Oriental Mindoro oil spill

Claims for oil spill damages seen to exceed Princess Empress’ insurance

Lance Spencer Yu

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Claims for oil spill damages seen to exceed Princess Empress’ insurance

FLOATERS. Residents of Barangay San Jose, Naujan, Oriental Mindoro, collect coconut husks, plastic bottles, and dried rice stalks, to make floaters to block the oil leaking from a sunken tanker, on March 20, 2023.

Johnmark Udtuhan Mendoza/PonD News Asia

More than 36,000 families have been affected by the Oriental Mindoro oil spill. Funds from insurance may not be enough to compensate all of them, so a separate fund could be tapped.

MANILA, Philippines – Due to the extensive damage from the Oriental Mindoro oil spill, the insurance coverage of the sunken MT Princess Empress oil tanker alone may not be enough to pay for all claims related to the disaster.

Even before the start of claims processing on Friday, March 31, compensation for victims of the oil spill is already expected to exceed the civil liability cover of Shipowners’ P&I Club, the insurer of MT Princess Empress. 

This is according to a statement issued by the International Oil Pollution Compensation Fund on Thursday, March 30. The IOPC provides compensation for oil pollution damage that occurs in its member states, including the Philippines.

“Cleanup and response operations are ongoing. Given the latest information reported, claims relating to this incident may exceed the limit of liability of the insurer under the 1992 CLC. It is possible that the 1992 Fund will therefore be called upon to pay compensation,” the IOPC said.

Currently, victims of oil pollution in IOPC member states are entitled to compensation through the 1992 Civil Liability Convention (1992 CLC) and the International Oil Pollution Compensation Fund 1992 (1992 Fund).

Under the 1992 CLC, shipowners are held strictly liable for oil pollution damages up to a limit, which is based on the tonnage of their ship. The shipowner is also obligated to maintain insurance to cover its liability under the 1992 CLC. This means that in practice, it is usually the shipowner’s insurer which provides compensation.

When civil claims exceed the amount for which a shipowner is liable, more funds can be drummed up from the 1992 Fund. Up to around $270.2 million can be tapped from the 1992 Fund to cover the rest of the claims, an amount which already includes that paid by the shipowner and the insurer. The 1992 Fund is financed by payments collected from oil and shipping entities in member states of the 1992 Fund who receive more than 150,000 tonnes of crude oil or heavy fuel oil in a year.

The Philippines became a signatory to both the 1992 CLC and the 1992 Fund on July 7, 1997, and these took effect a year later. Both international conventions were incorporated into the Oil Pollution Compensation Act of 2007, which was passed in the wake of the 2006 Guimaras oil spill.

Before its latest statement, the IOPC said it was still “too early to determine” whether the 1992 Fund would be tapped to cover the Oriental Mindoro oil spill.

At least 36,658 families in the Mimaropa, Western Visayas, and Calabarzon regions have been affected by the Oriental Mindoro oil spill, according to the National Disaster Risk Reduction and Management Council on Thursday.

Industrial fuel oil continues to leak out of the sunken tanker, the University of the Philippines Marine Science Institute said in a bulletin on Wednesday, March 29. Oil spill trajectories show that the oil may keep spreading to Pola, Naujan, and along the coast to Calapan City, Oriental Mindoro.

About half of the MT Princess Empress’ 800,000 liters of industrial fuel oil remained inside the submerged tanker, according to the Philippine Coast Guard on Tuesday, March 28. The PCG also recorded 10,363 liters of oily water mixture and 131 sacks of oil-contaminated materials collected during its offshore oil spill response operations. 

Meanwhile, more than 3,780 sacks and 22 drums of waste were collected in 13 affected barangays in the Oriental Mindoro towns of Naujan, Bulalacao, and Pola from March 1 to March 28. – Rappler.com

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Lance Spencer Yu

Lance Spencer Yu is a multimedia reporter who covers the transportation, tourism, infrastructure, finance, agriculture, and corporate sectors, as well as macroeconomic issues.