A Threat to Tugs and Barges – Piracy in the Sulu Sea:  The “new Somalia” or a limited threat?

21st January 2017

Stephen Askins, Partner at TugAdvise, considers the risk to tugs and barges of the continued rise of piracy in the Sulu Sea.

The National Counterterrorism Centre describes the Abu Sayyaf Group (“ASG”) as “the most violent of the Islamic separatist groups operating in the Southern Philippines” and it has as one of its aims the promotion of an independent Islamic State in western Mindanao. It is on the UK’s Foreign and Commonwealth Office’s proscribed list. It is not new, although its allegiance to ISIL is and one of their earlier kidnappings in 2001 of an American couple makes up one the episodes on Netflix’s new and compelling docuseries “Captive”. This group has kidnapped a number of mainly Malaysian and Indonesian seafarers over the past year mainly from tugs and fishing boats. However, in November a group (assumed to be from ASG) attacked a 179,000 DWT Japanese bulk carrier.

This is not the first time that a bulk carrier has been targeted but as we suggest below there is a risk that recent activity does herald a change in tactics and a recognition that rewards for commercial crew are far higher. Fortunately the attack was unsuccessful and prevented by the use of on board anti-piracy measures. There is no doubt that the recent attacks have caught the attention of the maritime industry. In one stroke the alarmist claim in April by Indonesian officials that the Sulu Sea was the “new Somalia” did not seem so far-fetched. It raises the very real prospect that an established terrorist group is now intent on targeting commercial ships to kidnap crew for ransom.

It is estimated that ASG have been paid nearly US$7m in ransom payments. There is no doubt that crew are being released for money and it follows that money is being transferred to terrorists. The significance for operators whose insurance is placed particularly in London, is that as a matter of English Law it is well established that ransoms cannot be paid to terrorists. In cases of Somalian and Nigerian piracy it has become relatively straight forward to satisfy the compliance teams of insurers that they are not falling foul of the express provisions of the terrorism legislation and in particular the express provision introduced by the Counter Terrorism and Security Act 2015 (see our article “Ransoms Revisited” for a more detailed overview of that).

How big a threat is this?   

ReCAAP (The Regional Cooperation Agreement on Combating Piracy and Armed Robbery against ships in Asia) evaluates the significance of the instances in piracy and robbery by reference to two key factors, namely the violence used and the economic impact of the attack. This sees each attack categorised from 1 (very significant) to 4 (minimum significance). The good news to be taken from their recent report shows that piracy is down 60% year on year but closer examination shows that category 1 incidents (i.e. kidnappings) are up. Indeed ReCAAP remains “deeply concerned” about the continued abduction of crew from ships in the Sulu-Celebes Sea.

It is estimated that over 100,000 ships per year transit the area carrying about 55m metric tonnes of cargo. The value of coal exported through the area is about US$800m accounting for 70% of all coal brought into the Philippines.  The map extract below (care of ReCAAP) shows the cluster of incidents in the Sulu Sea in the past 12 months. Most are against fishing vessels and tugs towing barges of coal and earlier in the year the authorities sought to ban the tug and barges which had to be reversed because of the impact on the coal trade.

The most significant attack for mainstream commercial shipping was the kidnapping of six Vietnamese from a bulk carrier in November. One should also spare a thought to the two Germans kidnapped from their yacht also in November one of whom is reported to have been killed. If we are at a tipping point then the clear indications are that the piracy model will be much more along the lines of Nigeria than Somalia. Kidnappings with crew held ashore possibly with similar demands as the Nigerian gangs although any Crisis Management Team will be faced with the fundamental problem of dealing with terrorists. That can only mean protracted negotiations.

At the moment the attacks must be kept in perspective but there is a feeling that matters have escalated and if there is one lesson to be taken from Somali piracy it is that where there is reward but little risk then piracy will increase. In fairness, the governments in Kuala Lumpur, Manila and Jakarta are alive to this and are instigating joint patrols and there is talk of a protected corridor similar to the IRTC (Internationally Recommended Transit Corridor). There is no doubt that the naval response off Somalia provides a ready template for regional cooperation.

As in the Gulf of Guinea the littoral states around the Sulu Sea do not allow armed guards in their territorial waters (Malaysia has now relaxed this law to allow their nationals to act as PMSCs in their EEZ). Further some nations including the UK only allow weapons on board their ships in the High Risk Area of the Indian Ocean. Clearly the threat would have to markedly increase to see a shift in attitudes on armed guards and the local navies would no doubt see themselves as capable of dealing with threat. Owners also have the choice of re-routing and given the concerns about the payment of ransoms several are no doubt giving this serious consideration.

As always a key component of tackling piracy is the ability to deal with the issues of those involved whilst they are ashore. However, the Philippines are seemingly unable to deal with ASG and in any event the President is waging an unprecedented war on the drug users and suppliers in his country. Added to that is ongoing tensions with the US and Australia who would be natural allies in any struggle against terrorism in the area.

Close attention will no doubt be paid to the area in the coming months. At least tug and barge owners have in the Best Management Practice guidelines a good template for operating in the region. Risk assessments are critical as are well briefed and drilled crews. The industry does not want another piracy hotspot or to see more men and women who they employ be kidnapped.

For additional information on this topic, please contact one of the firm’s Partners.

Related article: “Ransoms Revisited”