Chinese oil tanker Shen Neng 1 crashed into the Douglas Shoal near Gladstone more than five years ago.
Chinese oil tanker Shen Neng 1 crashed into the Douglas Shoal near Gladstone more than five years ago.

Chinese ship owners to pay $39.3 million over reef wreck

UPDATE: AUSTRALIA will receive just one-third of what it originally demanded from the owner of the Chinese coal ship that ran aground the Great Barrier Reef in 2010. 

  The Shen Neng 1 ran aground on Douglas Shoal off Rockhampton and Gladstone in 2010. It leaked oil and was towed to Hervey Bay where it was unloaded.   

The Federal Government took the ship's owner Shenzhen Energy to the Federal Court, calling for $120 million in damages.    But in an out of court settlement, Shenzhen's insurer,

The London P&I Club, agreed to pay $35 million in a single limitation fund to the government and a further $4.3 million to the Great Barrier Reef Marine Park Authority.   

The Federal Court trial began on September 6 but was adjourned on Monday to let the parties negotiate a settlement.    Although the settlement was lower than originally demanded, Federal Environment Minister Josh Frydenberg dubbed it a victory.   

"The Australian Government has won a significant legal challenge and reached a $39.3 million out of court settlement with the owners of a Chinese coal carrier that ran aground in April 2010 causing the largest known direct impact on the Great Barrier Reef," he said.  

"For more than six years, Shenzhen Energy Transport Co Ltd and its insurer refused to accept their responsibility for restitution after the 225-metre long, fully laden Shen Neng 1 ran aground 100km east of Rockhampton at Douglas Shoal."  

But Great Barrier Reef campaigner Jane Garcia said the government had "sold the reef short".  

"The grounding of the Shen Neng 1 off the coast of Queensland in 2010 severely damaged or destroyed a massive 115,000sq m of habitat in the Douglas Shoal, pulverised marine life and released toxic paint that will stunt coral re-growth for years to come," she said.  

"No one who saw the dramatic media images of the grounding of the Shen Neng 1 can forget what's at stake when shipping goes wrong on the reef, damaging coral and marine life in its wake.  

Mr Frydenberg said the funds were "sufficient for the clean-up" and would allow the GBRMPA to begin removing all toxic paint and rubble that the Shen Neng 1 left.  

In a statement The London P&I Club said the amount was "sufficient and appropriate" under Australian and international insurance agreements.   

"The London P&I Club again expressed regret over the Shen Neng 1 incident and said it always wanted to reach a fair and justifiable settlement with the Australian Government," the statement said.   

"The Shen Neng 1 incident was the result of an error by the chief officer of the vessel. The vessel was under management by another company at the time, as were all crew."   ARM NEWSDESK  

EARLIER: The owners of Shen Neng 1, a Chinese coal carrier which ran aground and caused significant damage to the Great Barrier Reef more than six years ago, have agreed to pay $35 million to the Australian Government.

The settlement is less than a third of what the Commonwealth was seeking in the Federal Court from the ship's owner, Shenzhen Energy Transport Co, for remediation costs.

The 225-metre long carrier carved a 2.2 kilometre-long, 400,000-square-metre scar in and around Douglas Shoal in April 2010, about 120 kilometres east of Rockhampton. 

The grounding also damaged one of the ship's fuel tanks, which left a four-kilometre trail of heavy fuel oil.