Tankers: Cyber Security Should Be Taken Seriously After Colonial Pipeline Attack

Tankers: Cyber Security Should Be Taken Seriously After Colonial Pipeline Attack

in Hellenic Shipping News 17/05/2021

The cyber attack on the Colonial Pipeline has shown how serious is such a threat not only for the energy sector, but also for tanker owners, whose vessels are often carrying dangerous cargo. In its latest weekly report, shipbroker Gibson said that “Friday 7th saw the unexpected closure of the 8,851km Colonial Pipeline linking US Gulf Coast (USG) PADD3 refineries with PADD 1 facilities along the Atlantic coast following a cyber-attack. With an average capacity of 2.5mbpd it supplies 45% of US East Coast fuel demand but suffered a ransomware attack shutting down internal computer networks. According to Bloomberg, Colonial is believed to have paid a $5m ransom in cryptocurrency. As of Wednesday 13th, operations have restarted but a full return to normal could take a week or more. This has raised serious concerns about the state of cyber defences guarding aging US energy infrastructure as well as in other countries given the increasing nature of such attacks”.

“In response, several US government agencies including the FBI and Department of Energy (DoE) are investigating. Their findings will be of significant interest to infrastructure stakeholders and those who rely on their unimpeded operation. It is believed President Biden’s proposed $4 trillion infrastructure package will now include specific provisions on cybersecurity for sensitive infrastructure such as pipelines and refineries, although this is possibly something for the longer term”, Gibson said.

According to the shipbroker, “this week, Atlantic MR rates have been quite volatile, impacted by the pipeline developments. Monday saw Baltic assessments for TC2 and TC14 close at WS160 and WS140, a gain of 33 and 50 WS points respectively. Tuesday onwards saw an easing of rates, with less TC2 enquiry from charterers keen to keep rates grounded. Alternative tonnage such as LRs and Handies gained some interest off the back of rising MR rates by becoming relatively cheaper from a charterers perspective. News of the restart only led to rates falling further as the week went on with TC2 at WS135 and TC14 at WS110 by Friday signalling market confidence in the restart”.

“Gasoline prices also increased in the Eastern US, with some stations reporting shortages, prices reached $3/gallon on Wednesday due to panic buying and shortage. Airports are also reporting jet fuel shortages leading to flight rerouting. In addition, some States declared a state of emergency as to use their emergency powers to attempt to mitigate any severe shortages. Despite the restart, fuel inventories will experience heavy drawdowns and above average imports are likely over the coming weeks. This is particularly pertinent given the strong recovery in US demand, and seasonal demand throughout the driving season. Products are likely to flow from Europe to the US Atlantic Coast (USAC) to meet any shortage should the trading economics support it. A resumption of service will pressure routes loading in the USG such as TC14 and TC18 as refiners will face less inventory pressure as the northern pipeline export route reopens”, Gibson added.

The shipbroker concluded that ‘this event has shown the vulnerability of energy assets to the growing threat of cyberattacks and the need to take the risk seriously. Whilst there have been no deaths, injuries, or environmental damage this time; the consequences of a cyberattack on an increasingly technologically reliant infrastructure is of concern. For the tanker sector, a cyberattack on a vessel carrying hazardous cargo could be far more serious should strong cyber defences and emergency procedures not be in place. Previously the industry had been mostly fearful of physical attacks, but action must now be taken to address the cyber risks faced.
Nikos Roussanoglou, Hellenic Shipping News Worldwide