Seafarers face an "atmosphere of fear" aboard LPG carriers trapped by Iran's Strait of Hormuz blockade, with crews reluctant to load amid high risks and owners demanding steep premiums, said Captain Shiv Samrat Kapur, managing director of the Indian arm of shipbroking firm Sentosa Shipbrokers in an interview to The Core. Additional bonuses are offered for high-risk transits, yet one Indonesian PSU tender was rejected as empty vessels stay idle, loaded ones remain stuck inside.

No fresh loadings are occurring at Gulf ports like Ras Tanura, Ras Laffan, or Ruwais. Transit from deep ports takes 1.5-2 days to clear Hormuz, plus 3-5 days to India's West Coast hubs.

Meanwhile, Reliance Industries has bought about 5 million barrels of Iranian crude days after the U.S. temporarily removed sanctions on the oil, according to Reuters. That oil was bought from the National Iranian Oil Company and was priced at a premium of about seven dollars a barrel to Brent Futures. Iranian oil has been mostly bought by Chinese independent refiners in recent years and is often rebranded as originating from another country, according to Reuters.

Govindraj Ethiraj: Captain Kapur, how are you reading the current situation and the traffic around the Strait of Hormuz?

Capt. Shiv Samrat Kapur: At the moment, there are no fresh loadings happening in the Middle East. So, I'll just call that area the Middle East Gulf. So, the typical ports over there, Saudi Arabia's Ras Tanura, then you have Kuwait Petroleum Corporation's Neenah Al Ahmadi, Qatar Petroleum has Ras Laffan, Das Island, UAE has Ruwais, you know, these are the load ports.

So, these are the typical loading areas, I think I've probably covered all of them, from where cargo is typically picked up. And I am talking with respect to the very large gas carrier segment (VLGCs), which typically picks up parcel sizes of 44,000 metric tonnes, plus-minus 5%.

So, at the moment, as I said, there are no fresh loadings happening. And the ships that we have recently seen transiting, these were ships which mostly loaded in the past in the pre-war area, but they were stranded there because of the blockade created by Iran in the Strait of Hormuz. And now thanks to the Indian government, who have a neutral relationship with all the parties involved, they have been able to sort of evacuate. This would avoid a total LPG crisis in India, sustain the current supply-demand balance that we sort of need.

You know, there's no emergency, there's no dry out. The first ships that we saw transiting were the Nanda Devi and Shivalik on the 13th of March. And then the Jagvasanth and the Pine Gas, they started moving.

I mean, there were talks about them moving since Friday evening, I think that's when we started picking up and we started monitoring those ships. And they were successfully able to come out.

Now they're well in the clear. So that's what is happening. And mostly I think the strategy that the Indian government is probably using - that we've seen on most of the two ships which came out and even these two ships - they are discharging them in West Coast India.

But what we have heard and what we feel is because they are discharging the ships at West Coast India, they want a quick turnaround so that, you know, if they are able to, they can take the ships back inside.

Govindraj Ethiraj: So two things. So one is from the time they load, whether it's in Saudi Arabia or the Emirates, till the point they clear the Strait of Hormuz, what is the total time usually?

Capt. Shiv Samrat Kapur: So again, it depends which port you're loading from, right? If it's KPC, if it's Mina al-Ahmadi (Kuwait), it's farthest, you're like completely inside the Gulf, so that would take, I think, about one and a half to two days. And if you're loading from say, Ruwais(UAE), Ras Al Khaimah (UAE) or Dar es Salaam (Tanzania), probably about half a day to one day, that's what I would say.

Govindraj Ethiraj: And once you clear the Strait, and which you're saying will take anywhere between one and a half to two days from the time you've loaded to reach western ports of India?

Capt. Shiv Samrat Kapur: I think it takes about three days to sail via the Arabian Sea. There is still a spot market, but it's not as liquid as it used to be for the medium-sized gas carriers (MGCs), which typically carry 20 KT. I remember I used to account like 15 days as a round voyage time, which includes, which is like five days for loading and discharging, and probably four to five days for coming and going.

So that's how we used to calculate, you know, our turnaround. So it's about probably, when you reach the load area, about 24 hours typically to load, and then about four and a half to five days to reach a western port. And it depends which West Coast India port you're going to, New Mangalore being the southernmost, and then, of course, Karnala, Pipava.

