INSURERS ASSESS LOSSES IN RUSSIAN TANKER DISASTER

LONDON-Almost a month after the Jan. 2 breakup of the Russian tanker Nakhodka during severe storms in the Sea of Japan, insurers and salvage experts still are trying to assess the likely costs and the extent of pollution.

The London-based International Tanker Owners Pollution Compensation Funds said that only small amounts of leakage are still occurring from about 5.3 million gallons of oil the 27-year-old tanker was carrying on its voyage from China to Russia.

About 1.5 million gallons have spilled so far.

The biggest uncertainty was whether periodically bad weather would undermine the efforts of cleanup workers, who were struggling to keep oil from reaching sensitive coastal areas.

The spillage threatened not only fish farms, ports and tourist areas, but 15 nuclear reactors at Wakasa Bay. Oil slicks had breached a ring of oil fences erected to protect the reactors. The breach took place at the Mikama nuclear power plant in Fukui Prefecture, where only small oil patches were reported to have broken through the ring, and the Shiga nuclear power plant in Ishikawa Prefecture, where it was reported that the oil was collected and no damage found to the reactor.

The Nakhodka is owned by Russian shipping company Prisco Traffic Ltd. The vessel is insured for $1.8 million with Russian insurer Zascita and 85% reinsured with Black Sea & Baltic General Insurance Co. Ltd.

While the vessel, which broke in two, looks certain to be declared a total loss, the biggest insurance claims will fall on Prisco's liability insurers, The United Kingdom Mutual Steam Ship Assurance Assn. (Bermuda) Ltd., known as the UK P&I Club.

The International Oil Pollution Compensation Funds-an alliance of government pollution funds, including one from Japan-said pollution damage or injury arising out of the Nakhodka incident will be compensated under applicable Japanese legislation, which is based on international conventions. These are the 1989 Civil Liability Convention and the 1971 Fund Convention and its 1992 Protocols.

Two layers of compensation are due under these conventions. First, the shipowner and its insurer must pay compensation up to a level related to the size of the ship, in this case about 260 million yen ($2.2 million). If this amount is insufficient to cover all valid claims, additional compensation is payable by the IOPC Funds up to about 22.5 billion yen ($191.7 million). The latter amount includes payments made by the shipowner and its insurer.

The Japanese government, which has insisted that compensation is up to the shipowner, said last week it is considering offering emergency funding to local governments to help with costs until compensation is paid by the shipowner's insurers.