Although its demise is being paraded as a merger with competitor Shoreline, the fact is that owners were either unable or unwilling to set aside large sums of money to acquire the necessary letters of credit from banks to join OPAClub.
Broking firms Willis Corroon and Sedgwick Marine, which were promoting OPAClub, are transferring the benefit of the reinsurance secured for their members and will switch to marketing Shoreline. It was disclosed at presstime that this scheme is to be acquired by New York-listed Mutual Risk Management Ltd, described as a major Bermuda-based risk management services company, with assets of more than USD 1bn.
It has also been announced that Shoreline, by taking over OPAClub's reinsurance and cutting its additional pollution cover from USD 300m to USD 50m, is slashing the cost to owners of obtaining COFRs, undercutting rival First Line. It is understood the incentive is an approximately 40 per cent cut in rates to Shoreline by Centre Reinsurance, which is providing up to USO 350m of COFR cover.
"The problem with OPAClub was that all you had was someone who issued a COFR but nothing else," said one observer. "You still had to go and get your own financial guarantee from a bank (letters of credit), which impacted on the operating cash owners had to run their vessels. It wasn't much good to anybody."
Meanwhile, the US Coast Guard has said that vessels will not be denied entry to US waters if they do not have a COFR on board, provided the operator can show evidence of having secured a financial guarantor in line with the Oil Pollution Act 1990.
On the chartering front, Bergesen, which recently secured COFRs for its fleet, has fixed three VLCCs at a premium which now seems to be settling at arou nd three points above non-COFR ships. On the Persian Gulf to US run, this is equivalent to around USD 120,000.
Vela took the Berge Nisa for a trip Middle East Gulf-West at WS 47.5 (December 28 lifting), the Berge Boss (December 24) at ws 48.5 and the Berge Banker (December 25) at WS 48.5.
GP Livanos also achieved a healthy premium from Mobil for its 98,300-dwt OBO Omegaventure L for Caribbean to US Gulf at WS 145.
Owners with time-charter obligations are not panicking over the need to be COFR-fitted to continue trading, although there have been reports of some companies expressing concern. John Fredriksen, for example, says he hopes to secure COFRs soon, primarily for his two VLCCs on charter to Vela, which has been Issued with COFRs for 23 of its own tankers.