Shen Neng 1 Damage Settlement Reached

Shen Neng 1

Published Sep 19, 2016 6:35 PM by The Maritime Executive

On Monday, Australia reached an A$39.3 million ($29.66 million) out-of-court settlement with the owners of a Chinese coal carrier that ran aground in 2010 on the Great Barrier Reef.

The settlement is less than a third of what the Australian government was seeking from the ship's owner - Shenzhen Energy Transport - for remediation costs after the 225-metre long Shen Neng 1 ran aground on the reef's Douglas Shoal.

The fully-laden carrier was en route to China when it sailed outside the shipping lane and ran aground on April 3, 2010. Anti-fouling paint that peeled off the ship contained a highly toxic component, tributyltin, which is now banned from use.

The funds from the settlement will allow the Great Barrier Reef Marine Park Authority to begin removing anti-fouling paint and rubble from coral, Australia Environment Minister Josh Frydenberg said.

"The paint also contains copper and zinc," he said. "Impact to marine life on the seafloor could potentially last for many decades if the toxic anti-fouling paint remains in place."

The grounding also damaged one of the ship's fuel tanks, which left a four-kilometre trail of heavy fuel oil.

The terms of settlement mean $35 million will be paid to the Australian Government for the cost of removing polluted rubble.

A further $4.3 million will be paid to cover costs incurred by the Government in the immediate aftermath of the grounding.

Frydenberg said the clean-up operation would begin mid next year.

While the court processes were underway, the Marine Park Authority conducted surveys at the site and tested clean-up methods, said Dr Russell Reichelt, Chairman of the Great Barrier Reef Marine Park Authority.

The ship's master and first officer were convicted of criminal offences against the Great Barrier Reef Marine Park Act. The first officer was found criminally negligent, resulting in a jail term.

“Damage to the Great Barrier Reef caused by such negligence should be made good by the shipowner or their insurer and not left to the Australian taxpayers to fund repairs,” says Reichelt. “It is clearly unsatisfactory that it has taken more than six years to reach this point of settlement with the owners of Shen Neng 1.”

While Greenpeace reef campaigner Shani Tager called the settlement "woefully inadequate" given the level of damage to the reef, Shenzhen Energy Transport Co's insurer, The London P&I Club, described the settlement as "sufficient and appropriate" as much of the shoal had recovered naturally since the incident.

In a statement, the insurer expressed regret over the Shen Neng 1 incident and said it had always wanted to reach a fair and justifiable settlement.

In a previous statement, the London P&I Club described the government's clean up estimates, which ranged from A$70 million to A$194 million, as unsubstantiated and unrealistic.