Costly kidnapping

Glencore Energy has won a battle against rival trader Transworld Oil over who will foot the bill for a Teekay suezmax failing to load a cargo from an FPSO stationed off Nigeria.

A London court has awarded Glencore more than $8.66m in a complicated dispute over a contract to lift a cargo of Ukpokiti crude in March 2008.

The deal however came unstuck when the 159,000-dwt Teekay tanker Narmada Spirit (built 2003) left the Trinity Spirit FPSO to head to deep water and subsequently its next load port when five of the six crew members of the tug Gunter were kidnapped.

The Trinity Spirit FPSO

Although the crewmen were only held for three days and there was uncertainty whether the kidnappers were armed with guns or knives London high court judge Justice Blair accepted that prospects for loading must at best have appeared uncertain and at worst dangerous so it was not surprising that the Narmada Spirit sailed away.

Glencore contracted to sell 650,000 barrels of Ivory Coast Espoir crude and 285,000 barrels of Nigerian Ukpokiti crude to BP which was the charterer of the Teekay tanker.

Glencore bought the Ukpokiti crude valued at some $28m from Transworld, part of the business empire of controversial oil trader and charterer, John Deuss.

The court was told the billionaire trader may also have an equity interest in Tetra Petroleum, a company that provided technical services to the Ukpokiti field including the Trinity Spirit FPSO, the former 270,000-dwt VLCC Conoco Independence (built 1976) which was converted to be a floating terminal in 1997.

Deuss did the sale of the Ukpokiti crude himself but as he felt this was inappropriate for someone as senior as Transworld’s president arranged for it to appear that the transaction was carried out by Allan Bechter, an IT specialist rather than a trader.

The kidnapping of the tug crew was a critical factor as tankers load from the Trinity Spirit bow to bow with tugs required to keep the vessels aligned.

The issue before Justice Blair was weather efforts to agree a return visit to the FPSO by the Narmada Spirit affirmed or ended the contract between Glencore and Transworld.

The 16,000 word judgment turns on exactly what happened as Glencore and Transworld tried to organise a return visit by the suezmax and the “free on board” conditions laid down in the sales contract.

Click on the document in the related media column to the right to read the judgment in full.

Printable version Newsletter sign up