Indonesia arrests crew of tanker caught up in Cambodian charter dispute

The Indonesian Marine Police boarded tanker Strovolos (IMO 9178056) shortly after midnight on Friday September 25th and arrested the crew in connection with a dispute over Cambodian oil, operator World Tankers Management has stated.

The dispute spread to Indonesia from Cambodia and Singapore in late July, when the Strovolos was first detained at a position off Sumatra. The vessel had anchored without prior authorization (a potentially illegal act in Indonesian waters) and was alleged by the Indonesian navy to have turned off its AIS.

Strovolos had been chartered by Singaporean firm KrisEnergy to support an attempt to produce oil from a field in the Cambodian sector of the Gulf of Thailand. KrisEnergy began production at the field in December 2020 with a “phase 1A” small-scale pilot, hoping to achieve 7,500 bpd. The Cambodian administration had high hopes of boosting the Cambodian economy as a result of becoming an oil producer and, making itself something of a hostage to fortune, had given the project a good deal of publicity.

Unfortunately the actual output fell far short of 7,500 bpd and the oil field was clearly financially unviable. In June this year KrisEnergy filed for liquidation, thus bringing to an end Cambodia’s first venture in offshore oil and gas, to the embarrassment of the Cambodian government.

Meanwhile, the Strovolos began to run short of fuel. The master contacted the charterer KrisEnergy to make arrangements for bunkering. However, World Tankers Management said that KrisEnergy responded that it could not pay the vessel’s hire.

At this point, for the safety of the crew, the cargo and the vessel, Strovolos sailed to the nearest convenient port, in Thailand, to refuel, World Tankers Management said. It then headed south to Batam, Indonesia to carry out a long-awaited crew change.

At this point the legal status of the crude oil on board, some 40,000 tons of it, became an issue, given that KrisEnergy had filed for liquidation. But as far as Cambodia was concerned, the oil on board belonged to Cambodia. In international legal cases such as this, possession is often a telling factor. But when the other side is a national state, things can become complicated. Such was the case here.

On July 24th Cambodian officials sent a diplomatic note to the Indonesian government, asking for its help in arresting the tanker for what it claimed was oil theft (an allegation that WTM vigorously denies). An Indonesian patrol vessel carried out the interception and implemented an arrest shortly after. The Strovolos has been detained near Batam ever since.

WTM said that it was awaiting proper proof of ownership and proper payment before releasing the cargo to any party. WTM said that for the past two months the Cambodian government has been negotiating with KrisEnergy over who owns the oil. Those negotiations might not be going well, and World Tankers is concerned that Cambodia is using its diplomatic contacts in Indonesia to put pressure on the crew instead.

Since Friday the crew, originally reported to consist of 13 Indian nationals, three Bangladeshis and three from Myanmar, have been in detention and are being “interrogated ashore in shifts,” WTM said, adding that it understood the police action followed an intervention by the Cambodian government which claimed the cargo was transported illegally. “This claim is made without foundation and is utterly rejected”, WTM said.

The operator asserted that the crew were the innocent victims of wrongful conduct by the Government of Cambodia in violation of their human rights.  

The vessel’s owners understood that the chartering company was contracted by the Government of Cambodia as part of a commercial oil development projection and gave it the right to sell the oil, subject to payment of royalties.

The charter had been terminated due to the charterers’ breaches of key obligations. WTM said that, as a matter of law, the vessel was under no obligation to return to Apsara in the Gulf of Thailand, where the oil had been loaded on board.

“Legally, whoever proves ownership and the right to sell the cargo (to the Owners’ satisfaction or as may be determined by the appropriate Court if there is a dispute about ownership) is obliged to make arrangements to offload it upon payment of the sums owed to the Owners”, said WTM.

The operator said that the Government of Cambodia had not provided any proof to the Owners to support its claim that it owns the cargo on board the vessel. KrisEnergy told the Owners that they objected to the cargo being released to the Government of Cambodia as that would be contrary to their ownership rights.

The Owners believed there have been ongoing talks between the Government of Cambodia, KrisEnergy and KrisEnergy’s Receivers to come to an agreement about the sale of the oil on board the vessel and the payments duly claimed by the Owners.

WTM noted that, while waiting for a resolution of the dispute, the Owners and the crew had taken proper care of the cargo, at considerable expense, and want nothing more than for it to be offloaded by mutual agreement as soon as is practical. In the meantime, they moved the vessel offshore of Batam, pending a long-awaited crew change.

WTM said that the crew had “far exceeded their contractual period of employment and are entitled to be repatriated to their families. All they have done is to perform their duties as seafarers in bringing the vessel, first to a safe place to refuel, and then to anchor off Batam to await the crew change.”

WTM noted that there had never been any intention or suggestion that anything would be done with the oil on board other than to offload it as soon as its ownership was proved.

However, WTM added a further complexity to the creditor mix when it added the phrase “and agreement was reached about payment to the Owners of the money which they are owed”. This would at least imply that the value of the oil on board is part of a three-way battle, between Cambodia, the receivers of KrisEnergy (on behalf of the liquidated company’s other creditors) and the owners of the Strovolos who, although one creditor among many, have the oil in their current possession.

“World Tankers believes the Government of Cambodia has failed to resolve matters with KrisEnergy and is now adopting the unpleasant and unethical tactic of trying to use the Request for Assistance to coerce the Owners to accept their claims without proof or payment. This is totally unacceptable”, the operator said, adding that “the Owners are forced now to raise their deep concern, at the highest governmental and diplomatic levels, that this conduct violates the human rights of an innocent crew”.

World Tankers said that “the Owners have grave concern that there would not be due and proper process and a fair trial in Cambodia. This concern stems from the fact that the Prime Minster of Cambodia and his Ministers have made public statements saying the crew are guilty of theft, which is inappropriate and contrary to the basic principle of justice.”

World Tankers therefore concluded that the Owners hoped and expected that “the Indonesian Government rightly, and in accordance with local and international principles of justice, [will] reject the Request for Assistance and to order the immediate release of the crew so that they may freely go home to their families”.

1999-built, Bahamas-flagged, 28,546 gt Strovolos is owned by Strovolos Shipping Co Ltd care of manager World Tankers Management Pte of Singapore. It is entered with London Club on behalf of Strovolos Shipping Co Ltd.