Iran to Give Insurance Cover to Any Foreign Ships

Iran to offer insurance coverage of any foreign ship

Iran has said it will give insurance to any foreign ships in their waters, the country's FARS News Agency (FNA) has reported.

"Any foreign shipping line and any foreign ship that enters Iran's waters, the Islamic Republic of Iran takes the responsibility for its insurance coverage," Seyed Ataollah Sadr, the Managing Director of Iran's Ports and Maritime Organization, was quoted as saying.

He added that the Islamic Republic's government had achieved the scheme "through the cooperation of Iranian insurance companies."

The report did not elaborate on how the scheme would work in practice.

European sanctions in effect since July 1, 2012 mean ship owners found carrying Iranian product, either as fuel or cargoes, will lose their P&I Cover from European clubs, which account for approximately 90% of the world's shipping tonnage.

In response, Iran is using and insuring its own tankers to deliver oil to its customers through Kish P&I, itself underwritten by Central Insurance of Iran.

The FNA report said the lack of shipping cover has failed to disrupt the flow of Iranian oil to Iran's major customers China, India, South Korea, and Japan.

A statement by U.S. Secretary of State Hillary Rodham Clinton last month said Iran's crude oil exports have dropped to 1.5 million barrels per day, down from approximately 2.5 million barrels per day in 2011.

Some nations such as India have arranged their own alternative non-European cover for their vessels in order to carry Iranian oil.

Media reports indicate Japan had completely halted crude imports from Iran in July, but industry sources were quoted saying Japanese insurers were expanding their maritime coverage to allow their tankers to transport Iranian crude.

Ship & Bunker reported Tuesday that Iran had prepared a draft bill asking its government to design nuclear-powered merchant ships in an effort to overcome the sanctions and help its oil delivery needs.

Additional sanctions effective June 28, 2012 mean financial institutions in a country that has not been granted a waiver will be subject to U.S. sanctions if they knowingly settle trades with the Central Bank of Iran for Iranian oil or petroleum products.

There are 20 countries with such waivers including Singapore, China and Britain.