Iranian tanker at risk of sinking as buyer seeks other supply

Heesu Lee, Ann Koh and Serene Cheong January 08, 2018

SEOUL and SINGAPORE (Bloomberg) -- Hanwha Total Petrochemical Co. bought alternative supply after a fire on board an Iranian oil tanker that was destined for the South Korean company. The 32 crew members of the vessel were still missing following a collision in the East China Sea with another ship that’s left it in danger of sinking.

The Sanchi is still ablaze and may explode after colliding on Saturday with the bulk carrier CF Crystal about 160 nautical miles off the coast of Shanghai, Chinese state media reported, with images showing the ship shrouded in thick black smoke. China, South Korea and the U.S. sent vessels and planes to search for Sanchi’s missing crew -- 30 Iranians and two Bangladeshis, the Associated Press reported.

Sanchi was ferrying 1 MMbbl of condensate -- a hydrocarbon liquid that’s used to make petrochemicals -- to Daesan, according to a Hanwha Total spokesman. The firm plans to use its stockpiles as a replacement for the supply, and is considering whether to make additional purchases, he said, asking not to be identified because of internal policy.

Hanwha on Monday also issued a tender and bought five 25,000-metric-ton cargoes of naphtha -- another feedstock involved in petrochemical production -- for delivery next month, paying a premium of about $10/ton over benchmark prices for four of the shipments. It didn’t issue tenders to buy a similar grade of the oil product for delivery in January, according to data compiled by Bloomberg.

Hanwha Total purchased a total of about 64 MMbbl of condensate in the January-November period last year, of which 39.4 MMbbl came from Iran, according to the state-run Korea National Oil Corp. data compiled by Bloomberg.

Compensation claim

The Panama-flagged Sanchi is owned by state-run National Iranian Tanker Co. and departed Assaluyeh port on Dec. 16 for Daesan, according to data compiled by Bloomberg. All aboard the CF Crystal, a Hong Kong-registered cargo vessel that was carrying grain from the U.S. to China, were rescued, according to China’s Ministry of Transport, which said oil was on the water.

Hanwha plans to claim compensation for the cargo’s loss under its own insurance program, while the damages caused by the collision will probably be covered under NITC’s policy, according to the South Korean company’s spokesman.

Iran, the third-largest oil producer in the Organization of Petroleum Exporting Countries, sells most of its crude and condensate to Asia, exporting about 2 MMbpd. Condensate is a light oil produced along with natural gas, mainly at Iran’s offshore South Pars fields. The port of Assaluyeh is the main loading point for Iranian condensate.

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