13 May 2020

Oil tanker with 40,000 barrels waiting months off Taranaki coast

From Checkpoint, 6:21 pm on 13 May 2020

By Jeremy Parkinson

When New Zealand oil company Tamarind Taranaki went into liquidation in November last year, it left the government holding a big fat oily baby.

Tamarind Resources' FPSO Umuroa off the Taranaki coast.

Tamarind Resources' FPSO Umuroa off the Taranaki coast. Photo: Tamarind Resources

Laden with 40,000 barrels or 6000 tonnes of crude oil, the FPSO Umuroa sits just 50 kilometres off the Taranaki coast.

It looks like a ship, but because it is attached to the Tui oil field, it is considered oil infrastructure and its removal will not begin until later this year at the earliest.

This means the FPSO Umuroa and its crew will sit idle and potentially uninsured over winter.

Tamarind Taranaki's Singaporean partner, BW Offshore, owns the FPSO Umuroa and wanted to remove it from the Tui field in accordance with a 2017 Environmental Protection Authority (EPA) decision.

But the EPA lodged an urgent appeal earlier this year, citing the Tamarind Taranaki's liquidation as a change in circumstance.

In a decision released last month, the High Court ordered the FPSO Umuroa to stay in place until it could be safely removed.

It is estimated that the cost of cleaning up the Tui oil field will be around $US100 million, a cost which is likely to be borne by New Zealanders taxpayers.

Maritime Law expert Peter Dawson said the rules are different for ships than they are for offshore installations such as oil rigs and storage vessels.

"It becomes an installation and as an installation, an offshore installation, there's a different suite of rules which cover it in that format, where as as a ship then [it comes under] normal maritime rules and international conventions which govern how the vessel is managed and liabilities limited and how the vessel is insured."

Dawson said it's a grey area in terms of where liability lies if there is an accident over the months the vessel is anchored at sea.

"It's not clear to me whether this vessel would be regarded as a ship or as an installation and I'm not clear as to which legal regime would apply to the clean up costs if the vessel would - god forbid - run aground and pollute the Taranaki coast."

That grey area could well mean that the FPSO Umuroa is not insured in the event of any incident.

"The risk that I see it is that the owner is now forced into the position where the vessel has to stay on the mooring the insurers may - in fact it was voiced in the judgement - the owner said that there's a risk that the insurers of the vessel would not continue to insure the vessel.

"So you have an ageing vessel and ageing moorings  - I'd be concerned that if a storm comes through and they let go there'd be a bunch of questions asked and possibly people left without recourse against the owners or the insurers of the vessel," Dawson said.

In a statement to Checkpoint, Maritime NZ spokesperson Michael Vredenburg clarified the legal status of the vessel.

"FPSO Umuroa is an offshore installation - it is not a ship or vessel for the purposes of the law unless/until it is completely detached from the seabed. When it is detached - under the Maritime Transport Act - it meets the definition of a ship," he said.

Vredenburg said Maritime New Zealand is satisfied that emergency procedures are up to standard in the event of extreme weather and that it expects those procedures to be followed.

Meanwhile New Plymouth Mayor Neil Holdom said locals and the government are dealing with the issue of the FPSO Umuroa as best as they can.

"It is a concern that we've got this vessel out there and it does present a level of residual risk although the government has assured us that they've taken all of the necessary precautions."

Holdom said the clean-up of the oil infrastructure will have to wait until after winter.

"It's clear that the previous owner of the field should never have been able to walk away and now the government has had to come in to clean up the mess and we want it cleaned up quickly but we understand the nature of permanently closing off the wells is fairly complicated and more likely to occur over summer."

The New Plymouth council asked why the work to detach the Umuroa and cap the wells could not be done earlier by an oil rig that only recently left New Zealand waters.

"There needs to be six to nine months worth of engineering work done to retire this thing safely and permanently. So my understanding is that it's quite a complicated process and we want it retired in a way that it doesn't leave any residual risk of environmental contamination," Holdom said.

Holdom has faith in the advice the government has taken in making decisions around the FPSO Umuroa.

"The government has taken a prudent and measured approach to resolving this and we just have to trust that the advice they've been given is high quality advice and the risks have been mitigated," he said.

And the damage to the Taranaki region is not only potentially environmental, the liquidation of the company has had an affect on local businesses also.

"There's millions of dollars outstanding to businesses, that's impacted us locally and impacted a lot of international players and adversely impacted the government.

"We've got this environmental risk that we're concerned about the sooner that the field is closed safely and permanently the sooner we can relax," Holdom said.

Greenpeace campaigner Amanda Larsson said the ship was is part of a pattern in which international oil and mining companies leave behind messes for local communities

"Sadly, it's common practice for oil companies to operate through subsidiaries, absolving the parent companies of liability in situations like the one we're seeing with Tamarind Taranaki and the Umuroa vessel.

"This dangerous debacle could have been avoided if the government had required a parent company guarantee or a decommissioning bond. The government must urgently update the regulatory regime for oil and gas in New Zealand."