FSO Safer: The Operational Plan over a year later
What has changed since April 2022?
The Original Plan and Budget
In April 2022, the UN’s Resident and Humanitarian Coordinator in Yemen, David Gressly, announced the release of the Operational Plan to address the threat posed by the deteriorating FSO Safer and the 1.14 million barrels of crude onboard.
The plan - with a total budget of US$144.1 million - was separated out into two concurrent tracks:
The emergency operation (~US$80 million), as the name suggests, was intended to deal with the immediate priority of getting the oil off the Safer and onto a temporary vessel, and was expected to take around four months.
Meanwhile, the longer term goal of having a permanent vessel in place (with the politics, operational logistics and other considerations around ownership and control of the oil left out of it) was given an 18 month timeline (~US$64 million).
A month later, a fundraising campaign hosted by the Netherlands was launched, with the aim of raising enough pledges from the international community to allow the emergency operation to commence in June; the raising of funds for the second phase would follow afterwards.
Assuming the original timelines were met, this meant that the first phase would be completed by the end of September 2022 (before more treacherous winter weather arrived) with the second phase at the end of November 2023.
Fundraising from the International community was lacklustre
The pledging round in May only raised US$33m which, combined with US$7m in existing funding, meant the UNDP was still around US$40 million short of its initial target.
US$10 million injections the next month from each of the US and Saudi Arabia provided some hope, but with its deadline now effectively passed, the UN resorted to starting a crowdfunding campaign from the public; the target was set at US$5 million, with an additional hope of gaining some publicity traction.
Further donations were received over the next few months from the likes of the Netherlands, the UK, Germany, Canada, Yemen’s HSA Group (the first private sector participant) as well as a couple of hundred thousand dollars from the public. By September, a now reduced (due to some found efficiencies) target of $US75 million of pledges was reached, but still not all of that in cash (a pre-requisite for the operation to be able to commence).
Finally, in late October it appeared that the cash had been received, but a timeline was still to be announced due to the still pending question over the procurement of an actual replacement vessel, as well as some Houthi demands over required visibility of the specifics of the detailed operational plan.
All in all, while there were pockets of good news, things were still looking disconcertingly uncertain for the first phase.
A change of plan for the Second Phase
In September, another major piece of news was also announced, namely that an agreement had been reached between the Houthis and the Yemeni government to the effect that a double-hulled VLCC tanker tethered to a CALM-buoy system, rather than a standalone FSO equipped with a riser and mooring system, would be procured and appropriately converted.
This meant that the budget for the second phase had been reduced from US$64 million to US$38 million, with potential for time savings as well if this meant a lengthy conversion to an FSO was no longer required.
While the below diagrams are not the exact pieces of equipment referenced above, they are included for approximate illustrative purposes to give one an idea of what the alternative set ups are.
Riser and Mooring System (original plan)
Catenary Anchor Leg Mooring (CALM) buoy (new plan)
No Interim Vessel would be utilised…but at a cost
News on the Safer went silent until January of this year, when the UN gave indications that the search for a vessel to initially take on the oil was proving not only elusive thus far but also much more expensive as originally anticipated, as a result of the impact of the Russian invasion of Ukraine and the flow on impact of tanker availability due to oil sanctions and the like. With no-one willing or able to lease a vessel to the UNDP, the agency was forced to eventually buy a 15-year-old tanker called the Nautica; announced in March, it reportedly cost about US$55 million (apparently US$20 million more tham budgeted).
When the leasing of an interim vessel was first on the table - ironically for a 15-year old VLCC, much like its now permanent replacement - it was for an expected timeline of 18 months while the search for a permanent VLCC continued simultaneously; an allocation of US$12.9 million for associated crew and maintenance was included in the original budget. As part of the deal with Euronav, the independent Belgian tanker company would provide support and technical assistance for a period of nine months; it is unclear what will occur after this, but presumably some of the budget originally set aside for the lease vehicle would be available.
Timelines are pushed back
After undertaking some necessary conversions, the Nautica sailed from China to Djibouti, where it was joined this month by SMIT Salvage’s Ndeavor in preparation for the operation to transfer off the oil. The expected timeline for the operation is approximately two months, which should hopefully see completion during July.
The revised budget is only US$4 million more than the original US$144 million
While the eventual cost of securing the replacement VLCC turned out to be a lot more than expected, with the CALM-buoy system now being used to attach to the Nautica rather than the FSO conversion, the overall budget has clocked in at US$143 million.
As per below, the elements in the original plan which are no longer relevant are marked in blue (for the vessel) and green (for the ancillaries; although some form of substitution is required).
What still remains are the UN charges and expenses, insurance, the towing of the Safer for scrapping, as well as the cost of the salvage and operations work by SMIT Salvage.
Update to original post:
It was originally reported in the 24 May post that the total budget for the operation had increased from US$144 million to US$148 million. Subsequent news after the Ndeavor arrived to start the inspection of the Safer, it was revealed that the budget was now a total of US$143 million; this has been reflected above.
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