Press TV – India’s media say Iran has started to provide insurance coverage to oil shipments to India so as to continue exporting the strategic fuel to its second largest buyer in light of US sanctions that are expected to choke its crude trade.
India’s NDTV in a report quoted unnamed sources as saying that Iran had was also using its own ships to transport oil to India because “not many shipping lines participated in recent tenders for transportation of Iranian oil”.
Earlier this month, Hindustan Petroleum Corp Ltd (HPCL) had to cancel the purchase of an Iranian oil cargo after it faced insurance issues, added the report.
In early July, the HPCL got its insurance for all its installations – from refineries to pipelines and storages – renewed to protect against any accident. However, the re-insurer refused to cover any incidents involving Iranian oil processed or stored, NDTV added.
Sources said this seems to be a temporary problem as a similar situation had arisen when first round of sanctions against Iran were imposed in 2012.
At that time, the insurance cover was extended to all installations minus the proportion of Iranian oil the company processed. Therefore, if Iranian oil in a company’s portfolio comprised of 10 percent, the insurance coverage would be to the extent of 90 percent of the processing.
Sources said HPCL problem should be sorted out soon and the cancellation of one cargo happened because of new insurance company coming in on the renewal of the cover.
Other firms like Indian Oil Corp (IOC) would renew their insurance cover in 2-3 months, by when a clear situation on Iran would emerge, sources close to the development further told the NDTV.
Iran was India’s second biggest supplier of crude oil after Saudi Arabia till 2010-11 but western sanctions over its suspected nuclear programme relegated it to the seventh spot in the subsequent years. In 2013-14 and 2014-15, India bought 11 million tonnes and 10.95 million tonnes respectively from the country.
Sourcing from Iran increased to 12.7 million tonnes in 2015-16, giving it the sixth spot. In the following year, the Iranian supplies jumped to 27.2 million tonnes to catapult it to the third spot, the report added.
In 2017-18, India bought 22.6 million tonnes of crude oil from Iran.
Iran became India’s second-biggest supplier behind Iraq in the first three months of current fiscal, supplying 8.93 million tonnes of oil, the NDTV conclluded.