President Obama shoots self in foot, again – Iran Oil Export Curbs Extend to 95% of Tankers in Europe’s Insurance Rules

Iran Oil Export Curbs Extend to 95% of Tankers in Europe’s Insurance Rules
30 January, 2012 – Maritime Sun Hellenic Shipping Portal

European Union sanctions on Iranian oil will extend to about 95 percent of tankers because they are insured under rules governed by European law.
The International Group of P&I Clubs insures all but 5 percent of the global tanker fleet and its 13 member clubs follow European rules to participate in the claim-sharing pool, said Andrew Bardot, the London-based secretary and executive officer. Carrying Iranian oil would invalidate the ships’ cover against risks including spills and collisions, he said.

“Any EU-regulated insurer will not be able to provide insurance to cover any ship engaged in the carriage of Iranian oil and petrochemicals to the EU and elsewhere,” Bardot said by phone yesterday. “We have already notified ship owners of the effect on their trading activities and our ability to cover.”
While the embargo on Iranian oil only covers the EU’s 27 member states, the extent of the region’s role in insuring ships will curb trade globally. Iran is the second-biggest member of the Organization of Petroleum Exporting Countries, and sends oil to China, Europe, Japan, India and South Korea. EU foreign ministers agreed to the ban on Jan. 23, seeking to increase pressure on Iran over its nuclear program, which the nation says is for civilian and medical purposes.

Vessels carrying oil from the nation will have to use “questionable” insurance, said Simon Schnorr, the London-based marine client director at Aon Risk Solutions, a unit of the world’s largest insurance broker.

Insurance Policies
The EU sanctions will still apply to shipping companies with no European link because of their insurance policies, according to Intertanko, the largest trade group representing tanker owners. Members include Hamilton, Bermuda-based Frontline Ltd. (FRO) and Tokyo-based Kawasaki Kisen (9107) Kaisha Ltd.
“The EU ban on related insurance and re-insurance means that owners or operators with no EU link who seek to transport Iranian oil will be caught even if there is no EU element to the shipment itself,” Michele White, Intertanko’s general counsel, said in an e-mailed response to questions yesterday. “This is now a highly restrictive and volatile environment in which we feel our members cannot trade without risk of breaching EU or indeed the myriad of other sanctions against Iran.”

Ship owners will struggle to find insurance that doesn’t comply with EU law and whose provider has the funds needed to meet the “standard cover provision” of $1 billion for pollution liabilities, Schnorr said. Ships without valid insurance would be barred from entering most ports, he said.

Mutual Protection
China and Japan have said they will still buy Iranian oil. The Japan Ship Owners’ Mutual Protection & Indemnity Association, the Asian nation’s only organization insuring ocean-going and coastal vessels, is a member of the International Group of P&I Clubs, according to its website. The London-based group doesn’t list Chinese members. …more