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Major U.S. Oil Companies Turning to British Warship Protection

February 25, 1988

MANAMA, Bahrain (AP) _ Major U.S. oil companies doing regular business with Saudi Arabia are turning to Britain for protection of their tankers against Iranian attacks in the Persian Gulf, shipping executives and diplomatic sources said Thursday.

The sources said the move by such corporations as Chevron and Mobil apparently was prompted by loss of hope that the U.S. Navy’s escort operations would be expanded to cover U.S.-owned or operated vessels that don’t fly the American flag. The sources spoke on condition they not be identified.

They said Chevron and Mobil recently registered five supertankers in Bermuda under the Red Ensign, flag of the British merchant marine, and Exxon Corporation had brought its Bahamas-registered Esso Atlantic out of four years’ retirement to carry crude to the United States. The 516,893-ton ship is one of the world’s three or four largest.

Exxon already has about a dozen supertankers flying the British flag, and another five sailing under the French flag.

France, Britain, Italy and the Soviet Union also have naval escort contingents in the gulf.

Two Chevron-owned vessels, the 413,158-ton Chevron South America and the 264,000-ton Chevron Edinburgh, were shifted from Liberian to Bermudan registry in December. The vessels routinely operate between Saudi Arabia’s Ras Tanura terminal and a Chevron refinery in Pascagoula, Miss. The Chevron fleet is estimated at 48, mainly under Liberian registry.

Mobil, with a 28-vessel fleet, has transferred three Liberian-flagged tankers to Bermudan. They are the 277,000-ton Mobil Falcon, the 280,428-ton Mobil Petrol and the 138,496-ton Mobil Acme, which also routinely carry Saudi crude to the United States.

The U.S. Navy’s Middle East Force mainly protects 11 state-owned Kuwaiti tankers re-registered last year in the United States. Only one of the Kuwaiti ships is a crude oil tanker, and none of them sails regularly to the United States, which derives only 6 percent of its oil imports directly from gulf sources.

Although the Navy may escort any U.S.-flag vessel, few enter the waterway, where nearly 500 ships have been hit or damaged since the Iraq-Iran war began in September 1980 and spread to the gulf four years ago.

Iran strikes at neutral vessels in the 600-mile waterway in retaliation for Iraqi raids on its own tanker routes.

Following an increase in Iranian attacks last year, American shipowners with vessels registered under other ″flags of convenience″ for tax and other purposes, or carrying cargo to and from the United States under other flags, urged the Pentagon to let the Navy escort their vessels.

The pressure increased just before the new U.S. defense secretary, Frank Carlucci, visited the gulf last month to reassess the Navy role.

However, the policy of escorting only U.S.-flagged vessels was subsequently reaffirmed, at the same time that Carlucci announced a slight cutback in the number of U.S. warships in the gulf and nearby waters.

″The U.S. escort operations for reflagged Kuwaiti tankers have been a success and the Americans do not want to spoil it,″ said one of the shipping sources.

The U.S. administration apparently has stressed to shipowners that protection would be given only to ships flying the American flag and therefore subject to U.S. taxes and laws requiring American crews. Under United Kingdom registry, vessels must have British captains but are sheltered from taxation.

Because Britain’s gulf force sails only as far north as Bahrain, halfway up the gulf, ships it escorts would be on their own if heading to Ras Tanura, or to Saudi or Kuwait ports farther north.

A knowledgeable shipping source in regular contact with oil companies in Saudi Arabia said there was ″no need for British escort beyond Bahrain″ because Saudi Arabia’s navy had made the area secure. He refused to elaborate.

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