UPDATE 1-Japan passes law to insure Iran oil imports
* Bill to become law on June 27
* Japan is first country to try to bypass EU ban
* Imports from Iran have fallen sharply (Adds import decline, graphic link)
By Risa Maeda
TOKYO, June 20 (Reuters) - Japan's parliament approved government guarantees on insurance for crude oil cargoes from Iran on Wednesday, paving the way for it to become the first of Iran's big Asian oil buyers to get round new European Union sanctions.
The law will take effect on June 27, a government official who requested anonymity said on Tuesday.
It allows the Japanese government, which has succeeded in getting a waiver from U.S. financial sanctions, to provide cover of up to $7.6 billion for each tanker carrying Iranian crude bound for Japan in the event of accidents.
An EU ban on member countries importing Iranian oil takes effect on July 1 and includes a ban on EU insurance firms from covering Iran's exports. That is a headache for Japan, South Korea, China and India, which together buy two-thirds of Iran's oil exports and rely on EU companies to insure them.
EU and U.S. sanctions aim to cut the oil revenues on which Tehran depends to force it to curb its nuclear programme. The West suspects Iran's aim is to develop nuclear weapons, while Tehran says it needs reactors to provide electricity.
Iranian oil accounted for nearly 9 percent of Japan's crude imports last year. Japan has reduced the flow already to comply with U.S. sanctions requiring buyers to make sizeable cuts, but wants to avoid more drastic reductions that could drive up energy import costs and hurt the world's third-largest economy.
Refiners have cut their purchases even though Japan needs more oil to fuel power stations after last year's Fukushima disaster led to a halting of reactors providing nuclear power.
It is the first time Japan has sought to provide guarantees on marine shipments, an official in the country's transport ministry, which sponsored the legislation, said earlier.
India's government, which has also won an exemption to U.S. sanctions, has been trying without success to figure out how it will get around the EU sanctions.
Iran's top buyer China has yet to detail how it plans to resolve the insurance problem, but industry sources there have said the country will find a way to keep imports flowing.
South Korea will reduce imports to zero in July due to the insurance ban, industry sources have said.
Seoul, like Tokyo, has lobbied the EU to delay or get a waiver on implementing the ban on insurers, but is not considering state guarantees, according to government sources there.
Those lobbying efforts have so far failed. The European Union will not cancel or delay the embargo on Iranian oil tankers, EU Energy Commissioner Guenther Oettinger said at an industry conference a week ago.
The International Energy Agency said last week that Iran's crude exports in April and May have fallen by 1 million bpd since the end of 2011 to 1.5 million bpd and that Tehran may need to shut in production.
China, Japan, India and South Korea have cut purchases by about a fifth from the 1.45 million bpd they were buying a year ago ahead of the imposition of the sanctions. (Reporting by Risa Maeda; Editing by Aaron Sheldrick, Michael Watson and Ed Davies)