Japanese crude buyers are set to switch back to private insurance providers for transportation of Iranian oil, after relief from some EU sanctions goes into effect next week, industry and government sources said.
Under the interim deal reached between Tehran and six world powers in November, the European Union on Jan. 20 will suspend for six months a ban on insuring and transporting Iranian oil.
Since 2012 when tough EU and U.S. sanctions were slapped on Iran over its ambitious nuclear programme, Japan has been providing a sovereign guarantee of up to $7.6 billion in liability per tanker to keep oil trade with Tehran going.
If the revision in EU regulations is implemented, the Japan P&I Club (JPI), the country’s main ship insurer against pollution and personal injury claims, would be able to resume the normal coverage of $7.6 billion for a tanker carrying Iranian oil, a JPI official said.
The switch in insurance is expected to have no impact on Japan’s Iranian oil lifting plans, the JPI official added.
It remains unclear how soon the switch can occur, as some details need to be worked out. The government will keep the sovereign scheme in place for now, however, as the revision is regarded as temporary, a government official said.
Japan’s imports of Iranian oil in January-November 2013 fell by 4.6 percent from a year earlier to 178,539 barrels per day (bpd), trade ministry data showed last month.
The November deal between Iran and western world powers eased some sanctions on Iran in exchange for curbs on Tehran’s nuclear programme. It also allows purchases of Iranian oil to remain at current levels of about 1 million bpd.
The Geneva accord also lifts the trade ban affecting the country’s petrochemicals, gold and other precious metals.
(Reporting by Osamu Tsukimori; Editing by Tom Hogue)