October 23, 2012 / 11:17 AM / 8 years ago

Chennai Petroleum's insurance cover cut on Iran stake-sources

* Annual premium for marine, risk policies up by a third from yr ago

* Chennai Petroleum will not process Iranian oil in 2012/13 due to lack of insurance

* Insurance cover for non-Iran oil shipments down to 84.6 pct from 100 pct

By Nidhi Verma

NEW DELHI, Oct 23 (Reuters) - India’s Chennai Petroleum will stop processing Iranian crude after it lost insurance for those supplies, and its cover for crude imports from other countries was reduced because an Iranian firm owns a stake in the refiner, industry sources said.

Chennai Petroleum’s plants refine 230,000 barrels per day and account for about 5.4 percent of India’s total refining capacity. Iran’s Naftiran Intertrade Co Ltd owns 15.4 percent, according to the Indian company’s website.

“Reinsurers are not supporting because of Iran’s stake in the company,” said one of three industry sources who declined to be named because of the sensitivity of the issue.

Iran’s oil exports have fallen due to the difficulty in paying and insuring cargoes because of Western sanctions aimed at curbing funding for Iran’s nuclear programme.

Indian insurers do not fall directly under the sanctions, but they depend on the Western reinsurance market to hedge their risk.

Chennai Petroleum’s insurance firm, United India Insurance Co Ltd, renewed its policies for the refiner in September and October and said it would not provide any coverage for crude oil imported from Iran, one of the sources said.

And because of the involvement of the Iranian firm, United India also said it would cover just 84.6 percent of the cost of any accidents that occur while Chennai Petroleum is importing crude from any other country.

The insurance firm also said it would not cover any liability arising out of processing crude from Iran, the sources added.

Officials at United India Insurance Co. were not immediately available for comment.

The insurer had previously provided full coverage. “The balance is (Chennai Petroleum’s) responsibility. It is a dangerous thing,” one of the sources said.

He said the oil ministry has asked the finance ministry to investigate whether United India Insurance should consider raising the cover for Chennai Petroleum again.

Chennai Petroleum’s annual insurance premiums were also increased by a third to 260 million rupees ($4.9 million) compared to a year ago, the sources said.

Chennai Petroleum is a unit of India’s largest refiner Indian Oil Corp, which imported 42,000 bpd from Iran in 2011/12 and was planning to bring in 30,000 bpd in 2012/13. IOC, however, has so far not lifted any cargoes from Iran.

Chennai Petroleum was planning to process about 5,000 bpd of Iranian oil in 2012/13 compared with 8,000 bpd in 2011/12, one of the sources said. It has increased imports of Arab Mix, Basrah and Upper Zakum as substitutes.

India has cut back on its imports of Iranian oil to secure a waiver from U.S. financial sanctions. India imported about 190,000 bpd from Iran in August, down 4.9 percent from July, a third straight monthly drop. ($1 = 53.47 Indian rupees) (Reporting by Nidhi Verma; Editing by Jo Winterbottom and Miral Fahmy)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below