GoI Offers Sovereign Guarantee to Iran Oil Insurers

India, the third-biggest buyer of Iranian oil, will offer state-backed insurance to tankers, helping the nation’s biggest sea carrier to resume cargoes from the Persian Gulf nation hit by international trade sanctions.

Shipping Corp. of India will soon start services to Iran as Indian insurers have agreed to give as much as $100 million of cover per voyage, Chairman Sabyasachi Hajara said without specifying a timeframe. Prior to the sanctions, European companies provided unlimited protection against risks including oil spills and collisions, he said.

The resumption of services will help Mangalore Refinery & Petrochemicals Ltd. (MRPL), India’s biggest buyer of Iranian crude, and other state processors secure supplies after European Union measures disrupted trade. The sanctions, prompted by Iran’s nuclear plans, also affect shipments to China, Japan and South Korea as 95 percent of oil tankers are insured by the 13 members of London-based International Group of P&I Clubs.

Mangalore Refinery halted purchases from Iran after the sanctions made it impossible to get ships to carry the crude, Managing Director P.P. Upadhya said last week. That prompted the company to buy more of its requirements from the spot marketwhere prices are typically higher.

Iran was the fourth-biggest supplier of crude to the South Asian nation in the year ended in March, according to the Associated Chambers of Commerce and Industry of India. The country purchased about 18 million tons of Iranian oil, the New Delhi-based lobby group said on May 8.