UN Buys Tanker, But Funding Gap Could Scuttle Plan to Salvage Oil from ‘Floating Time Bomb’

United Nations officials declared partial victory Thursday in a multi-year effort to avert a US$20-billion humanitarian and environmental catastrophe along the Red Sea coast, but warned their mission may still unravel if they can’t raise another $34 million to fully fund the work.

With $219 billion in profit last year, it would take about 81½ minutes for the global oil and gas industry to pick up the remaining cost of salvaging 1.1 million barrels of crude oil from the stricken FSO Safer, a 47-year-old tanker that has been taking on sea water and last received proper maintenance in 2015.

But the UN Development Programme (UNDP) is still scrambling to finish fundraising for salvage operations that are scheduled to begin in early May—if all goes well. “There is still the risk that this operation could be suspended” if the funds don’t come through, Executive Director Achim Steiner told a news conference at UN headquarters in New York.

UNDP summoned media to announce it had signed a deal to buy a 330-metre, double-hulled very large crude carrier (VLCC), allowing a salvage company to begin transferring crude off the Safer. The announcement followed a years-long effort that had the UN office in Sana’a, Yemen, resorting to a crowdfunding campaign to draw public attention to a “floating time bomb” set to trigger a maritime and shoreline disaster.

One elementary school ventured where the world’s most powerful fossil companies dared not tread— David Gressly, the UN’s resident coordinator/humanitarian coordinator for Yemen, said the children organized a lemonade stand to raise $200 for the salvage.

For months, Gressly has been warning that an oil slick from the Safer would foul shorelines in Yemen, Eritrea, Saudi Arabia, and possibly beyond, devastate the “pristine” Red Sea ecosystem, and “wipe out 200,000 jobs in fisheries overnight” in Yemen.

“If the ship breaks up, it will cost tens of billions of dollars in lives and livelihoods, not to mention the decimation of reefs and mangroves and fishing stocks which will take decades to replenish,” UN communications advisor Russell Geekie added earlier this year.

Yesterday, officials said a spill would jeopardize regional water supplies by shutting down desalination plants along the Red Sea coast and close ports that bring “food, fuel, and life-saving supplies” to 17 million people.

But a close observer familiar with the ship and its condition told The Energy Mix last year that the fossil and international shipping industries feared the reputational risk of being associated with a high-risk rescue operation, involving a ship loaded with four to five times more oil than the notorious Exxon Valdez. Steiner confirmed as much yesterday.

“I do have to say it surprises me that I have to sit in front to you here today still begging for these funds,” he told media. “We’ve put out feelers, appealing to countries in the region, philanthropies, the oil and gas industry, to please step forward and help make this operation work…

“Your lawyers will all tell you not to come near this project, but frankly, that is not an option,” he added. “You can either look at this and sit back and say it’s someone else’s problem, or you can step forward.”

Gressly said news that the salvage ship had been acquired and was now in drydock undergoing refits and maintenance was “already bringing a sense of relief here in Yemen….the only real question I keep encountering is, ‘when can you start?’”

But that sense of urgency didn’t extend to the UNDP assuming the financial risk of guaranteeing a complete, safe salvage before all the funding has been secured. “As public organizations, we cannot simply borrow money to cover this cost,” Steiner said.

A spokesperson for the UN office in Yemen was travelling from New York to Sana’a yesterday and could not answer follow-up questions by email—beginning with the steps the UNDP could take to make the reputational risks in not stepping up more costly to the world’s biggest oil and gas companies than 81½ minutes of their profit.

Steiner said the UNDP had acquired the VLCC at a cost of $55 million from Antwerp-based Euronav after determining that it would be unable to borrow or even lease a ship in the midst of an “extremely stressed global market”. The Mix reported in January that officials had thought $85 million would be enough complete the salvage until the rising cost of VLCCs blew the project budget out of the water.

“Availability of VLCCs constricted in the past six months, largely due to events related to the war in Ukraine,” Geekie explained at the time. “Just as the UN was gearing up for the operation, the costs to both lease and purchase a vessel surged. A suitable VLCC for the operation now costs at least $20 million more than was budgeted in the original plan.”

During the news conference, a reporter asked whether the UN could make plans to resell the VLCC after the salvage was complete. In our questions to the UN’s Yemen office, The Mix asked why the UN can’t finance the remaining $34 million against that eventual revenue. But officials explained that the new ship is already spoken for—the plan is to turn it over to the Yemeni national oil company once the oil has been transferred off the Safer and moved out of the Red Sea.

Meanwhile, the Safer has been languishing for eight years without maintenance, with a six-member skeleton crew holding it together “with band-aids and gaffer tape,” an observer told The Mix in July. During the news conference yesterday, Gressly singled out those “unsung heroes” for their “miraculous work to keep the FSO going long enough to mobilize the support to go forward.”