Cepsa naphtha transfer from damaged LR1 Hafnia Nile concludes, some volume lost

The LR1 Hafnia Nile, which collided with the VLCC Ceres I July 19, has completed the transfer of less than 50,000 metric tons of Spain-based Cepsa's naphtha cargo to LR1 Hafnia Guangzhou in Malaysia, several sources involved in the exercise said Sep. 2.

"The [naphtha] transfer was completed last week," a source involved in the exercise said. The transfer took almost six weeks to complete, including the days involved in bringing the damaged ship to anchorage. Sources said the transfer operation to the 2019-built Hafnia Guangzhou was very sensitive and was done gradually due to technical reasons.

A part of the cargo had been burnt, so the quantity transferred is estimated at around 67,500 cubic meters, or less than 50,000 metric tons, sources said. Naphtha cargoes on LR1s are typically around 55,000 metric tons, plus/ minus 5%, though these tankers have a capacity of 65,000 metric tons.

Cepsa on Aug. 22 declined to divulge the volume of naphtha remaining compared with the original load, in reply to queries from S&P Global Commodity Insights. It also declined to disclose where the remaining naphtha, which was sourced from Huelva, will be discharged.

Trading sources in Singapore said if cargoes are affected in maritime accidents, claims are filed with cargo insurers and a distress sale of the balance quantity takes place.

The Singapore-flagged Hafnia Nile has a protection and indemnity cover from Gard. The Ceres I has hull and machinery insurance from Maritime Mutual and is now anchored near Sedili in Malaysia's Johor province, sources said.

Cepsa had declined to disclose the insurer of the cargo or whether a replacement has been provided to the original buyer under a separate deal. Gard and Maritime Mutual are yet to reply to a request for comment.

In July, Malaysian authorities accused the crew of the 24-year-old Ceres I of attempting to flee and detained the ship for further investigation. The authorities issued a statement saying that Malaysia's coast guard had found traces of an oil spill at the collision location.

There was a light oil sheen that came out from the damaged part of Hafnia Nile, a Hafnia spokesperson said in July.

The Ceres I, operated by China's Shanghai Prosperity Ship Management, had previously carried Iranian crude, which is subject to US sanctions, according to S&P Global Commodities at Sea. The company could not be immediately reached for comment.

Singapore-based shipping conglomerate BW Group has a stake in Hafnia, which operates the world's largest fleet of LR1 tankers. Hafnia was listed on the New York Stock Exchange nearly five months ago and continues to trade on the Oslo Stock Exchange. It operates more than 100 tankers.

Asian LR1 tanker freight rates are just a tad above year-to-date lows, Commodity Insights data showed. This is due to weak refinery margins and sluggish demand to move oil products, market participants said.

Daily earnings on a round-trip basis for LR1s on the benchmark Persian Gulf-Japan route are close to $15,000/d compared with this year's high of $65,000/day around March 20, according to brokers' estimates.