Singapore Authorities Seize FAL Oil Tanker

The Khorfakkan was seized on July 18, 2012

Authorities in Singapore have seized the oil tanker Khorfakkan operated by UAE based independent oil and bunker trader FAL Oil Co Ltd (FAL), news agency Reuters has reported.

According to an industry source, its 80,000-tonne fuel oil cargo was allowed to be discharged to its owner ChinaOil, the trading arm of Chinese oil and gas firm PetroChina Company Limited (PetroChina).

Industry sources were also quoted as saying FAL owes Germany's DVB Bank around $3 million, and the troubled firm has until the end of next week to avert the Liberia flagged tanker being handed over to bank.

According to the report, the 105,000-deadweight tonne clean tanker was seized by Singapore's Supreme Court Sheriff's Office on July 18, 2012.

"The tanker was seized because of an outstanding debt of $2.84 million that was initially due in late May," said the source.

"The company has eight days to decide whether to contest the claim or allow the bank to foreclose on the property," they added.

FAL said in April that it was close to securing a debt restructuring agreement of approximately $700 million plus additional loans of $620 million in an effort to keep its operations going.

A lack of cash flow resulting from sanctions imposed by the U.S. in January for supplying gasoline to Iran had left the company, once viewed as one of the largest independent oil and bunker traders in the Gulf Region, struggling operationally.

FAL is currently banned from receiving U.S. export licenses, U.S. export-Import bank financing, and loans over $10 million from U.S. financial institutions.

Company operations are reported to have shrunk by more than 60 percent and they have closed their offices in Singapore and London.