Chennai Petroleum has announced that it will no longer be processing crude from Iran.
An insurance news announcement from Chennai Petroleum in India has stated that the company will no longer continue with its processing of crude from Iran after its coverage for the oil supplies was lost.
Industry sources say that an Iranian firm owns a stake of Chennai Petroleum, reducing imports from other nations.
Every day, the plants at Chennai Petroleum will refine 230,000 barrels of crude. This makes up approximately 5.4 percent of the entire refining capacity of the country. According to the company’s website, 15.4 percent of the refinery is owned by Naftiran Intertrade Co. Ltd., an Iranian business.
When this made insurance news, reinsurers ceased their support of the coverage.
According to an industry source, who remained anonymous due to the issue’s sensitivity, “Reinsurers are not supporting because of Iran’s stake in the company.”
This type of issue has become common once again in insurance news, as Iran’s efforts to skirt the sanctions from the European Union and the United States have started to wobble in some areas. The Middle Eastern country had been compensating for the lack of coverage for tankers leaving its ports from the E.U. (which had previously provided approximately 90 percent of that cover before the sanctions were put into place) by providing its own policies.
While this has given Iran some recovery, situations like this most recent insurance news in India are still popping up. India had opted to provide its own coverage for the tankers, as opposed to purchasing policies from Iran. The insurers in India are not subject to the same sanctions as those in the West. However, they do depend on reinsurance from Europe.
United India Insurance Co. Ltd. is Chennai Petroleum’s insurer, but when the policies for the refiner renewed in September and October, the firm stated that it would not continue to extend its coverage for crude that was brought in from Iranian sources. Moreover, it furthered this insurance news by saying that due to the Iranian company’s involvement in the refiner, only 84.6 percent of the expenses associated with accidents occurring while importing crude from any other nation would be covered.