India Working on Insurance for Iran Oil Imports

(WSJ)

NEW DELHI – India is speeding up efforts to ensure insurance cover for tankers that bring in crude-oil from Iran, about a week before the onset of European Union sanctions that will effectively cut off insurance services for oil shipments from the Islamic Republic.

The move by India's oil ministry comes after the South Asian nation got exemptions from U.S. sanctions. India and South Korea were among the countries exempted earlier this month from U.S. sanctions after the U.S. believed they had significantly reduced oil imports from Iran.

But India continues to face logistical challenges in importing oil from Iran as the EU sanctions, which come into effect on July 1, are affecting its ability to get insurance for ships carrying Iranian crude.

Oil Secretary G.C. Chaturvedi said Friday that the oil ministry has asked the shipping ministry to allow refiners to import crude from Iran on Iranian ships.

The current system for importing oil favors Indian shippers as part of the federal government's policy to support the local shipping industry. Allowing Iranian ships to bring crude to India would free refiners from the responsibility of arranging insurance for the tankers.

"The ministry of shipping is considering our proposal," Mr. Chaturvedi told reporters.

He said the oil ministry has also asked the finance ministry to press state-owned reinsurer General Insurance Corp. to provide insurance cover to Indian ships carrying crude from Iran. The oil ministry is also working to get sovereign guarantees for Indian vessels, he added.

"We are providing for the contingency. We are taking all steps to ensure supplies are not hit," Mr. Chaturvedi said.

Asian countries that import oil from Iran, such as India, Japan and South Korea, have been working to find a way around EU sanctions. Earlier this month, Japan passed a bill that would enable the government to back insurance plans for tankers carrying Iranian crude-oil to the country.

India has been reducing its oil shipments from Iran saying it wants to cut dependence on a single nation. Shipments from Iran fell 5.7% in the financial year ended March 31 to 17.44 million tons, or 349,300 barrels a day. That led to Iran slipping to fourth position from second among oil suppliers to India.

Indian refiners aim to cut Iranian imports by 11% to about 15.5 million tons this fiscal year.

"We are receiving supplies from Iran," said Oil Minister Jaipal Reddy. "We are adopting all possible legitimate means," he said, adding that India has "decided not to discuss these things too loudly and too frequently."

Earlier this month, Mr. Reddy met energy ministers from Saudi Arabia, Qatar and Algeria, seeking additional supplies for India.

Write to Rakesh Sharma at [email protected] and Santanu Choudhury at [email protected]