Great Barrier Reef 2010 Oil Spill: Chinese vessel insurer refuses to pay $120 million fine

The insurance firm of the Chinese coal carrier MV Shen Neng 1 that ran aground on the Great Barrier Reef in 2010 said the Australian government’s demand for $120 million in damages is “unsubstantial and unrealistic.”

During Tuesday’s federal court hearing, the government said Shenzhen Energy Transport should foot the cost of the cleanup of the Douglas Shoal, which was damaged when the MV Shen Neng 1 wen off-course and ran aground in April 2010.

The government said the fine will be used to cleanup the 40-hectare crash site that was contaminated with paint particles containing tributyltin, which slows the growth of aquatic organisms.

But Shenzhen Energy Transport’s maritime insurer, London P&I, said the Chinese shipping company should not be compelled to pay for a cleanup since the reef was self-healing. It added that the Australian government’s estimated cost of fixing the reef was “unsubstantial and unrealistic.”

The London Steam-Ship Owners’ Mutual Insurance Association Ltd, which manages the London P&I club, covers the Shen Neng 1 for liabilities up to $20 million, according to Business Insurance.

2010 Great Barrier Reef oil spill

The MV Shen Neng 1 was carrying 68,000 tonnes of coal and 975 tonnes of fuel oil when it ran aground on Douglas Shoal en route to China from Gladstone, Queensland on April 3, 2010. The ship ruptured its fuel tanks during the incident and caused oil spill to the waters restricted to shipping due to risks of damaging the Great Barrier Reef.

In 2012, the Chinese ship captain Jichang Wang and chief officer-on-watch Xuegang Wang were convicted for their role on the maritime accident, which created the largest grounding scar on the Great Barrier Reef so far.