* Indian ship firms hardest hit in Asia by EU/Iran sanctions
* China insurers most likely to fill void
* Japan insurers approached by SKorea, Taiwan shipowners
* Asian oil importers to rely on domestic firms for OPEC
By Nidhi Verma and Randy Fabi
NEW DELHI/SINGAPORE, Feb 21 Indian
shipping firms will find it difficult to obtain replacement
insurance coverage to continue importing Iranian crude oil after
new European Union sanctions come into effect, industry sources
State-run Shipping Corp. of India, the largest
tanker owner in India, will lose its EU insurance coverage for
its oil tankers operating in Iran from July 1, when European
insurers will be prohibited from indemnifying ships carrying
Indian maritime firms are likely to be the most affected in
Asia by the sanctions as the other two biggest buyers China and
Japan do not rely on European insurers but are covered by
domestic providers. India, China and Japan are Iran's three
biggest crude oil buyers.
"We are covered by P&I clubs in the EU," Sunil
Thapar, director at Shipping Corp of India told Reuters,
referring to the groups of customer-owned maritime protection
and indemnity insurance groups.
"These clubs will not be able to give us coverage for
vessels to Iran from July. It will be difficult for Indian
shipping lines to transport Iranian crude unless alternative
arrangements are made." SCI owns 39 oil tankers.
Europe and the United States are implementing tougher
sanctions in the hope that isolating Iran will force Tehran to
halt its atomic programme, which the West fears will be used to
develop nuclear weapons.
Iran, the biggest producer in OPEC after Saudi Arabia,
denies Western suspicions that its programme has military goals,
saying it is for purely peaceful purposes.
Iran, the world's fifth-largest oil exporter is struggling
to retain its top consumers as stricter sanctions and an embargo
make it impossible to trade with the Islamic Republic.
Iran will export a six-month low volume of fuel oil to East
Asia in March due to sanctions and volumes will likely drop
further as the EU embargo approaches.
A.P. Moller-Maersk, Singapore-based Samco
Shipholding, and many other international maritime firms have
halted new deals with Iran, leaving Asian oil importers to rely
more on domestic and state-run firms to handle the OPEC member's
All but one of the international P&I clubs, which together
cover 95 percent of the world's tankers against pollution and
personal injury claims, are covered by the sanctions since they
are based in the European Union or the United States.
That leaves India firms with only a few options -- Japan's
P&I club, insurers in China, Russia and the Middle East, or
Singapore and Hong Kong.
"We continue to provide insurance to oil tankers. It does
not matter whether the ships call at Iran," said an official
with Japan P&I club, which mainly provides coverage to domestic
shipowners and represents around 7 percent of global P&I
coverage. The club has recevied recent inquirers from South
Korea and Taiwanese shipowners.
Switching to the Japan P&I club could take months as members
have to weigh the risk of a potential new entrant, especially
one that wants to do business with Iran, maritime lawyers said.
And Iranian insurance coverage is not an option as sanctions
against the country's financial system make it impossible to
collect payment should there be a claim, said Jim James, a Hong
Kong-based lawyer with legal firm Norton Rose.
The most likely alternative is China, which has a big enough
market to provide the necessary re-insurance coverage to
insurers looking to share the risk.
"The China market is slightly different. You have some
extremely large insurers that may decide it is a good business
and China is not subject to that regime," said Iain Anderson, a
Singapore-based lawyer with Ince & Co.
As fewer insurers are able to offer cover, rates could go up
significantly for tankers carrying Iranian crude, said Karam Jo,
assistant manager for marine underwriting at Korean Re.
Singapore and Hong Kong insurers also could be options, but
many of them have links to the West.
"It will also be very difficult for an Asian market insurer.
They too have to be comfortable that their footprint around the
globe keeps them outside the current sanctions regime," Anderson