MUMBAI–United India Insurance Co. has agreed to provide protection and indemnity cover to Indian tankers carrying oil from Iran with General Insurance Corp. offering reinsurance, two people with knowledge of the matter said Tuesday.
The offer bring some relief to Indian shipping companies that aren’t getting covers from European insurers since July 1 for carrying shipments from Iran, which is facing sanctions from the U.S. and European Union for its decision to continue with an alleged nuclear weapons program.
“We (shipowners) had asked for and have been offered a P&I cover of $50 million,” a senior executive at state-run Shipping Corp. of India Ltd. (523598.BY) told Dow Jones Newswires.
While United India Insurance executives weren’t available to comment, an executive from General Insurance Corp. said there will be a $50 million P&I cover and a separate amount for hull and machinery.
“The cover is for all Indian shipowners,” the executive said.
Both insurers are state-owned. India’s oil ministry has been asking the country’s Ministry of Finance to push General Insurance to provide cover to cargo shippers dealing with Iran.
Indian refiners have reduced sourcing of crude oil from Iran — until recently their second-largest supplier — due to the western sanctions and their difficulty in charting ships.
The U.S. recently exempted India from the sanctions, after the South Asian nation reduced oil imports from Iran. Still, getting insurance cover to transport oil from the Middle Eastern nation is difficult.
Asian countries have been looking for ways to work around the problem as Iran accounts for a significant part of their oil imports.
Last month, Japan said its government would be able to back insurance plans for tankers carrying Iranian crude. South Korea, however, has indefinitely halted all oil imports from Iran.
In India, shipments from Iran fell 5.7% in the last financial year ended March 31 to 17.44 million metric tons, or about 348,800 barrels a day. The country aims to cut its imports from Iran by 11% to 15.5 million tons this financial year.
“There will be a meeting of shippers and the insurer tomorrow [Wednesday], in which we hope to get further clarity,” the executive from Shipping Corp. said. The General Insurance Corp. executive said the meeting is “just a formality to finalize the cover.”
– Anirban Chowdhury, Dow Jones Newswires