China, India plan shipment guarantee for Iranian crude

Beijing and New Delhi are mulling new measures to prevent the European Union’s embargoes from disrupting Iranian crude shipments to China and India, by providing insurance cover for their tankers.

“We are paying great attention to this, the country (China) has the need for oil and it’s our responsibility to move the crude,” Zhang Shouguo, the secretary general of China Shipowners’ Association (CSA), told Reuters on Monday.

“But we need a solution from the government so we can avoid such risk,” Zhang noted, adding, “We have put forward our concern and related government departments are studying the issue.”

The European Union approved new sanctions on Iran’s oil and financial sectors on January 23. The sanctions are meant to prevent member states from buying Iranian crude or doing business with its central bank. The sanctions will come into force as of July 1.

Additionally, the embargo banned European companies from transporting, purchasing or insuring crude and fuel originating in Iran and intended for anywhere in the world.

India and China are among the biggest buyers of Iranian crude.

Beijing also strongly opposes trade restrictions against Iran, saying that the oil sanctions are not “constructive.”

Likewise, India is also taking steps to avert the EU sanctions by providing coverage for ships carrying Iranian oil.

Indian General Insurance Corp. (GIC) said it planned to provide third-party liability cover for ships importing Iranian crude.

“GIC has communicated to Indian shipowners last week saying that they are willing to provide liability cover of up to $50 million against collision and oil spills on a per-voyage basis,” said Sunil Thapar, an official at the state-run Shipping Corp. of India Ltd (SCI).

India accounts for more than 10 percent of Iran’s annual oil exports, worth about $12 billion.

The US and the EU have imposed new financial sanctions as well as oil embargoes against Iran since the beginning of 2012, claiming that the country’s nuclear energy program includes a military component.

Tehran refutes such allegations, noting that frequent inspections by the International Atomic Energy Agency have never found any diversion in Iran’s nuclear energy program toward military purposes.