Shipping companies may refuse to carry
Iranian crude oil to India in the absence of international insurance cover
following European Union sanctions against Iran announced on January 23. The
sanctions prohibit EU-based entities from providing insurance and guarantees
for transportation of oil from Iran.
Protection and indemnity cover (P&I) is
available mainly from European P&I clubs.
According to shipping company officials, the
European P&I clubs have told shipping lines that they will have to follow
the sanctions once they are implemented. This is expected to happen by March. Existing
shipping contracts with Iran for crude oil should be completed before July 1.
The insurance cover will not be extended to any fresh contract entered into
after January 23.
Ministries to Meet
“Shipping companies will not be able to pick
up oil cargoes without adequate insurance cover for the whole voyage,” said
Capt. Sunil Thapar, Director, Bulk Carriers and
Tankers, Shipping Corporation of India.
All Indian public sector oil companies — IOC,
BPCL, HPCL and MRPL — import crude oil from Iran. Companies like Shipping
Corporation of India, Great Eastern Shipping and Mercator have annual contracts
with these oil companies for importing the crude.
The oil companies may decide to buy crude on
c.i.f. basis in which case it is the responsibility of the sellers to arrange
for the shipment. But then they will have to pay higher freight rates.”
It is possible for General Insurance
Corporation of India to step in by setting up an Indian P&I club. This will
attract the ire of US and EU.
In the meanwhile, Ambassador Nirupama Rao spoke up in favour
of Indian trade with Iran at a meeting in Boston. She said that Indian will abide
by UN sanction which covers only nuclear related trade.