x Abu Dhabi, UAESunday 21 January 2018

Red flag for regional shipping

The head of the International Maritime Organisation says international trade faces the risk of disruption from events in the Mena region.

International trade is facing higher risks because of the globalisation of shipping networks, with future disruptions especially likely to emanate from the Mena region.

Efthimios Mitropoulos, the secretary general of the UN International Maritime Organisation (Imo), said safety and security risks to shipping associated with "catastrophic events" ranging from natural disasters to terrorism were on the rise.

"An event in one particular area has a substantial potential to affect the global system as a whole," he told the World Ports and Trade Summit in Abu Dhabi on Monday.

"It is vital that strategic shipping lanes be kept open under all circumstances."

In this region, those include the Strait of Hormuz, which 40 per cent of the world's sea-borne crude supply passes through on its way from the Gulf to the Indian Ocean.

Other regional maritime choke points for international shipping are the Bab al Mandab connecting the Red Sea and the Gulf of Aden, and the Suez Canal in Egypt, which links the Mediterranean and Red seas. About 11 per cent of the world's crude passes through the canal.

All three strategic sea lanes are subject to security threats related to unrest in the Mena region, and Somali piracy in the Gulf of Aden and beyond. "The strategic importance of the Gulf of Aden is clear," Mr Mitropoulos said.

Because of that, the Imo has placed its anti-piracy action plan at the top of its agenda this year.

Last month, the group sent a letter to its members, sister UN agencies and various organisations outside the UN flagging naval reports of "an unacceptably high proportion" of commercial shipping in the pirate-infested region failing to show visible deterrent measures or to act upon navigational warnings of pirate attacks or suspect vessels.

"Too many large ships seem to think they are invulnerable. But experience has shown this is not the case, particularly when it comes to fully laden tankers," said Mr Mitropoulos.

While the extent and nature of potential threats to shipping were still to be assessed, the importance of the Gulf to global energy trade had become "clearer than every before", he said.

If substantial threats to Mediterranean shipping lanes emerged, shipments of Caspian and Iraqi oil via Turkey from the Ceyhan export terminal could be jeopardised. One option for western oil-consuming countries might be to increase imports of Nigerian oil, Mr Mitropoulos suggested.

Farouk Soussa, the chief economist of Citigroup, told the conference he was deeply disturbed by the prospect of the Gulf of Aden being flanked on both sides by failed states if Yemen's economic and political problems worsened. "It keeps me up at night."

Under such a scenario, oil prices would "go through the roof" and threaten the global economy, he predicted. Ali al Yabhouni, the general manager of the shipping units of Abu Dhabi National Oil Company and the UAE's Opec governor, called for the international community to combat Somalian piracy by helping the divided state re-establish effective central government and rule of law.