(1) Britain seeks delay to EU’s Iran ship insurance ban (Dmitry Zhdannikov and Justyna Pawla, Reuters) - Britain is seeking to persuade fellow European Union members to postpone by up to six months a ban on providing insurance for tankers carrying Iranian oil, arguing that it could lead to a damaging spike in oil prices, European diplomats said. A European Union ban on importing Iranian oil, which takes effect on July 1, will also prevent EU insurers and reinsurers from covering tankers carrying its crude anywhere in the world. The impact of the measure is likely to be felt strongly in London’s financial district, the centre for marine insurance.

Iran exports most of its 2.2 million barrels of oil per day to Asia. The four main buyers - China, India, Japan and South Korea - have yet to find a way to replace the predominantly Western insurance shipping cover provided by London insurers. The sanctions seek to stem the flow of petrodollars to Tehran to force it to halt a nuclear program that the West suspects is intended to produce weapons. Some Indian and Chinese firms have already asked state insurers to step in and provide coverage by offering government guarantees.

The situation is more complicated for Japan and South Korea, which have already cut imports of Iranian oil under pressure from Washington, but need Western protection and indemnity (P&I) ship insurance to continue importing the remaining volumes.

“Britain will be pushing the EU to postpone the ban on P&I insurance by six months,” said one diplomatic source. “The main reason is pressure from Japan and South Korea as they would struggle to buy oil after July 1,” the source said. He said Britain feared oil prices could rise sharply as a result of disruptions caused by the lack of insurance after July 1, as Japan and South Korea would be forced to bid aggressively for alternative supplies to meet their needs. A second European diplomatic source said he was aware of the British initiative.

Proposal yet to be discussed

Both sources said Britain’s proposal had yet to win support from other EU members, including France, which has been pushing for the toughest stance on Iran. But in Asia, some shippers welcomed the proposal. “A six-month delay would give more time for alternative arrangements to be made or for the situation to become clearer,” said Arthur Bowring, managing director of the Hong Kong Shipowners Association and a supporter of Britain’s actions. “It could also be an opening for a more permanent arrangement to be worked out.”

It was not yet clear when the measure could be debated by EU officials as a meeting to review the embargo on Iranian oil has been rescheduled from the middle of May to an unspecified date. Japan, South Korea and India have lobbied EU officials for exemptions to the sanctions. “One keeps hearing about positive developments on this issue, so we are hopeful that some positive outcome may come out,” said S. Hajara, chairman of the Shipping Corp of India.

Negotiations between Iran and major world powers on nuclear issues resumed in Turkey in April after a 15-month hiatus. Another round of talks is scheduled for May 23 in Baghdad, but Iran has said it wants a softening of sanctions first.

(Additional reporting by Richard Mably and Jonathan Saul in London, Randy Fabi in Singapore, Clare Baldwin in Hong Kong and Swati Pandey in Mumbai; Editing by Miral Fahmy)

http://www.newsdaily.com/stories/bre84806k-us-iran-eu-insurance/

(2) China mulls guarantees for ships carrying Iran oil (Alison Leung, Reuters) - China is considering sovereign guarantees for its ships to enable the world’s second-biggest oil consumer to continue importing Iranian crude after new EU sanctions come into effect in July, the head of China’s shipowners’ association said.

Tough new European Union sanctions aimed at stopping Iran’s oil exports to Europe also ban EU insurers and reinsurers from covering tankers carrying Iranian crude anywhere in the world. Around 90 percent of the world’s tanker insurance is based in the West, so the measures threaten shipments to Iran’s top Asian buyers China, India, Japan and South Korea.

Global crude oil prices have risen nearly 20 percent since October, partly on fears over supply disruptions from Iran. “(Ship) operators are worried that if the insurance issue cannot be resolved, they will not be able to take orders for shipping Iranian oil any longer,” Zhang Shouguo, secretary general of China Shipowners’ Association, told Reuters in a rare interview with foreign media. “We have put forward our concern and related government departments are studying the issue.”

Iran, OPEC’s second-largest producer, exports most of its 2.2 million barrels of oil per day to Asia, and major buyers have yet to find a way around pending EU sanctions. “We are paying great attention to this, the country has the need for oil and it’s our responsibility to move the crude,” said Zhang. “But we need a solution from the government so we can avoid such risk.”

Like China, India and South Korea were also mulling sovereign guarantees for their tankers. Indian shipping firms indicated last week they would continue to transport Iranian oil even if limited insurance cover exposed them financially to a spill or accident.

Chinese insurers and shipowners would not take the risk on themselves and government intervention was necessary, Zhang said. Major ship insurer, China P&I club, told Reuters earlier this month it would not provide replacement cover for domestic tankers carrying Iranian oil. Most of China’s tanker fleet, owned by firms such as China Shipping, COSCO Group and Nanjing Tankers, were covered by European insurers, analysts said.

Most maritime insurers pool their coverage and tap into the reinsurance market when coverage exceeds $8 million. A typical supertanker - the biggest can ferry some 2 million barrels of oil - is covered for $1 billion against personal injury and pollution claims.

Several government departments were considering the industry’s request, including the Ministry of Finance, China Insurance Regulatory Commission, Ministry of Transport and National Development and Reform Commission (NDRC), Zhang said. He did not say when a decision might be made. Until recently, China was Iran’s top customer, taking more than 20 percent of its crude exports but customs data last week showed China halved its Iranian crude imports in March compared with the same month in 2011.

