Feb 28, 2012, 06.22 PM | Source: Reuters
INDIA-IRAN-SHIPPING:India debates options to insure Iran oil cargoes
Indian shipping firms may lose EU insurance coverage for their vessels when they operate with Tehran from July 1 as European insurers will be prohibited from indemnifying ships carrying Iranian oil.
Iran is India's second-biggest supplier of oil after Saudi Arabia, with some $11 billion a year in shipments making up about 12 percent of India's crude import needs.
"Definitely it (P&I insurance coverage for vessels supplying Iran oil) is a problem area," Mohandas said.
He said other options like using P&I cover from other Asian insurance clubs and Indian insurance firms looks unlikely as these need re-insurance cover, which again could be difficult in the face of mounting pressure from western sanctions.
"The problem with P&I cover is the money involved is massive," he said, adding sovereign guarantees and purchase of Iran oil on a delivered basis look to be "practical solutions".
He said a final decision would be taken in next two to three months.
Europe and the United States are implementing tougher economic sanctions in the hope of isolating Iran and forcing it to halt its nuclear programme, which the West fears will be used to develop weapons.
Iran, the biggest producer in OPEC after Saudi Arabia and the world's fifth largest oil exporter, says its nuclear programme is purely for peaceful purposes.
The sanctions have made it more difficult for Iran to sell its crude, and it will export a six-month low volume of fuel oil to east Asia in March. Volumes are likely to drop further as the EU embargo approaches.
(Reporting by Nidhi Verma; Editing by Ranjit Gangadharan and Jo Winterbottom)