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London P&I club covers ship grounded off Australia

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QUEENSLAND, Australia—Crews began pumping fuel oil Friday from a Chinese coal ship that ran aground off the coast of Australia and began leaking, a delicate operation to minimize damage to the Great Barrier Reef.

The Shen Neng 1, which is owned by Shenzen Energy Transport Co. Ltd. in Shenzen, China, ruptured its fuel tanks in the April 3 mishap. The ship was in waters restricted to shipping because of the risk of damage to the Great Barrier Reef's fragile ecosystem.

The London Steam-Ship Owners' Mutual Insurance Assn. Ltd. covers the Shen Neng 1 for liabilities up to 20 million Australian dollars ($18.4 million) arising from the spill, said Ian Barr, claims director at London-based A. Bilbrough & Co. Ltd., which manages the P&I club.

Booms to trap leaking fuel oil put in place after the accident will remain to contain any oil that might spill while offloading the ship's fuel to a barge, said Patrick Quirk, general manager of Maritime Safety Queensland, a government agency. “This is a delicate operation that will take days, not hours,” Mr. Quirk said in a statement Friday.

“Today will give us a good indication of the rate of flow that can be achieved,” Mr. Quirk said. “But we're not going to rush into this operation—we want to manage the risk and manage it closely.”

The Shen Neng 1 was enroute to China carrying 68,000 tonnes (75,000 tons) of coal and 975 tonnes (1,075 tons) of fuel oil when it grounded at Douglas Shoal. A small amount of oil leaked from the ship and was treated with dispersants to minimize impact on the marine environment.

Australian Prime Minister Kevin Rudd was angered by the incident, saying in a news conference shortly after the spill that the ship's operator could face large fines.

It is “outrageous that a vessel this size could find itself 12 kilometers (7.5 miles) off course,” said Mr. Rudd, who pledged action against whoever is determined responsible for the spill.

Mr. Rudd and Queensland Premier Anna Bligh have said the ship's operator and captain could face millions of dollars in fines and cleanup costs related to the accident, which is under investigation by the Australian Transport Safety Bureau.