On the broader shipping market, Zhang said he expected the troubled industry would return to a normal growth path in 2014. The freight market, which includes oil tankers, dry bulk ships and container vessels, has been in one of the worst downturns in recent memory due to an oversupply of vessels and slow global economic activity 
(Editing by Randy Fabi and Ed Davies)

http://www.newsdaily.com/stories/bre83t03y-us-china-iran/

(3) Indian shipping firms to carry Iran crude despite reduced insurance (Nidhi Verma and Randy Fabi, Reuters) - Indian shipping firms will continue to transport Iranian crude even if limited insurance coverage due to tightening Western sanctions leaves them financially exposed to a spill or accident, a top executive and industry sources said.

Tough new European Union sanctions aimed at stopping Iran’s oil exports to Europe also ban EU insurers and reinsurers from covering tankers carrying Iranian crude anywhere in the world from July. Around 90 percent of the world’s tanker insurance is based in the West, so the measures threaten shipments to Iran’s top Asian buyers China, India, Japan and South Korea.The sanctions seek to stem the flow of petrodollars to Tehran to force the OPEC member to halt a nuclear program the West suspects is intended to produce weapons.

Shipping Corp of India, which is the country’s largest shipping firm, Great Eastern and other Indian tanker firms have asked state insurers to step in and provide up to $50 million in third-party liability coverage per tanker voyage. The amount is a fraction of the typical $1 billion coverage that a supertanker carrying around 2 million barrels of crude would have from reinsurers against personal injury and pollution claims.

India’s shipping companies would run the risk of shipping the crude even though they would be liable for any claims above $50 million in the case of an incident, industry sources said. “To the best of our knowledge, over the last 10 years, none of the Indian shipping companies carrying Iranian crude oil into India has had any major incident relating to pollution or anything,” Shipping Corp Chairman S. Hajara told Reuters on the sidelines of an industry conference in Singapore. “Since there have been no claims in 10 years, we felt if we have cover of $50 million as a commercial organization it would be worthwhile for us to continue in that business.”

India is the world’s fourth-largest oil importer and one of the biggest customers for Iran’s 2.2 million barrels per day (bpd) of oil exports. On average, there are 10 crude shipments a month from Iran to refineries on the west coast of India. A major oil spill from one of these tankers could leave Indian shipowners liable for billions of dollars in damages.

The most expensive oil spill was the Exxon Valdez disaster in Alaska in 1989, which industry groups estimate has cost as much as $7 billion so far in clean-up, fines, penalties and claims. “Exxon Valdez happens once in decades. If you think all your risk must be covered, then you should not be in business,” Hajara said, adding that liability limits for an oil spill have extended beyond $1 billion and $3 billion for other incidents. “We have been very clear that Indian insurance companies will have a tough task, if not impossible, to get reinsurance if the sanctions really set in. We know if we ask for a huge amount of cover we will never get it.”

The biggest reinsurers are located in Europe and according to some industry experts the only way to cope with the loss of European reinsurers would be for governments of importing countries to provide federal guarantees to cover any expenses relating to personal and pollution claims. Shipowners have asked the government for sovereign guarantees, but have not received a response, Hajara said. Indian firms, along with Japan and South Korea, have also lobbied European officials for exemptions to the EU sanctions.

India’s refiners are already cutting imports to comply with a separate set of US sanctions requiring Iran’s crude clients to significantly cut purchases. Refiners could cut imports by about a quarter in the 2012-2013 year that began on April 1, but are keen to keep the remaining imports coming. In the fiscal year that ended on March 31, India’s imports from Iran were less than 340,000 bpd, compared with the 362,000 bpd committed under annual term contracts. India is currently importing about 280,000 bpd.

A finance ministry source said the Indian government would consider any action necessary to keep oil flowing from Iran, India’s second-biggest supplier after Saudi Arabia, including offering sovereign guarantees to shipments.

The shipping firms have sent their request to state insurers United India Insurance, General Insurance Company, New India Assurance Co. Ltd., National Insurance Co. Ltd. and the Oriental Insurance Co. Ltd., said a shipping source. The shipping and finance ministries were also looking at the proposal. A final decision is expected “very soon,” Hajara said.

Japanese insurers have also warned ship owners they will only cover one tanker at a time carrying Iranian crude through the Middle East because their ability to provide cover is limited without the European reinsurance market. That will reduce the number of tankers carrying Iranian oil to three or four a month as each ship takes about a week to 10 days to travel in and out of the Gulf, sources said, compared with about 10 ships a month last year. Japan has cut its April crude loadings from Iran by nearly 80 percent compared to the first two months of the year.

(Additional reporting by Clare Baldwin in HONG KONG and Manoj Kumar in NEW DELHI; Editing by Jo Winterbottom, Simon Webb and Clarence Fernandez)

http://www.newsdaily.com/stories/bre83n0dm-us-india-oil-iran/

Peter Myers is a writer who lives a simple life on a small farm. Apart from writing, he builds whatever’s needed, does the plumbing, and grows subtropical and tropical fruits. He has done a number of academic courses, but finds academia (in the West) too narrow and ex-cathedra in its mindset: stifling of genuine creative thought. Genuine independent thinking now takes place outside official circles, on the internet. Website: http://mailstar.net/index.html