TEHRAN (Tasnim) – The Indian administration is drawing up plans to create a local oil insurance fund to underwrite oil tankers carrying Iranian crude to India in a bid to get around the western sanctions against Tehran.
India’s finance ministry has called on the country’s petroleum ministry to speed up efforts for establishment of an oil insurance fund that would provide insurance coverage for the tanker vessels bringing Iranian crude oil to the country.
The Indian refineries have run into a shortage of oil imports from Iran after a series of anti-Iran sanctions imposed by the US and the European Union banned the insurance providers from covering the oil tankers traveling between Iran and India.
A local Indian refinery, Indian Petroleum, now hopes that removal of oil insurance obstacles would enable it to restart importing crude oil from Iran to an extent of at least 0.8 million metric tons (MT) within this financial year.
In a separate development in August, India’s finance ministry and the local insurance companies decided to offer a state guarantee to the Indian refineries that import crude oil from Iran in the absence of western insurers.
Indian government, at the time, decided to consider providing a $327mln state guarantee to prop up the Indian refineries that have encountered problems in importing crude oil from Iran as a result of western sanctions against Tehran.
Two state-run oil refiners in India have been obligated to cut imports from Iran since April, after international insurance agencies refrained from covering trade deals between Tehran and New Delhi for fear of being exposed to the sanctions.
The European Union imposed an embargo on Iranian crude in July 2012. It also prohibited European companies from providing storage or transport vessels for Iranian oil and petrochemical products, effectively preventing European insurers from covering oil tankers transporting Iranian oil.
In October, an Iranian official said his country’s underwriters provide insurance coverage for more than 90 percent of the crude oil it exports.
“Currently, more than 90 percent of crude oil cargos are insured by Iranian insurance consortiums and our customers have been satisfied with us so far,” said Mohsen Qamsari, director for international affairs at National Iranian Oil Company.
“Fortunately, this consortium has managed to insure Iranian oil cargos over the past two years and for the time being we have no problem with insuring our vessels to carry oil to our customers,” said Qamsari.
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