* NITC takes vessel with India-backed insurance
* Effectively transfers insurance risk to New Delhi
* Chartered Omvati Prem for two months -industry source
By Nidhi Verma
NEW DELHI, Jan 15 (Reuters) – A loophole in an Indian
insurance scheme has allowed Iran’s state-run tanker company
NITC to bolster oil exports by chartering a vessel insured by
India’s state-run firms, industry and shipping sources said on
Tuesday.
European Union and U.S. sanctions to force Iran to curb its
nuclear programme cut Iran’s oil exports by more than half last
year. An EU ban on insuring vessels carrying Iranian oil was
among measures that disrupted the flow to top Asian buyers, as
the maritime insurance industry is mostly based in Europe.
National Iranian Tanker Company (NITC) has for the first
time chartered an Indian vessel covered under a scheme arranged
by New Delhi through state-run insurers, sources said.
NITC has chartered the vessel the Omvati Prem, owned by
Mumbai-based Indian shipper Mercator Ltd, and used it
to carry an oil cargo that sailed from Iran in December for
Indian refiner Mangalore Refinery and Petrochemicals Ltd
, the sources said. The deal included cost, insurance
and freight (CIF), they said.
India’s junior oil minister Panabaaka Lakshmi in a written
reply to a question in parliament in November on the insurance
scheme did not specify if Iran could charter vessels with Indian
insurance cover for supplies.
Use of the scheme effectively transfers the liability for
any damage or spill to India’s state-run insurers, and
ultimately to New Delhi. When NITC uses its own vessels, the
liability stays with its Iran-based insurer.
India established the scheme to keep some oil flowing after
EU sanctions came into effect and disrupted shipping. The
government arranged emergency cover that was meant for use by
Indian flagged vessels chartered by local refiners.
There was little appetite for Indian shippers for the scheme
as the insurance was limited to $50 million, a fraction of the
$1 billion coverage that a supertanker would typically have from
reinsurers against personal injury and pollution claims.
Mercator was the only company to use the scheme. Before NITC
chartered the Omvati Prem, MRPL had used the vessel — which can
carry about 635,000 barrels — to import Iranian crude.
MRPL is India’s biggest buyer of Iranian crude and
did not charter the vessel for this voyage due to commercial
and technical reasons, one source
said
Another shipping source privy to
the deal said Omvati Prem discharged in Mangalore on Jan. 8.
Mangalore Port’s website showed that the vessel arrived
on Jan. 7.
NITC has struggled to keep the flow of oil going to India as
it lacks vessels of small enough size to dock at India’s
Mangalore port. One of the sources said NITC had chartered the
Omvati Prem for about two months.
“Iran offered Mercator a better rate than MRPL, that’s why
they have taken the risk of joining hands with NITC,” another
shipping source said.
“Mercator has taken a risk as NITC is a blacklisted company
under sanctions.”
Mercator paid $26,105 for P&I; cover to United India
Insurance Company and 1,852,710 rupees ($34,000) for hull and
machinery cover to The New India Assurance for a voyage between
December 28 and January 27, documents seen by Reuters show.
Sources at the two insurance companies were not aware that
Mercator had used the policy to deliver an Iranian cargo on a
CIF basis.
Mercator did not respond to Reuters enquiries. MRPL, India’s
shipping ministry, United India Insurance and The New Indian
Assurance Co Ltd all declined to comment for the story.
D.K. Mittal, secretary for financial services at the finance
ministry, and Syed Akbaruddin, spokesman at India’s foreign
ministry, were not immediately available for comment.
India, along with Iran’s other major Asian clients including
China and Japan, has won an exception to U.S. sanctions on
financial institutions that process oil payments by reducing
Iranian oil imports.
NITC was the target of fresh EU sanctions imposed in October
and was declared by Washington to be an extension of the Iranian
state in July 2012. That prevents U.S. companies from dealing
with it.
[ ID:nL2E8ICCBN ]NITC has changed many tanker names as it adopts new tactics
to keep Iran’s oil exports flowing in response to sanctions.
China, India, Japan and South Korea are the top four buyers
of Iranian crude and have all struggled to find ways around the
shipping insurance ban.
Japan provides its refiners with government-backed insurance
of up to $7.6 billion per tanker to ship Iranian oil, in line
with cover from the international P&I; Club.
($1 = 54.4575 Indian rupees)
(Editing by Jo Winterbottom, Simon Webb and Ed Davies)