Porbandar now, I think, is the only West Coast India port which does not accept VLGCs (very large gas carriers). Otherwise, typically, most of the West Coast Indian ports have become VLGC ports.

Govindraj Ethiraj: If you take the total time going back and forth, if you were to look at the time going back many years, when you were sailing, how many ships would be going, you know, transiting in a good season, let's say?

Capt. Shiv Samrat Kapur: On a day, thousands of them, I would say. I'm not talking just LPG at any given point of time, that's a very high traffic dense area. I mean, the India, West Asia or the India Middle East corridor.

So at that time, I was sailing in 2011, the Indian LPG imports were not where they are right now. Right now, we are doing 20 million plus of LPG imports.

At that time, I was not on the commercial side of things. But I would still assume we would probably just be importing about two and a half, three million tonnes. You know, we were not doing much because the Pradhan Mantri Ujjwala Yojana (PMUJ) came on later, right?

The Pradhan Mantri Ujjwala Yojana probably came in 2014 – 15, that sort of gave India a boost on its LPG consumption, making it overtake Japan.

Govindraj Ethiraj: Yeah, it's more recent than that. But my point is at the current consumption rate, let's say even before February 28, how many ships would be typically going back and forth on the India Middle East corridor?

Capt. Shiv Samrat Kapur: So if we look at it, we have like, as I said, about 20 plus VLGC's on time charter. So I think last financial year, we did about 55 VLGC's on spot, you know, so that is excluding March. So if we include March as well, then it would probably be 60.

And then typically, I would say for a VLGC to do a round voyage from East Coast India, it takes about 25 to 35 days.

So let's say a 30 day voyage, you know, because the normal trend is okay, these circumstances are different. The normal trend otherwise is a ship would load out of the Middle East to a two boat discharge in India, which could be two ports in East Coast India or one West Coast, one East Coast India.

It depends on the port congestion also at different times, the monsoon stuff like that, you know, if we calculate a total of it, it would be one PC ship a month, plus five ships. So that would make about 25 to 30 VLGCs. And on the MGC segment, as I said, the spot market is not that liquid anymore.

So maybe about one spot ship every one or two months. So let's say six ships. And then I think we have about eight to 10 MGCs on time charter.

So I would say about roughly around 35 ships or something, you know, that would be like, you know, in the entire month.

Govindraj Ethiraj: That's how I would look at And what would be the current run rate in terms of what we are in the last, let's say, 24 days, we've just seen four ships coming out, right? Just four ships. Got it.

So arguably, we are at least 20 to 25 ships short for this month.

Capt. Shiv Samrat Kapur: So I mean, this is not the correct way to put it, because a lot of things have changed this year also, because India has started importing CFR cargoes from the US, right? So that sort of, you know, offsets. The other thing which they've done is they've also increased domestic production.

So I think the domestic production has jumped by 25 to 40%. But if you talk about shipping, there are ships which are coming from the US as well, you know, about 2 million tonnes of LPG, I think 2 million plus tonnes of LPG per annum has been committed from US. So that has also sort of eased the dependence or the pressure we would have had from loading out of the Middle East Gulf.

Govindraj Ethiraj: Sure. Last question. So, Captain, I'm sure a lot of people you know are piloting some of these ships or are stuck somewhere.

So what are they telling you in terms of what they're going through right now?

Capt. Shiv Samrat Kapur: So honestly speaking, I haven't spoken to a seafarer who's currently on board. But all sorts of things are going on. I remember when I was sailing, like, you know, your charters or owners would offer you like additional crew bonus to sail through high risk, we call them HRAs (high risk areas), you know, to sail through those.

And so all that must be happening. Of course, people would be scared.

And then of course, owners need a big premium to load out in the current situation. Because what happens is like, whether you get hit on an empty ship or a full ship, it doesn't matter.

But once you are full, once you're loaded, then the incentive for someone to hit you becomes more because it's not just an empty vessel. So there is reluctance for people to sort of, you know, load currently like there is a tender which got quoted today by an Indonesian PSU to load out of Mina Al Hamidi. And this ship which is sitting empty over there, they decided not to offer in for the tender. So there is reluctance for seafarers at the moment, who are stuck inside to load.

Of course, there are a few unfortunate few which are loaded and are stuck. They are not Indian ships which are able to come out. I can at least think of three or four offhand ships like owners, who I have spoken to.

So of course, they're scared. There is like, you know, that atmosphere of fear, which is on board, which is natural in such a situation.