Gulf tanker incidents to raise shippers’ costs, cut traffic

In this picture taken on Tuesday, April 7, 2015, and released by the semi-official Fars News Agency, Iranian warship Alborz, foreground, prepares before leaving Iran's waters, at the Strait of Hormuz. (AP)
Short Url
Updated 15 January 2020

Gulf tanker incidents to raise shippers’ costs, cut traffic

  • Many of the 2,000 companies operating ships in the region have ordered their vessels to transit the Strait of Hormuz only during the daylight hours and at high speed

WASHINGTON: Recent seizures and attacks aimed at oil tankers in the Strait of Hormuz will raise insurance rates for shipping companies and, if unchecked, reduce tanker traffic in the vital waterway, according to energy experts.
Britain’s foreign secretary said that Iranian authorities on Friday seized two ships, one flying under the British flag, the other registered in Liberia. The events occurred in a passageway that carries one-fifth of the world’s crude exports.
“If this kind of problem continues, you might see people start to shy away from the (Arabian) Gulf or try to reflag — not be a British tanker,” said energy economist Michael Lynch.
The near-term impact will fall most heavily on the shipping industry in the form of higher insurance rates, said Lynch, who is the president of Strategic Energy & Economic Research Inc.
Richard Nephew, a Columbia University researcher who wrote a book on sanctions, also believes the tanker seizures could create “a real risk premium” for companies that operate in the Gulf and insurers that underwrite them.
“Certainly we’ve seen concern with this in the past on sanctions grounds, and I would imagine security groups would be a far more complicating element,” Nephew said.
On Friday, Iran’s Revolutionary Guard said it took the British tanker Stena Impero to an Iranian port because it allegedly violated international shipping regulations. An Iranian news agency said the Liberian-flagged Mesdar was briefly detained and then released after being told to comply with environmental rules.
The seizures marked a sharp escalation of tension in the region that began rising when the Trump administration withdrew from a 2015 nuclear deal with Iran and imposed severe restrictions on Iranian oil exports and other sanctions.

FASTFACT

The British navy seized Iran’s Grace 1 tanker in Gibraltar on July 4 on suspicion of smuggling oil to Syria in breach of EU sanctions.

Many of the 2,000 companies operating ships in the region have ordered their vessels to transit the Strait of Hormuz only during the daylight hours and at high speed. But only a handful of the companies have halted bookings.
The tensions in the Gulf also pushed oil prices slightly higher. Brent crude, the international standard, rose 0.9 percent to $62.47 a barrel on Friday, while benchmark US crude gained 0.6 percent to settle at $55.63.
There’s a long history of shippers enduring threats in the region.
“There have always been little problems around the Gulf where people will say, ‘You’re in our territorial waters,’ but usually that doesn’t go so far as the seizure of tankers,” Lynch said.


STC postpones its acquisition of Vodafone Egypt for second time

Updated 13 July 2020

STC postpones its acquisition of Vodafone Egypt for second time

  • Kingdom’s largest telecom company says it will need an additional two months to complete the deal

CAIRO: The Saudi Telecom Company (STC), the Kingdom’s largest telecom company, said that it will need an additional two months to complete a deal to purchase a 55 percent stake in Vodafone Egypt.

In January, STC was in agreement to buy the stake for $2.4 billion. In April, it extended the process for 90 days due to logistical challenges stemming from the spread of COVD-19. The company said in a statement that it would extend the period again to September for the same reason.

The Public Investment Fund, the Saudi sovereign wealth fund, owns a majority stake in STC. The ownership of Vodafone Egypt is divided between 55 percent for Vodafone International, which is the target percentage of the Saudi purchase offer, 44.8 percent for Telecom Egypt, and the remaining 0.2 percent for small shareholders.

Telecom Egypt is awaiting the results of Vodafone’s evaluation of the final share price to announce its position on the deal. A Telecom Egypt official stated that the company is still awaiting STC’s position regarding the purchase of the share. If the deal is not completed, it may be presented with its rights to acquire Vodafone’s share, which would allow it to take over 99.8 percent of the company’s shares, leaving 0.2 percent for small investors.

Ashraf El-Wardany, an Egyptian communications expert, pointed out the importance of waiting until the procedures between STC and the Vodafone Group are complete. The results will determine the next steps by Telecom Egypt.

El-Wardany said that the Saudi operator must, after completing the relevant studies, submit a final binding offer at the share price and any conditions for purchase. If approved by Vodafone, it must submit the offer with the same conditions and price to Telecom Egypt, provided that the latter responds within a maximum period of 45 days to determine its position regarding the use of the right of pre-emption and the purchase, or lack thereof, of Vodafone’s share.

According to El-Wardany, there are other possible scenarios. Vodafone International may not be convinced of the offer or the conditions presented by the Saudi side and the sale may be withdrawn, or the Vodafone group may be ready to sell and has prepared another buyer for its stake in Egypt in the event of rejecting the Saudi offer. It may also it back away from the deal and continue to operate in Egypt for a few more years.

El-Wardany said that if Telecom Egypt decides not to use the right of pre-emption to acquire the remaining Vodafone shares for any reason, it will continue with its 44.8 percent stake.
It may also resort to selling all of its shares or part of it to the Saudi side or to any company that wants to acquire its stake.

“This raises the question of whether STC can acquire all of Vodafone’s shares,” El-Wardany said, adding that the coming months “will make the answer clear.”