The ship was damaged during a collision with a freighter over the weekend.

A tanker is at risk of exploding and sinking after catching fire following a collision over the weekend, Chinese authorities say.

The Panama-registered tanker, called Sanchi, was carrying 136,000 tonnes of condensate, a type of light oil, from Iran to South Korea. The cargo is worth about $60 million and is covered by insurance, according to Hanwha Total Petrochemical, which chartered the ship.

Hanwha Total is a 50/50 partnership between South Korea’s Hanwha Group (KRX:000880) and French oil firm Total (NYSE:TOT).

Bloomberg reports that Hanwha Total has already bought alternative supply to replace the oil carried by Sanchi. It has issued tender for five 25,000-MT cargoes of naphtha for delivery in February at a price premium about $10 per ton over benchmark prices for four of the shipments.

Sanchi collided with a Hong-Kong registered freighter, CF Crystal, about 257 kilometers off the coast of Shanghai on Saturday (January 6) evening. CF Crystal was carrying grain, and its 21 crew members were rescued. CF Crystal headed to China’s Luhuashan port with minor damage.

One of the Sanchi’s 32 crew members has been found dead, and the other others are still missing, says CCTV. A statement from the Shanghai Maritime Safety Administration states that search efforts have been complicated by the blaze and by poisonous gases being released. China has sent four rescue boats and a cleaning ship, while South Korea has dispatched a helicopter to offer assistance.

Ship-tracking data from Reuters reveals that the vessel’s registered owner is Hong Kong-based Bright Shipping, and it is managed by the National Iranian Tanker Company. Sanchi was traveling from Kharg Island in Iran, and was scheduled to arrive at Daesan in South Korea on Sunday.

China has not provided details regarding the size of the oil slick, but the country’s foreign minister has said the cause of the incident is being investigated. Shipping experts have noted that the incident could cause shipping to be disrupted around the busy port of Shanghai.

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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.

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