Sri Lanka assessing environmental damage from oil tanker fire


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Sri Lanka’s government is sending scientists to determine whether a three-day fire on a giant oil tanker off its coast damaged the marine environment, an official said on Monday.

Ships and helicopters from the country and neighbouring India extinguished the fire on the MT New Diamond – carrying about two million barrels of crude oil – on Sunday. The fire killed one Filipino crew member and injured another.

Navy spokesman Indika de Silva said that although the main fire has been extinguished, “occasional small-scale fires are taking place from time to time”. Firefighters have doused them as they continue spraying water to cool the ship.

The general manager of Sri Lanka’s Marine Environment Protection Authority, Terney Pradeep, said the scientists from state agencies and universities will prepare a risk assessment, including the potential for an oil leak. The authority has said it plans to take legal action over the fire.

On Sunday, Attorney General Dappula de Livera directed officials to prepare cost and environmental damage assessments.

With its engines shut down, the tanker drifted to within 20 nautical miles (37 kilometres) of Sri Lanka’s eastern coast on Friday before a tugboat towed it farther out to sea.

Meanwhile, 10 British and Dutch professionals, including rescue operation specialists, disaster evaluators and legal consultants, reached the scene and were waiting to board the tanker to begin the mission of salvaging the ship. The experts were sent by New Shipping Ltd, the commercial owner of the New Diamond in Athens, Greece, the navy said.

The fire began in an engine room boiler but did not spread to the tanker’s oil storage area and no leak has been reported, the navy said. Sri Lankan officials said they feared massive environmental damage if the ship leaks or explodes.

The tanker had 23 crew members – 18 Filipinos and five Greeks. Twenty-one crew members left the tanker uninjured as the fire burned.

It was transporting crude oil from the port of Mina Al Ahmadi in Kuwait to the Indian port of Paradip, where the state-owned Indian Oil Corp has a refinery.

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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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