The Finance Ministry is hoping that the fund will be formalized by next month and is encouraging speed.
The Finance Ministry in India is asking the Petroleum Ministry to work more quickly in their effort to complete the procedure for the creation of the oil insurance pool that would make it possible to provide coverage for tankers bringing Iranian crude to the country.
This effort is designed to allow the country’s refineries to circumvent the Western sanctions against Iran.
The oil insurance pool has been designed by the Indian government to ensure that the refineries in India will be covered even when they are processing crude from Iran. Sanctions from the United States, the European Union, and other Western nations have banned insurers and reinsurers in those countries from covering crude originating in Iran in order to attempt to place pressure on the country to step back from its controversial nuclear program.
These oil insurance sanctions have caused crude exports from Iran to plummet compared to before they started, last year.
As the vast majority of the coverage for Iranian crude has traditionally been from the E.U., this has left importers – and Iran – scrambling to come up with alternative methods of cover. The Indian Energy Insurance Pool is hoped to be the solution that India has been seeking in this area. This oil insurance effort has seen its fair share of struggles, to the point that the country has once again had to slash its imports for lack of coverage.
According to an official from the Hindustan Petroleum Corporation Ltd., that refinery is hoping to be able to restart its imports of Iranian crude and intends to bring in at least 0.8 million metric tons (MT) within this financial year, provided that the oil insurance issues can be resolved in time. The goal is to have the fund formalized by December, so that the imports can begin. However, officials from the company pointed out that if this cover cannot be established, then they simply will not be importing.
To make that happen, the Finance Ministry has asked the Petroleum ministry to push to make this oil insurance happen, and to be ready sooner than previously hoped. It also requested that the Oil Industry Development Board (OIDB) immediately pour funds into the pool.