Mystery Ship Remains in Gulf of Mexico

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Suez-Max tanker United Kalavryta is anchored off the Texas coast (this is NOT the Texas coast pictured!) Photo Credit: Marine Management Services, M.C.

The future of a mystery tanker in the Gulf of Mexico remains clouded as international powers wrangle over ownership of the cargo. The name of the vessel is no secret–it’s the United Kalavryta, Greek-owned, and sailing under the flag of the Marshall Islands. “The vessel is carrying a cargo of oil from Turkey that arrived from Kurdistan,” says Keith Letourneau, Partner at Houston’s Blank Rome, LLP law firm. Ownership of the oil is the subject of international maritime debate. “It’s quite a quandary for Kurdistan at the moment, because they’ve got to make a decision as to what’s going to happen with that cargo, otherwise, they’re going to continue to accrue charter hire aboard the vessel offshore,” he says.

The impasse has created problems for other, associated contractors, like AET Offshore Services, which had been engaged to off load the oil and bring it ashore in Houston. AET got a judge to release them from their contract. “We’re not going to be conducting any lightering operations until the situation is fully resolved,” says Darrell Wilson, AET spokesman. “The Kurdish regional government wants to off-load the cargo, but the Oil Ministry of the Republic of Iraq has convinced the contracted lightering company not to off-load it and carry it ashore for fear of handling stolen goods,” Letourneau said. AET spokesman Darrell Wilson confirmed their stance, “We’re not going to be conducting any lightering operations in regards to disputed oil, until the situation is fully resolved.”

So what happens now?
“What happens to the cargo remains to be seen,” says Letourneau. “That cargo has to be off loaded, and somebody has to accept the responsibility for off loading it, and I’m not sure who that’s going to be at the moment,” he says. There are two main triggers, political and economic.

The United Kalavryta is a Suez-Max class vessel, with a double hull, a 175,000 ton deadweight capacity, and a displacement of over 201,000 tons. At 274-meters, she’s as long as three football fields, and her beam–or width–is more than half the length of a football field. She’s massive. She won’t fit in most US ports, including the Port of Houston.
That’s where AET Services fit in. With lightering vessels of smaller capacities, between 70- and 80,000 tons, its job would have been to transfer the United Kalavryta’s oil and ferry it to a terminal on the Houston Ship Channel. But with the tanker in a deadlock between Iraq and Kurdstan’s claims, all she can do is accrue daily charter billing for her owners, Marine Management Services, M.C., a Greek company.

“The market right now, prices are going up, so the rates are quite high,” says Letourneau. “She’s definitely in the $1,000’s of dollars per day, no question about it,” he says. If the money committed to contract the vessel runs out before this is resolved, Letourneau says Kurdistan would have no other alternatives for the tanker. “The vessel, at that juncture, likely would terminate the charter for breach of contract, and opt to transit to a different destination,” he says.

But who would take the oil? Certainly no one willing to run afoul of the Republic of Iraq. “As far as where it might go, I’m not really certain,” Letourneau says. There are alternatives, obviously, world wide, where that vessel could go–Venezuela comes to mind. But that country “is an outlier when it comes to dealing with the oil industry, generally, so I would be be surprised if that would happen,” he says.

For now, she’s riding the swells in the Gulf.

Kurdistan is putting forward an argument that the alleged-conversion of the oil did not occur aboard a vessel in navigable waters or in connection with traditional maritime activity. “Conversion” is a legal synonym for “theft.” “The alleged conversion would have taken place in Kurdistan when the oil was transported via pipeline to Turkey,” says Letourneau. He believes the cargo in the holds of the United Kalavryta has more worth as political capital, and that the Kurds have more at stake than a tanker-ful of crude. “I would imagine that Kurdistan is holding out prospects of possibly waiting until they can declare their own independence” from Iraq, Letourneau says. “Absent an agreement between these two parties, sooner or later that cargo is going to have to move ashore somewhere, and there, a legal battle will ensue over the cargo’s handling and ownership,” he says.

This isn’t going to be solved this weekend. “I think this is going to take a while,” Letourneau says.

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