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European reinsurers are wary of US and EU sanctions on Iran and hence the Indian government is trying to get limited intermediary cover.
The Indian government has decided that the insurance fund to cover oil imports from Iran, would be managed by General Insurance Company (GIC).
Officials in the Indian petroleum and natural gas ministry were quoted by local media announcing that a decision had already been taken to create the insurance fund for Iranian oil imports.
The contributions to the fund will be done by the insurance companies and Oil Industry Development Board (OIDB) under the petroleum ministry.
India is Iran’s second-largest buyer.
The proposal now awaits the nod from the Indian foreign affairs ministry.
International sanctions have forced countries importing oil from Iran to provide alternative insurance, as in the case of Japan and now India, or use Iran-flagged tankers like China.
In countries like China, India and Japan, Iranian oil constitutes more than 10 per cent of the total crude supply.
The expansion of Iran’s tanker fleet has aided Iran in circumventing the sanctions.
“Iran bought a number of tankers from China and can now do more deliveries. It’s taken some pressure off Iran and facilitated tanker traffic and we are seeing higher exports to China,” analyst Salar Moradi at oil and gas consulting firm FGE told Reuters earlier in January.
With inputs from Agencies