• The deck of Yemen's 'FSO Safer', which has not been maintained for years. Photos: IR Consilium
    The deck of Yemen's 'FSO Safer', which has not been maintained for years. Photos: IR Consilium
  • Corrosion in the boiler system. The severity of the ship's physical deterioration remains unclear.
    Corrosion in the boiler system. The severity of the ship's physical deterioration remains unclear.
  • The vessel has been called a 'ticking time-bomb' as gases are building up in its chambers.
    The vessel has been called a 'ticking time-bomb' as gases are building up in its chambers.
  • The ship's corroded auxiliary utility system.
    The ship's corroded auxiliary utility system.
  • The external piping system broke down on April 22, 2019, leading to an oil spill.
    The external piping system broke down on April 22, 2019, leading to an oil spill.
  • The vessel lacks a functioning cathodic system to protect it from corrosion.
    The vessel lacks a functioning cathodic system to protect it from corrosion.
  • The leaky vessel still contains 1.1 million barrels of oil.
    The leaky vessel still contains 1.1 million barrels of oil.
  • The hull of the 'FSO Safer', which could be sold for scrap.
    The hull of the 'FSO Safer', which could be sold for scrap.

EU to donate $3m towards salvage of Yemen's ‘floating time-bomb’ oil tanker


Nada AlTaher
  • English
  • Arabic

The European Union has pledged $3 million towards an operation to salvage a crumbling oil tanker off the coast of Yemen after a disappointing fund-raiser brought in less than a quarter of the cash needed.

The UN says it needs about $144m to fund the operation from start to finish, including finding a temporary replacement for the Floating Storage and Offloading (FSO) vessel to take on its 1.1 million barrels of crude oil currently threatening fisheries and livelihoods in Yemen and beyond.

A pledging conference in the Netherlands on May 10 secured less than half of the $80m needed to finance the first part of the operation.

“Salvaging this tanker is also a very good example of international cooperation to prevent a full-blown disaster, which would affect the livelihoods of millions of Yemenis, as well as fishermen and tourist operators in the wider Red Sea area,” EU High Representative and Vice President Josep Borrell said on Wednesday, when announcing the donation.

A flurry of fund-raising activity was launched after the UN signed an agreement with the Houthi rebel group in March to finally end the risk posed by Safer which has been in need of maintenance and decommissioning for years.

Safer MOU
Safer MOU

Previous attempts to sort the matter out were blocked by the Iran-backed group, which controls the port of Ras Isa where the Safer is currently moored.

An oil spill or leak could cost billions in clean-up — and result in an incident four times as big as the 1989 Exxon Valdez disaster.

As progress remains slow on the Safer dossier, a two-month truce which began on the first day of Ramadan may be extended amid international pressure on the warring sides to maintain the significant reduction in violence on Yemen’s front lines.

On Wednesday, the Houthis said they were “studying” a request by the UN to extend the truce which is set to expire on June 2.

After an initial failure to launch commercial flights to and from Sanaa last month, a plane successfully departed from the Houthi-controlled capital to Jordan for Yemenis to receive treatment abroad last week.

A second commercial flight took off from the Jordanian capital Amman to Sanaa, “as per the terms of the truce agreement”, in a positive sign that Yemen might be finally on its way to more peaceful times, after the Houthis took control of the capital in 2015 and the government launched a counter-offensive which led to all-out war.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Updated: May 19, 2022, 11:27 AM