Indian Govˈt Offers Full Insurance For Imports Of Iranian Crude Oil

New Delhi, May 18, IRNA -- The Indian Government announced Thursday its decision to offer full and official insurance coverage for its crude oil imports from Islamic Republic of Iran. The Time of India in its Thursday issue published a report in this respect, writing, ˈThe unilaterally US and EU sanctions against crude oil exports of Iran have created difficulties for the Indian oil refineries and that is the reason why the New Delhi Government intends to establish a special fund commissioned to insure the countryˈs crude oil imports from Iran.ˈ According to the Indian daily, the government intends to offer official 240 billion rupees (about 4.4 billion US dollar) insurance to the Indian oil refineries, which the European insurance companies have refrained to insure their Iranian crude oil imports. Indian Deputy Oil Minister Vivik Rae made the decision in this respect after the worries were expressed by top managers of Indian refineries about the insufficient capital of the Indian insurance companies for covering their Iranian oil imports. The Indian Government had earlier announced its decision to allocate a 20 billion rupees (about 400 million US dollar) capital for insuring the Indian refineries that import crude oil from Iran, but the top managers of those refineries later on announced that the amount was far to small to cover their purchases. The Indian Oil Industry Development Board (OIDB) - affiliated to the Indian Oil Ministry – was earlier commissioned to allocate 10 billion rupees (about 185 million US dollars) to the purpose and the remaining 10 billion rupees, too, would be covered by the public insurance companies of that country. The Indian public and private sector insurance companies were also allowed to allocate greater amounts for the purpose. The government, too, agreed to deposit 100 billion rupees (1.8 billion US dollars) to cover the probable hazards in the course of purchasing crude oil from Iran. But the executive managers of the Indian refineries said at the last session on the issue that the maximum amount that could be allocated to the private sector Essar Oil and the state owned Mangalore Refinery and Petrochemical Limited (MRPL) would be respectively 110 billion rupees (about 2 billion US dollars) and 70 billion rupees (1.2 billion US dollars). These two companies are the major clients of the Iranian crude oil. The executive managers of these refiners have said that the maximum amount that could be allocated to their probable losses for buying crude oil from Iran would be 240 billion rupees (4.4 billion US dollars) and since the capital of the insurance fund allocated to the purpose is insufficient, the governmentˈs contribution is required. Deputy Indian Oil Minister Viviek Rae who announced the establishment of this insurance fund, too, noted that that Indian Government would ensure covering a part of the required monetary assets. India has failed to reduce its purchases of Iranian oil, and if it doesn’t do so, President Barack Obama may be forced to impose sanctions on one of Asia’s most important nations, Obama administration officials said Wednesday. A decision to levy penalties under a new US law restricting payments for Iranian oil could come as early as June 28, according to several US officials who spoke on condition of anonymity because of the sensitivity of the issue. Alejandro Barbajosa, an oil markets specialist and business development manager at Argus Media Inc., talks about oil supply disruption and the role of the International Energy Agency. He speaks from Singapore with Caroline Hyde on Bloomberg Televisionˈs ˈFirst Look.ˈ (Source: Bloomberg) “Given the level of trade, and in particular oil, between Iran and India, targeting an Indian entity that facilitates Iran’s access to the international financial market should be top of mind for the US Treasury,” Avi Jorisch, a former Treasury Department official who is now a Washington-based consultant on deterring illicit finance, said in an interview. The US law, which targets oil payments made through Iran’s central bank, applies to any country that doesn’t make a “significant” reduction in its Iranian crude oil purchases during the first half of this year. If India fails to cut Iranian imports sufficiently, Obama may be compelled to bar access to the US banking system for any Indian bank processing oil payments through Iran’s central bank, the US officials said. While India hasn’t asked its refineries to stop purchasing Iranian crude, the government has told processors in the South Asian nation to seek alternate supplies and gradually reduce their dependence on the Persian Gulf state due to increasing pressure from the US in recent weeks, three Indian officials with direct knowledge of the situation said Thursday. India hasn’t significantly cut imports this year because refiners’ annual crude term deals with Iran typically run from April to March, they said. The planned reductions will start only when new annual contracts begin next month, the Indian officials said, declining to be identified because they aren’t authorized to speak to the media. India bought an average of 328,000 barrels a day of Iranian crude in the first six months of last year, making it the No. 3 buyer, behind China and Japan and ahead of South Korea, according to the US Energy Information Administration. Iran is the No. 2 producer in the Organization of Petroleum Exporting Countries./end