of voyage and routing:

2. Please provide full details of the Oil Terminal /Oil Field: (where applicable)

Limits required

War Risks Amount:

Kidnap and Ransom: USD 3m USD 5m USD 8m USD 10m

Loss of Hire Daily Amount: £

(please advise if required)

Number of Days Indemnity:


Onboard security

1. Does the vessel have Security Personnel onboard?

a) Number of Armed Security Personnel?

b) Number of Unarmed Security Personnel?

Please advise name of Security Company to be used

2. Will Razor/Barbed/Electric wire be deployed on low-lying deck areas?

a) Razor Wire Yes No

b) Barbed Wire Yes No

c) Electric Wire Yes No

3. Are Porthole Grills and Security Doors fitted? Yes No

4. Are Protective oil drums deployed? Yes No

5. Are Fire Hoses installed with baffle plates? Yes No

6. Are your crew trained in security and counter piracy measures? Yes No

7. Will your crew implement the guidelines contained in BMP 4? Yes No

8. Please provide details of any other security measures deployed

9. Do you carry further Defence Stores? Please provide details.

(Quantity of Barbed/Razor wire, pallets, netting, barrels carried on board)

Signed:

Dated:

SHIP SECURITY QUESTIONNAIRE

West Africa/Gulf of Guinea

Vessel details

Name:

GT:

Speed (Laden):

Speed (Ballast):

Freeboard (Laden):

Freeboard (Ballast):

Transit /Destination details

1. Please provide full details of voyage and routing:

2. Please provide full details of the Oil Terminal /Oil Field: (where applicable)

Limits required

War Risks Amount:

Kidnap and Ransom: USD 3m USD 5m USD 8m USD 10m

Loss of Hire Daily Amount: £

(please advise if required)

Number of Days Indemnity:


SOURCES

Hull & Machinery casualties

Latest war/piracy incidents

Navy Kills Two Pirates in Gun Duel, Arrest Six (18th May 2014) – Chiemelie Ezeobi

Pirates attempt to hijack tanker off Nigeria (22nd May 2014) – Reuters, 22nd May, 8:55 am

Dryad in piracy alert (4th June 2014) – Dale Wainwright

Protest in eastern Libyan oil port town Brega, airport closed (17th June 2014) – Reporting by Ulf Laessing, Ayman al-Warfalli

and Feras Bosalum; Editing by Tom Heneghan

Nigerian navy preventing use of armed guards (26th June 2014) – Data provided by Lloyd’s List Intelligence

Ukraine bans international shipping from Crimea ports (9th July 2014) – David Osler (Informa)

Libyan protesters shut down Brega oil port – state firm NOC (14th July 2014) – Reuters 12th July 2014

Operation Dignity reaffirms that it will attack ships trying to enter Benghazi port (12th August 2014) – Noora Ibrahim

Ag Marine (25th April 2014) - www.vesselfinder.com

MOL Motivator/Zhong Xing 2 (5th May 2014) - www.wikipedia.org / www.rooselaw.co.uk

Suat Bey Grounding (15th May 2014) - www.rooselaw.co.uk

Saloos capsize (16th May 2014) - www.rooselaw.co.uk / www.vesselfinder.com

Elinakos Grounding (26th May 2014) - www.rooselaw.co.uk

Le Sheng/ Cape Med Collision (30th May 2014) - www.news.odin.tc

Shoko Maru Explosion (29th May 2014) - www.rooselaw.co.uk

Antonio Fire (6th June 2014) - www.rooselaw.co.uk

Viet Long grounding (9th June 2014) - www.rooselaw.co.uk / www.salvageconsultancy.com

Explorer Fire (14th June 2014) - www.vesselfinder.com / www.worldmaritimenews.com

Elpida GR/ Sea Rose Collision (16th June 2014) - www.rooselaw.co.uk

Universal Brave (17th June 2014) - www.rooselaw.co.uk

AMT Explorer Capsize (3rd July 2014) - www.rooselaw.co.uk

Bremen engine breakdown (11th July 2014) - www.rooselaw.co.uk

Lady Rosebud engine breakdown (14th July 2014) - www.rooselaw.co.uk

RHL Fidelitas water ingress (30th July 2014) - www.rooselaw.co.uk / www.gcaptain.com

Hafnia Crux engine Failure (7th August 2014) - www.rooselaw.co.uk

Flag Gangos/ Pamisos collision (12th August 2014) - www.rooselaw.co.uk

http://www.vesselfinder.com/news/2038-AG-Marina-sinks-off-Crete-3-missing

http://en.wikipedia.org/wiki/2014_Po_Toi_Island_ship_collision

http://www.rooselaw.co.uk/Roose+Partners%20Casualty%20Newsletter%20-%20Edition%2059%20-%207%20May%202014.pdf



http://www.vesselfinder.com/news/2096-Cargo-vessel-Saloos-sinks-in-the-Cabinda-Gulf-West-Africa

http://www.rooselaw.co.uk/Roose+Partners%20Casualty%20Newsletter%20-%20Edition%2063%20-%204%20June%202014.pdf

http://www.news.odin.tc/index.php?page=view/article/1486/British-capesize-bulker-Cape-Med-collided-with-Chinese-freighter-Le-Sheng-in-Bay-of-Gibraltar



https://www.salvageconsultancy.com/en/projects


http://www.vesselfinder.com/news/2162-LNG-tanker-Explorer-under-tow-after-engine-room-fire

http://www.worldmaritimenews.com/archives/127414/fire-aboard-lng-carrier-explorer-no-casualties/



http://www.rooselaw.co.uk/Roose+Partners%20Casualty%20Newsletter%20-%20Edition%2068%20-%209%20July%202014.pdf



http://www.rooselaw.co.uk/Roose+Partners%20Casualty%20Newsletter%20-%20Edition%2072%20-%206%20August%202014.pdf



Arthur J. Gallagher (Specialty)

Walbrook OfficeThe Walbrook Building25 WalbrookLondonEC4N 8AW

Tel: +44 (0) 20 7204 6000Fax: +44 (0) 20 7204 6001

www.ajginternational.com

Arthur J. Gallagher (Specialty) is a trading name of Arthur J. Gallagher (UK) Limited which is authorised and regulated by the Financial Conduct Authority. Registered Office: The Walbrook Building, 25 Walbrook, London EC4N 8AW. Registered in England and Wales. Company Number: 1193013. www.ajginternational.com

The information contained in this market review has been compiled by Arthur J. Gallagher from various news sources. This review does not purport to be comprehensive or to give legal advice. While every effort has been made to ensure accuracy, Arthur J. Gallagher cannot be held liable for any errors, omissions or inaccuracies contained within the document. Readers should refrain from acting upon information in this document without first taking further specialist or professional advice.

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