The administrative backlog of tankers carrying Kazakh oil at the Bosporus is getting bigger, with no signs that Turkish officials are ready to change a new (and unintentionally disruptive) insurance guarantee policy.
Fearing exposure to the nine-figure cleanup costs of a major tanker incident, Turkey now requires all laden tankers transiting the Bosporus to provide a letter of guarantee from their insurer. The policy responds to new G7 sanctions which forbid Western insurers from covering Russia's crude cargoes (unless the oil was sold for less than $60 per barrel). Since the sanctions constrain access to insurance, Turkey wants to verify that all tankers that pass through are properly insured throughout the transit.
However, Turkey's mechanism appears to be too stringent for the leading P&I clubs. According to Gard, the new Turkish rules require an unprecedented guarantee that "cover will remain in place under any circumstances" while the vessel is in Turkish waters - even if the vessel is in breach of sanctions or otherwise in violation of the terms of its coverage. An unconditional guarantee of insurance for a tanker that turned out to be in breach of sanctions would expose the club itself to a breach of sanctions, according to Gard - and that is a risk that Western insurers will not accept.
However, Turkey's Ministry of Transport is not willing to accept the risk either. "It is out of question for us to take the risk that the insurance company will not meet its compensation responsibility in an accident that may occur . . . if a sanctioned ship or a cargo passes through the Turkish Straits," the agency said in a statement Thursday.
The U.S. Treasury Department has been in talks with its Turkish counterparts to help clear the backlog. "We’ve explained that [Kazakh shipments] are not subject to a price cap at all," Treasury Secretary Janet Yellen told Bloomberg on Thursday. "There’s no reason whatsoever for why they should be subjected to any type of procedures."
Meanwhile, Russian shipowner Sovcomflot - which is fully insured by a Russian P&I club - has provided the requested insurance guarantee for at least one vessel to successfully transit the Bosporus, according to Bloomberg.
