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Tehran wants India to extend Dec 27 deadline for accepting Iranian oil tankers: sources
Iran has sought additional time from the Indian government to resolve a stalemate regarding India's insistence on getting financial guarantees from Tehran before New Delhi renews its approval allowing crude shipments on tankers with Iranian insurance cover, a source at India's Directorate General of Shipping said.
DGS, which is India's shipping regulator, had sent a letter earlier this month to its Iranian counterpart seeking a bank guarantee worth approximately Rupees 23 billion ($400 million) through an Indian bank to cover any potential liability in the event of maritime accidents in Indian waters.
The DGS source said Iran has sought an extension from India on the approved period for accepting tankers with Iranian insurance cover, which is due to expire on December 27, until the matter is decided at the diplomatic level. The DGS grants approval allowing ships with Iranian insurance cover to enter Indian ports on a quarterly basis.
"They [Iranian authorities] have not rejected our suggestion but have sought additional time," said the DGS source based in Mumbai.
An Indian government committee looking into the matter is scheduled to meet Friday to examine the response from the Iranians before making a recommendation to the petroleum and natural gas ministry, the source said.
The EU in July last year banned the import of Iranian crude by its member countries and also the provision of EU-linked insurance which included protection and indemnity cover for any shipments of Iranian crude, regardless of destination.
The insurance ban had a significant impact beyond Europe because most key shipping cover across the world was tied back to EU insurers at the time.
P&I Clubs provide insurance cover for broad, indeterminate risks such as third-party liabilities, which include a carrier's liability to the owner of a cargo for damage to the cargo, the liability of a ship after a collision, environmental pollution and war risk insurance.
Since the ban, the National Iranian Tanker Company's tankers have been deployed to deliver crude to Tehran's customers in India.
TEHRAN INITIALLY REJECTED INDIAN DEMAND: IRAN SOURCE
According to an Iranian source following the matter, Tehran initially rejected India's demand for a financial guarantee when it was first communicated to them.
"The Indians asked for financial guarantees from Iran. We told them we can't. We already have a $1 billion cover on Iranian tankers. They wanted a financial guarantee of $400 million for ships calling there [in India]," the Iranian source said this week.
"If they [Indians] don't want Iranians to deliver the crude, then the Iranians will not send their ships. Currently they are talks to explore the chances to get a three-month extension on the approval period which is expiring on December 27."
INDIA MAY SOFTEN ITS STAND: SHIPPING SOURCES
The partial and temporary easing of sanctions against Iran last month by the US and the EU in return for a freeze on Iran's nuclear program includes the revoking of the shipping insurance ban.
However, with Western P&I clubs yet to receive any official confirmation on the removal of the ban, Indian crude buyers still need to depend on Iranian tankers to receive Iranian crude.
Currently, Iranian tankers have insurance cover provided by the homegrown Kish P&I Club, which curtails the chances for these ships to be hired by most Western and Asian charterers.
Meanwhile, many shipping market participants believe that India will have to accede to the Iranian request for an extension because it needs to maintain its supply of oil imports.
"I anticipate another extension of [few] months will be given" so that the Iranian ships can continue to discharge crude oil at the Indian ports, an Indian tanker broker said. "Otherwise, how will the oil come to India?"
The Indian petroleum ministry will take a more sympathetic view of the Iranian stand than the shipping regulator, considering the fact that Indian companies such as Mangalore Refinery and Petrochemicals Limited are dependent on the Middle Eastern country for their oil requirements, the broker said.
India's imports of Iranian crude fell to 13.3 million mt in the fiscal year ended March 2013, from 18.1 million mt in the previous fiscal year. Over April-November this year, India has imported around 6.5 million mt of crude oil from Iran.
India has said in recent months it wants to increase crude oil imports from Iran to curtail dollar outflows as the country struggles to reduce its current account deficit. India has been settling 45% of its crude oil import bill with Iran in rupees.
Source: Platts
DGS, which is India's shipping regulator, had sent a letter earlier this month to its Iranian counterpart seeking a bank guarantee worth approximately Rupees 23 billion ($400 million) through an Indian bank to cover any potential liability in the event of maritime accidents in Indian waters.
The DGS source said Iran has sought an extension from India on the approved period for accepting tankers with Iranian insurance cover, which is due to expire on December 27, until the matter is decided at the diplomatic level. The DGS grants approval allowing ships with Iranian insurance cover to enter Indian ports on a quarterly basis.
"They [Iranian authorities] have not rejected our suggestion but have sought additional time," said the DGS source based in Mumbai.
An Indian government committee looking into the matter is scheduled to meet Friday to examine the response from the Iranians before making a recommendation to the petroleum and natural gas ministry, the source said.
The EU in July last year banned the import of Iranian crude by its member countries and also the provision of EU-linked insurance which included protection and indemnity cover for any shipments of Iranian crude, regardless of destination.
The insurance ban had a significant impact beyond Europe because most key shipping cover across the world was tied back to EU insurers at the time.
P&I Clubs provide insurance cover for broad, indeterminate risks such as third-party liabilities, which include a carrier's liability to the owner of a cargo for damage to the cargo, the liability of a ship after a collision, environmental pollution and war risk insurance.
Since the ban, the National Iranian Tanker Company's tankers have been deployed to deliver crude to Tehran's customers in India.
TEHRAN INITIALLY REJECTED INDIAN DEMAND: IRAN SOURCE
According to an Iranian source following the matter, Tehran initially rejected India's demand for a financial guarantee when it was first communicated to them.
"The Indians asked for financial guarantees from Iran. We told them we can't. We already have a $1 billion cover on Iranian tankers. They wanted a financial guarantee of $400 million for ships calling there [in India]," the Iranian source said this week.
"If they [Indians] don't want Iranians to deliver the crude, then the Iranians will not send their ships. Currently they are talks to explore the chances to get a three-month extension on the approval period which is expiring on December 27."
INDIA MAY SOFTEN ITS STAND: SHIPPING SOURCES
The partial and temporary easing of sanctions against Iran last month by the US and the EU in return for a freeze on Iran's nuclear program includes the revoking of the shipping insurance ban.
However, with Western P&I clubs yet to receive any official confirmation on the removal of the ban, Indian crude buyers still need to depend on Iranian tankers to receive Iranian crude.
Currently, Iranian tankers have insurance cover provided by the homegrown Kish P&I Club, which curtails the chances for these ships to be hired by most Western and Asian charterers.
Meanwhile, many shipping market participants believe that India will have to accede to the Iranian request for an extension because it needs to maintain its supply of oil imports.
"I anticipate another extension of [few] months will be given" so that the Iranian ships can continue to discharge crude oil at the Indian ports, an Indian tanker broker said. "Otherwise, how will the oil come to India?"
The Indian petroleum ministry will take a more sympathetic view of the Iranian stand than the shipping regulator, considering the fact that Indian companies such as Mangalore Refinery and Petrochemicals Limited are dependent on the Middle Eastern country for their oil requirements, the broker said.
India's imports of Iranian crude fell to 13.3 million mt in the fiscal year ended March 2013, from 18.1 million mt in the previous fiscal year. Over April-November this year, India has imported around 6.5 million mt of crude oil from Iran.
India has said in recent months it wants to increase crude oil imports from Iran to curtail dollar outflows as the country struggles to reduce its current account deficit. India has been settling 45% of its crude oil import bill with Iran in rupees.
Source: Platts
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