Japan’s main shipping insurer will only be able to provide a fraction of the coverage to tankers transporting Iranian oil under new European Union sanctions, officials said on Friday, Arab Times reports.
Starting in July, European insurers and reinsurers will be prohibited from indemnifying ships carrying Iranian crude and oil products anywhere in the world as per sanctions on Tehran.
Although Japan’s P&I Club, which provides insurance for shipping companies, does not directly fall under the sanctions regime, it is largely dependent on the European reinsurance market to hedge its risk.
New Western sanctions imposed on Iran to punish it for its suspected nuclear weapons programme have hampered traders’ ability to do business with Tehran.
“The Club benefits from the reinsurance programme of the International Group of P&I Clubs, much of which is placed in London and thus within such jurisdiction,” said Royston Deitch, a London-based official with Japan’s P&I Club.
“Japan Club rules excludes any recovery or indemnity where the liabilities, costs or expenses are not recoverable from the Club’s reinsurers due to sanctions.”
The insurer will only be able to provide coverage worth a maximum $8 million per tanker, down from the current $1 billion coverage, said an industry official, who declined to be identified.
“Japan Club can pay up to $8 million, but if it covers more than that, it could go bankrupt with only an accident,” he said.
The insurer is expected to publish a circular early next week outlining its policy on Iran, and which is likely to include cuts to coverage.
Any reductions would force club members who want to continue to import Iranian oil to obtain additional coverage from outside the Japan P&I club, possibly in China, Russia or the Middle East.
It also translates into fewer options for non-Japanese shipping companies, such as state-run Shipping Corporation of India, that need to replace their European insurance coverage. China, India and Japan are Iran’s three biggest crude oil customers.
Japan P&I Club is the only Asian-based member of the Group of International P&I Clubs, an association of customer-owned ship insurers which covers 95 percent of the world’s tankers against pollution and personal injury claims.
Japan, Iran’s third biggest crude oil customer, is looking to reduce its dependence on the OPEC member due to pressure from the EU and the United States.
Japan may cut Iranian crude oil imports by a more-than-expected 20 percent as it seeks a waiver from US sanctions, a newspaper reported on Thursday, a move which would spare its banks from a major blow but also boost its rising fuel import bill.
Also:
TOKYO: Japan is to offer $530 million in loans to Iraq, in part to help rebuild oil refineries, an official said Friday, as Tokyo seeks to diversify fuel supplies after the tightening of sanctions on Iran.
Loans totalling 42.5 billion yen have been pledged to Baghdad to aid the war-ravaged country with four infrastructure projects, including a refinery in the southern city of Basra and another in the northern city of Baiji, a foreign ministry spokesman said.
A hospital and telecommunications system will also benefit.
“The total value of the projects will amount to 160 billion yen and the main contractors will be Japanese companies,” said the official in charge of Middle East issues.
The loans come as Washington continues to press Tokyo to decrease its dependence on Iranian oil, amid a growing Western-led sanctions campaign targeting Tehran’s alleged nuclear weapons programme.
The United States is trying to ramp up pressure over the programme, which Tehran insists is peaceful, threatening to cut off financial institutions that deal with the country’s central bank, which would squeeze Iran’s vital oil export business.
Japan last month initially appeared willing to fall into line with US demands to reduce Iranian oil imports, only to backtrack and insist the issue needed further study.
Iranian crude now makes up around a tenth of resource-poor Japan’s oil imports, while crude from Iraq accounts for about three percent.
Japan has eagerly sought to strengthen its ties with Iraq by offering reconstruction support in the aftermath of the conflict there. The world’s third-largest economy relies heavily on the Middle East for its oil needs.
Starting in July, European insurers and reinsurers will be prohibited from indemnifying ships carrying Iranian crude and oil products anywhere in the world as per sanctions on Tehran.
Although Japan’s P&I Club, which provides insurance for shipping companies, does not directly fall under the sanctions regime, it is largely dependent on the European reinsurance market to hedge its risk.
New Western sanctions imposed on Iran to punish it for its suspected nuclear weapons programme have hampered traders’ ability to do business with Tehran.
“The Club benefits from the reinsurance programme of the International Group of P&I Clubs, much of which is placed in London and thus within such jurisdiction,” said Royston Deitch, a London-based official with Japan’s P&I Club.
“Japan Club rules excludes any recovery or indemnity where the liabilities, costs or expenses are not recoverable from the Club’s reinsurers due to sanctions.”
The insurer will only be able to provide coverage worth a maximum $8 million per tanker, down from the current $1 billion coverage, said an industry official, who declined to be identified.
“Japan Club can pay up to $8 million, but if it covers more than that, it could go bankrupt with only an accident,” he said.
The insurer is expected to publish a circular early next week outlining its policy on Iran, and which is likely to include cuts to coverage.
Any reductions would force club members who want to continue to import Iranian oil to obtain additional coverage from outside the Japan P&I club, possibly in China, Russia or the Middle East.
It also translates into fewer options for non-Japanese shipping companies, such as state-run Shipping Corporation of India, that need to replace their European insurance coverage. China, India and Japan are Iran’s three biggest crude oil customers.
Japan P&I Club is the only Asian-based member of the Group of International P&I Clubs, an association of customer-owned ship insurers which covers 95 percent of the world’s tankers against pollution and personal injury claims.
Japan, Iran’s third biggest crude oil customer, is looking to reduce its dependence on the OPEC member due to pressure from the EU and the United States.
Japan may cut Iranian crude oil imports by a more-than-expected 20 percent as it seeks a waiver from US sanctions, a newspaper reported on Thursday, a move which would spare its banks from a major blow but also boost its rising fuel import bill.
Also:
TOKYO: Japan is to offer $530 million in loans to Iraq, in part to help rebuild oil refineries, an official said Friday, as Tokyo seeks to diversify fuel supplies after the tightening of sanctions on Iran.
Loans totalling 42.5 billion yen have been pledged to Baghdad to aid the war-ravaged country with four infrastructure projects, including a refinery in the southern city of Basra and another in the northern city of Baiji, a foreign ministry spokesman said.
A hospital and telecommunications system will also benefit.
“The total value of the projects will amount to 160 billion yen and the main contractors will be Japanese companies,” said the official in charge of Middle East issues.
The loans come as Washington continues to press Tokyo to decrease its dependence on Iranian oil, amid a growing Western-led sanctions campaign targeting Tehran’s alleged nuclear weapons programme.
The United States is trying to ramp up pressure over the programme, which Tehran insists is peaceful, threatening to cut off financial institutions that deal with the country’s central bank, which would squeeze Iran’s vital oil export business.
Japan last month initially appeared willing to fall into line with US demands to reduce Iranian oil imports, only to backtrack and insist the issue needed further study.
Iranian crude now makes up around a tenth of resource-poor Japan’s oil imports, while crude from Iraq accounts for about three percent.
Japan has eagerly sought to strengthen its ties with Iraq by offering reconstruction support in the aftermath of the conflict there. The world’s third-largest economy relies heavily on the Middle East for its oil needs.