MUMBAI–The Indian government has selected Mercator Ltd. (526235.BY) to bring crude oil from Iran after it accepted a cover offered by a state-run insurer for its tanker, the company’s managing director, Atul Agarwal, said Tuesday.
India has been finding it tough to charter tankers to bring crude oil from Iran after European insurers stopped providing covers to shipments from the Islamic nation last month following sanctions by the U.N. and some Western countries.
India, which has decreased but not stopped crude purchases from Iran, has been trying to make its own arrangements to bring in the oil. For the time being, it is selectively allowing Iranian vessels to ship in crude.
In the absence of covers from Europe’s insurers, state-run United India Insurance Co. last month offered $50 million for third-party, or protection and indemnity, cover and a similar amount for hull and machinery.
That was far below the $1 billion cover European insurers usually give.
The country’s main Iran crude carriers, Shipping Corp, of India Ltd. (523598.BY) and Great Eastern Shipping Co. (500620.BY), refused to carry Iran cargo, calling the cover inadequate. Analysts say the companies are also afraid to irk western clients and investors by contributing to Iran’s trade.
Mercator’s Mr. Agarwal said the cover is adequate “given there have been almost no claims on Iran voyages for the last decade.” His company has taken just $15 million in hull and vessel cover apart from $50 million as P&I.
The shipping company will ply one vessel with a carrying capacity of 90,000 metric tons from Iran starting Wednesday or Thursday, Mr. Agarwal told Dow Jones Newswires. It won’t deploy any additional tanker on the route.
This may not be enough to meet India’s crude requirement from Iran, which means the country will still have to use Iranian vessels to transport oil.
– Anirban Chowdhury, (c) 2012 Dow Jones & Co