UK P&I looks for continued LNG record
The UK P&I Club’s loss prevention director Karl Lumbers has said that the club is looking to maintain the low claims record of the LNG sector even as shifts in the market change the risks involved. In 43 years of LNG shipping, there has yet to be a major incident.
He said that in the club, LNG ships produced well under half of one per cent of the number and value of large claims (over US$100,000) from the entire entered fleet over the period 1987-2004. Some 34 large claims had cost just US$15m. Yet the proportion of LNG tonnage entered with the UK Club is nearly eight per cent of the total.
Looking ahead, Mr. Lumbers anticipated a more variegated LNG industry and indicated a wide range of developments of concern to insurers. Market growth could mean more players, pressure on time, more competition and short term contracts. A growing spot market was a distinct prospect with the increased likelihood of contractual disputes and revisions to performance criteria. Time considerations would become more important as commercial operators encouraged swift turnaround in berths.
Larger, technologically more advanced vessels would require more sophisticated terminal facilities and procedures and skilled operators. The close association between terminals, vessels and multinational carriers was likely to diminish as terminals and routes increased. More ships were likely to find themselves trading to unfamiliar terminals and perhaps faced with more onerous conditions of use from terminal operators.
Ship and terminal repairs would become more expensive and there could be difficulty in finding the necessary, yards, facilities and skills.
“The combination of LNG ship designs and current safety management practices for LNG transportation has reduced accidents to a level such that there is little historical or empirical information on breaches or spills. Large unignited vapour releases are unlikely. Beyond approximately 750 metres for small accidental spills and 1600 metres for large spills, the impacts on public safety should generally be low.”
Mr Lumbers concluded: “the future does pose problems but we see no reason to suspect they can’t be resolved. Insurers need to work closely with their assureds to ensure the risks are minimised.”
He said that in the club, LNG ships produced well under half of one per cent of the number and value of large claims (over US$100,000) from the entire entered fleet over the period 1987-2004. Some 34 large claims had cost just US$15m. Yet the proportion of LNG tonnage entered with the UK Club is nearly eight per cent of the total.
Looking ahead, Mr. Lumbers anticipated a more variegated LNG industry and indicated a wide range of developments of concern to insurers. Market growth could mean more players, pressure on time, more competition and short term contracts. A growing spot market was a distinct prospect with the increased likelihood of contractual disputes and revisions to performance criteria. Time considerations would become more important as commercial operators encouraged swift turnaround in berths.
Larger, technologically more advanced vessels would require more sophisticated terminal facilities and procedures and skilled operators. The close association between terminals, vessels and multinational carriers was likely to diminish as terminals and routes increased. More ships were likely to find themselves trading to unfamiliar terminals and perhaps faced with more onerous conditions of use from terminal operators.
Ship and terminal repairs would become more expensive and there could be difficulty in finding the necessary, yards, facilities and skills.
“The combination of LNG ship designs and current safety management practices for LNG transportation has reduced accidents to a level such that there is little historical or empirical information on breaches or spills. Large unignited vapour releases are unlikely. Beyond approximately 750 metres for small accidental spills and 1600 metres for large spills, the impacts on public safety should generally be low.”
Mr Lumbers concluded: “the future does pose problems but we see no reason to suspect they can’t be resolved. Insurers need to work closely with their assureds to ensure the risks are minimised.”