Iran offers India $1bn guarantee for oil shipments
New Delhi, July 24, 2013
Iran has offered to underwrite insurance for its vessels to keep oil exports to India flowing, after New Delhi asked for assurances to help halt a fall in shipments.
Letters seen by Reuters show Iran is offering sovereign guarantees of up to $1 billion per incident to back its ships sailing to India, its second biggest oil customer after China.
India's crude imports from Iran have been hit by insurance problems triggered by western sanctions, falling by 59.4 per cent in June, and the state guarantee could keep oil revenues flowing.
In letters seen by Reuters from Iran's industries, mines and trade minister Mehdi Ghazanfari and oil minister Rostam Ghasemi told India that liabilities of $50 million to $1 billion are covered by "sovereign guarantee and government special fund".
The two ministers said Iran's finance minister will issue a final letter on the sovereign guarantee in due course.
India abides by United Nations sanctions on Iran but does not follow US and European Union measures which are aimed at choking off funds to a nuclear programme which the West says is a drive to achieve a weapons capability.
With limited options available, India had sought sovereign guarantees for the Kish and Moallem protection and indemnity (P&I) clubs that insure Iranian vessels against personal injury and environment clean up claims.
European Union sanctions on insurance from a year ago bar members of International Group of P&I - who account for the majority of cover for the tanker market - from covering Iranian shipments. US sanctions from July forced foreign container shipping lines to shun business with Tehran.
New Delhi had given a temporary approval to the two clubs but wanted Iran's backing longer term.
India will take a call on extending long-term approval for the two clubs by end-September.
The biggest potential drawback for vessels insured by Iranian companies, even with a sovereign guarantee, is that they may struggle to pay claims outside Iran because Western sanctions prevent banks from channelling cash out of the country, shipping and insurance officials say.
For liabilities up to $50 million, a consortium of Iranian insurers led by the Central Insurance of Iran (CII) will provide the bulk of the cover, the letters said.
Kish, Moallem and CII have been blacklisted under the US sanctions.
Ghazanfari also said in the letter that a similar guarantee is available for the Qeshm International Trust Alliance P&I Club. This company has not featured so far in the list of insurance clubs approved by India. - Reuters
More Energy, Oil & Gas Stories
- Libyan rebels start oil exports, bypassing govt
- Dubai drilling company set for London IPO
- Opec output soars on higher Iraq exports
- S Korea to pay Iran $550m under nuke deal
- Qatar LPG exports will stay unchanged till 2018
- $14bn Bahrain energy sector focus for summit
- Iraq now world's fastest-growing oil exporter
- Old IT systems pose risk to oil firms
- Thomson Reuters adds commodity monitoring tool
- Oil below $90 to hit GCC economies
- GlassPoint appoints new Oman director
- Sheffield company opens Dubai hub
- Oman targets big rise in gas output
- Intertek buys UAE firm for $66m
- Qaiwan to tender Baizan refinery EPC contract
- Al Maha wins Oman Air fuel supply deal
- Iran to become top gas importer by 2025
- UAE hydrocarbon projects seen hitting $11bn
- Summit focus on occupational safety
- Aramco names new senior VP
- Siemens gets $253m Qatar power contract
- Taqa-led group's India deal worth $1.6bn
- Taqa-led group to buy India power plants
- Iraq oil exports hit record 2.8m bpd
- Korean refiners eye more Iraq crude
- Dana starts Egypt gas plant upgrade
- Opec oil production hits new high in Feb
- Taqa-led group to buy Indian hydropower plants
- Schneider gets energy management certification
- Morocco moves ahead with $1.7bn wind farms