India has joined Japan in offering government-backed insurance for ships carrying Iranian crude in order to bypass European sanctions, the Washington Post reported.
The first Indian ship to carry oil from Iran with Indian insurance is scheduled to load up in Iran on Wednesday, a shipping company executive said. This is a breakthrough for the Indian government, which has scrambled to maintain vital Iranian oil imports after European sanctions blocked third-party insurance in July.
The MT Omvati Prem — a tanker contracted to carry 85,000 metric tons of crude oil from Iran for Indian state refiner Mangalore Refinery and Petrochemicals Ltd. — is scheduled to arrive in India by Aug. 25, said Kowshik Kuchroo, president of shipping for Mercator Ltd., an Indian shipping company.
“This being a government of India cargo, it has a different sense of importance. We’re not doing it just for business,” Kuchroo said Monday. “India is in definite need of the crude. At a short notice, we can’t just snap the supply.”
Mercator is insuring the ship with $50 million in hull and machinery insurance, which covers physical damage to the ship, from state-owned New India Assurance Co. It’s insuring the vessel with another $50 million in protection and indemnity insurance, which covers a broad range of liabilities, including environmental pollution and cargo damage, from government-backed United India Insurance.
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India’s refiner MRPL has received a crude cargo under the coverage of an Iranian insurance company to become the first Indian firm taking such an action in the face of oil embargoes against the Islamic Republic, sources say.
Mangalore Refinery and Petrochemicals (MRPL) “recently got a cargo insured by an Iranian firm and other cargoes can also be insured from Iran. The company will do that on a case-by-case basis,” Reuters quoted one of the sources on Monday.
The Iranian insurer provided coverage for MRPL’s crude cargo of about 707,500 barrels, which arrived at India’s Mangalore Port last week.
Another source said, “As long as we can avail of Iranian cover we will continue to import cargoes on that basis.”
India is one of the biggest customers for Iranian crude. The Asian country accounts for more than 10 percent of Iran’s annual oil exports, worth about $12 billion.
Earlier in May, Indian General Insurance Corp. (GIC) said it planned to provide third-party liability coverage up to $50 million for ships importing Iranian crude in a bid to prevent the oil embargoes from disrupting Iranian crude shipments to India.
The European Union approved new sanctions on Iran’s oil and financial sectors on January 23. The sanctions are meant to prevent member states from buying Iranian crude or doing business with its central bank. The sanctions will come into force as of July 1.
Additionally, the embargo banned European companies from transporting, purchasing or insuring crude and fuel originating in Iran and intended for anywhere in the world.
The US and the EU have imposed new financial sanctions as well as oil embargoes against Iran since the beginning of 2012, claiming that the country’s nuclear energy program includes a military component, a claim Iran has strongly rejected.