Indian refiner MRPL secured coverage from an Iranian insurer for a crude cargo that arrived last week becoming the first Indian firm known to have taken such action as Western sanctions tighten.

Sources with knowledge of the matter said that India is the world's fourth largest oil importer and one of the biggest customers for second largest OPEC producer Iran's exports of 2.2 million barrels per day but Western sanctions make it tough for Indian oil importers and shipowners to maintain access to Iran's crude market.

Indian insurers denied coverage to Mangalore Refinery and Petrochemicals for fear the action could fall foul of a pending European oil embargo against Iran. Tough new European Union sanctions aimed at stopping Iran's oil exports to Europe also ban EU insurers and reinsurers from covering shipments of Iranian oil anywhere in the world from July. India's insurers do not fall directly under the sanctions regime but depend on the Western reinsurance market to hedge their risk.

The sources said that but an Iranian insurer provided cover for MRPL's crude cargo of about 7 07,500 barrels that arrived at India's Mangalore Port last week. MRPL recently got a cargo insured by an Iranian firm and other cargoes can also be insured from Iran. The company will do that on a case by case basis.

Another source said that MRPL might continue to get Iranian insurance cover for oil imports from Tehran. As long as we can avail of Iranian cover we will continue to import cargoes on that basis. MRPL is a major Indian buyer of Iranian oil and its insurance policy with New India Assurance Co Ltd for cargoes lapsed this month.

A Shipping Corporation of India director said that state run insurers were willing to extend cover for crude cargoes except those from Iran under MRPL's new policy forcing the refiner to approach Iran. MRPL and other oil firms buy insurance to protect their crude cargo, while ship owners usually arrange cover for the ship and any liability from an oil spill or personal injury. Indian state run insurers have agreed to give USD 50 million cover for local tankers carrying Iranian oil from July.

Source - Reuters

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