Oil tankers are typically insured for up to $1 billion because of the risk of oil spills
File photo shows an oil tanker off the port of Bandar Abbas, southern Iran, on July 2. Iran is expanding its insurance on its fleet of 47 oil tankers through a multi-billion-dollar line of credit as it seeks to get around EU sanctions crimping its crude exports, reports said on Saturday. © Atta Kenare - AFP/File
Oil tankers are typically insured for up to $1 billion because of the risk of oil spills
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AFP
Last updated: July 28, 2012

Sanctions-hit Iran expands oil tanker insurance

Iran is expanding a promise to insure shipments of its oil to include both Iranian and foreign tankers, in an effort to get around EU sanctions crimping its crude exports, reports said Saturday.

The insurance will be made possible through a new multi-billion-dollar line of state credit, Iran's OPEC representative, Mohammad Ali Khatibi, was quoted as saying.

"Iran is ready to give total insurance for the transport of its oil... and the commitments by Iranian insurers are no different from those by Western insurers and therefore all risks and dangers are insured," state-run newspaper IRAN reported him saying.

Crude buyers have the option of using Iran's fleet of 47 oil tankers or their own, he said.

"Deliveries that don't obtain insurance from other countries will be insured by Iran," Khatibi told the weekly news magazine Mosalas in an interview.

The Fars news agency cited an unnamed official saying the government had given the central state insurance agency, Bimeh Markazi, a line of credit worth several billion dollars to insure the tankers.

It said 10 percent of the money had already been transferred.

The measure expands on a promise of insurance for deliveries of its oil using Iranian tankers to major customers China and India. South Korea is also mulling joining that offer.

Iran is suffering a cut in oil sales abroad of up to 40 percent, according to the International Energy Agency (IEA), because of an EU embargo on Iranian crude imports and a related ban on European insurers providing cover for deliveries of Iranian oil anywhere in the world.

European insurers accounted for 90 percent of coverage for Iran before the EU sanctions took effect on July 1.

Iran is striving to maintain a semblance of business as usual in its oil exports.

"Export volumes are the same as before" the sanctions, Khatibi told Mosalas.

By attempting to fill the insurance gap itself, Iran faces several obstacles.

US sanctions targeting Iranian financial transactions worldwide make it unclear how Iran could pay out any claims arising from accidents involving its tankers.

Oil tankers are typically insured for up to $1 billion because of the risk of oil spills.

A European analyst in Tehran noted that the 40 tankers in Iran's fleet owned by the NITC, formerly known as the National Iranian Tanker Company, each had a long-distance capacity of up to two million barrels of oil.

Iran, before the EU sanctions, exported around 2.5 million barrels of oil per day. The IEA estimates that has now been cut to around 1.5 million barrels per day.

Several of the NITC vessels were being used in June to store Iranian offshore crude that Tehran has not been able to sell because of the sanctions, according to industry specialists.

Iran has announced plans to quickly expand its onshore storage capacity, which has been saturated, including by subcontracting to private firms. Tehran has also ordered 12 new supertankers from China and should receive the first in December.

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