* Petchem exports fall nearly 90 pct in last two weeks
* Follows EU insurance sanctions that took effect May 1
* Few ships able to find insurance to conduct trade
* Similar EU sanctions to come into effect for crude in July
(Adds analyst comment, Japan official)
By Randy Fabi
SINGAPORE, May 17 Iranian petrochemical exports
have plunged nearly 90 percent in the last two weeks as most
maritime firms, including those in Iran, cannot find insurance
to transport cargoes due to EU sanctions, according to traders
and shipping data.
The impact EU sanctions are having on Iran's $14 billion
petrochemical industry offers a glimpse into how the OPEC
member's much larger crude and oil products trade could be
affected once similar EU measures are imposed in July.
"Petrochemicals are definitely an indication of what could
happen to crude, but I doubt the impact will be as strong," said
Erik Nikolai Stavseth, a shipping analyst with Arctic
EU sanctions prohibiting European insurers and reinsurers
from covering tankers carrying Iranian petrochemicals came into
effect on May 1, forcing out most of the ships operating in this
Around 90 percent of the world's tanker fleet, including
those operated by Iran's Petrochemical Transportation Company,
is covered by Western-based protection and indemnity (P&I)
clubs, which insure against personal injury and environmental
"So far, there has been no proper insurance available for
shipping companies. The decline in exports is almost 90 percent
and I don't see that changing," said a Singapore-based ship
Shipping data confirmed a sharp drop in Iranian
petrochemical exports, which includes methanol, xylene and
caustic soda, to around 60,000 tonnes a week in May from a
weekly average of 350,000 tonnes last year.
However, Iran's deputy oil minister, Abdolhossein Bayat,
told local media earlier this month that the country's
petrochemical exports had not declined despite EU sanctions.
OPEC's second-largest oil producer could be exporting more
petrochemicals than what is evident from shipping data, as
captains on some of Iran's ships have turned off the black box
transponders that monitor vessel movements.
CHINA BUYS IRANIAN PETROCHEMICALS
China, Iran's top oil customer, is probably the only buyer
of Iranian petrochemicals so far this month, traders said.
Chinese firms, such as Nanjing Tankers and Sinochem Corp, have
been able to get insurance from domestic providers and were
reaping huge profits from conducting the niche trade.
Iran's Petrochemical Transport Company has not had the same
success. It asked Iran's main ship insurer, Kish P&I club, to
provide cover but ship owners would not allow such a move, a PTC
"We have a problem with the P&I clubs. We are working on
that and we have contacted some other P&I insurance companies,
but up until now we cannot find any solution to that problem,"
Ramtin Hassan, a Tehran-based marine manager for the Iranian
company, told Reuters in a telephone interview.
IMPACT ON CRUDE
For crude shipments, Iran's maritime companies do not face
the same insurance problem.
The country's main tanker operator NITC has coverage from
the Kish P&I club, but it does not have the fleet capacity to
transport all of Iran's 2.2 million barrels per day in crude
Shipowners from Iran's top oil buyers - China, India, Japan
and South Korea - have asked their governments to provide
sovereign guarantees in place of Western-based maritime
insurance to enable their tankers to transport Iranian crude
"What Iran will have to do to sell their crude is just to
provide a very large discount and they will find somebody to
move their crude," Stavseth said.
Iran's production has already felt some impact from
sanctions, dropping to a two-decade low of 3.15 million bpd in
April from around 3.5 million bpd last year, a Reuters survey
Britain is seeking to persuade fellow EU members to postpone
the shipping insurance sanctions for crude by up to six months
to avoid a spike in oil prices, diplomats said earlier this
South Korea and Japan are asking the EU to give them access
to European insurance for Iranian oil shipments even after the
July 1 embargo comes into effect, the Korean economy ministry
said on Monday.
Asian oil buyers have also struggled to pay for Iranian oil
as Western sanctions target Tehran's central bank and financial
institutions to pressure the OPEC member to halt its disputed
China, India, Japan and South Korea made deep cuts in
Iranian imports in the first quarter.
Bank of Tokyo-Mitsubishi UFJ, which handles most of Japan's
payments for oi imports from Iran, said on Thursday it had
frozen transactions with Iranian banks after being ordered to do
so by the New York District Court earlier this month.
(Additional reporting by Ayai Tomisawa in Tokyo; Editing by