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Wednesday, July 28, 2010

Japanese oil tanker damaged by an explosion near Strait of Hormuz

By Osamu Tsukimori and James Topham

TOKYO, July 28 (Reuters) - An oil tanker owned and operated by Japan's Mitsui O.S.K. Lines Ltd was damaged in an explosion suspected to have been caused by an attack near the strait of Hormuz on Wednesday.

A crew member suffered minor injuries and the ship was heading to port to assess the damage, the company said. The impact to the spot Asian crude market was seen as minimal.

The ship, the "M. STAR", was loaded with 270,204 tonnes when the incident occurred in waters off Oman, Mitsui O.S.K. said.

It said the ship had been bound for Chiba port near Tokyo. The explosion occurred at around 00:30 a.m. local time on Wednesday (2030 GMT Tuesday), the transport ministry in Tokyo said.

The ministry said there had been no reports of piracy in the area. There was no leakage of oil from the tanker, a Very Large Crude Carrier (VLCC) with 16 Filipino and 15 Indian crew members on board.

It was sailing under its own power towards Fujairah port in the United Arab Emirates to check the damage, a spokeswoman for Japan's second-biggest shipper said.

Around 17 million barrels per day of oil flow via the Strait of Hormuz, and Middle East crude accounts for 90 percent of Japan's total imports.

The location of the explosion near a lifeboat at the rear starboard side of the ship suggested the blast was unlikely to have been caused by oil on the tanker, Mitsui O.S.K. was quoted as saying by the ministry.

"In addition, a crew member saw light on the horizon just before the explosion, so (Mitsui O.S.K.) believes there is a possibility it was caused by an outside attack," the ministry said in a statement.

The impact to the Asian spot crude market could be minimal because the tanker would have taken three weeks to arrive in Japan, traders said.

This (event) won't stop the flow of crude, so there will be no impact on what is able to be bought," said a Tokyo-based crude trader.

The tanker was carrying around 2.3 million barrels of Qatar Land and Abu Dhabi Lower Zakum crudes, industry sources said.

"The impact could be limited if there's no severe damage," said a trader with a northeast Asia refiner when asked about the potential impact of the cargo's diversion on the physical crude market.

"If there is a spill, that might be different story. But not a big impact," said another trader. (Reporting by Yoko Nishikawa, Osamu Tsukimori and James Topham in Tokyo and Alejandro Barbojosa and Luke Pachymuthu in Singapore; Editing by Michael Watson)

© Thomson Reuters 2010 All rights reserved

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