New Delhi, Aug. 18: Tehran has offered to provide sovereign guarantee in lieu of insurance to tankers carrying crude oil from Iran to India.
Top finance ministry officials said India received about 7.5 per cent of its crude imports from Iran against 11 per cent earlier. A major factor behind the drop in shipment is the unavailability of insurance for ships carrying crude.
Officials said the finance ministry had received a proposal from Iran to give sovereign guarantee in lieu of insurance to tankers. Insurance firms have refused to cover tankers for fear of US sanctions against Tehran’s nuclear programme.
The offer by Iran’s ministry of industries, mines and trade will cover liabilities between $50 million and $1 billion per incident through a sovereign guarantee drawn on the Iranian government’s special fund, said officials.
Petroleum ministry officials said they expected Iran crude to become cheaper by around $2 per barrel, which could further reduce the trade deficit. The Brent crude is trading around $109 a barrel, while US oil is at $106.
After the US and European Union sanctions closed the preferred routes of payments through Turkish and Gulf-based banks, India had agreed to buy about 45 per cent of the $11-billion oil it purchased from Iran in rupees. Against this import, the West Asian country had to buy Indian goods.
The money was to be parked in Uco Bank to facilitate Iranian purchases from India.
State-run HPCL plans to buy 20,000 barrels per day (bpd) of oil from Iran this fiscal, while Mangalore Refinery and Petrochemicals Ltd (MRPL) aims to import about 80,000 bpd.
MRPL and Hindustan Petroleum had stopped purchases because of difficulties in getting insurance for refineries processing Iranian oil, forcing India to look at providing its own reinsurance after European firms backed out over sanctions.
Industry sources said MRPL, the subsidiary of ONGC, planned to lift four Iranian oil cargoes this month.
India, the second largest importer of Iranian crude oil after China, has been forced to import from other sources over the past six months to meet the shortfall generated because of problems in shipping Iranian crude.