India set to halt Iran oil imports

[Daredevil]

India is set to halt all crude imports from Iran because insurance companies in the country have said refineries processing the oil will no longer be covered due to Western sanctions, the head of refiner MRPL said on Friday.

India is Iran's second-largest buyer, taking around a quarter of its oil exports worth around $1 billion a month.

"If cover is not available then all Indian refiners will have to halt imports from Iran or else they will have to take a huge risk," P.P. Upadhya, managing director of Mangalore Refinery and Petrochemicals Ltd, said.

MRPL is India's biggest buyer of Iran crude.

"Insurance companies said if I buy Iranian crude my refinery's insurance cover will be cancelled ... If we don't get insurance for the refinery then we will stop buying Iranian crude."

It was not immediately clear why this has become an issue now, several months after Europe and the U.S. introduced tough sanctions aimed at Iran's oil trade to force Tehran to the negotiating table over its nuclear programme.

But in a letter in January seen by Reuters, the General Insurance Corp of India, the national reinsurer, told the General Insurance Council, an industry group, that it had "dawned" on insurers that cover and losses on processing the crude would not be payable by reinsurers due to existing sanctions.

A source at another refiner that buys Iranian crude, Hindustan Petroleum Corp (HPCL), also said imports were threatened by the insurance problems.

"Iran imports will be stopped soon," the HPCL source told Reuters. "As far as insurance is concerned, we are all sailing in the same boat."

HPCL is Iran's third-biggest Indian buyer and warned last month that insurers may withdraw cover because of sanctions.

MRPL's Upadhya declined to say how soon the company would have to stop Iranian imports. But MRPL has issued tenders to buy three cargoes of 650,000 barrels of crude to load in April, according to documents seen by Reuters. Two of the cargoes are high sulphur and could be used to replace Iranian oil.

"There is a problem on the insurance front for Iran oil," Upadhya said when asked about the tenders.

Oil is Iran's biggest income generator so a halt in sales to India would be a heavy blow for Tehran. Sanctions more than halved the country's crude exports in 2012.

In January, India imported over 286,000 barrels per day (bpd) of Iran's around 1.1 million bpd total exports.

INSURANCE

This is the first time that insurance problems have had a direct impact on refineries processing Iranian crude.

The lack of insurance cover dates back to April 2012, Upadhya said, but was clarified by insurers only in February this year.

MRPL has written to India's federal oil ministry asking for an alternative insurance mechanism, Upadhya said.

"Refineries processing Iranian crude would be severely hit," MRPL told India's oil secretary in a letter dated Feb. 27 and seen by Reuters. There would be no cover for claims if the plant was processing Iranian crude, MRPL said.

An Indian government source said last month that New Delhi would find a way to ensure refineries have cover but gave no details.

Insurers rely on European reinsurance markets to hedge their risk. EU sanctions have blocked European maritime reinsurers from any involvement in insuring shipments of Iranian oil.

That forced a temporary halt in mid-2012 to imports by two of Iran's other top Asian buyers, Japan and South Korea.

India's government stepped in to provide emergency insurance but it was a fraction of the $1 billion liability coverage that a supertanker would typically need and has rarely been used.

India's refiners have already slashed imports from Iran as they joined other major Asian buyers in reducing purchases to secure waivers from the sanctions.

MRPL had already expected to cut nearly 40 percent or its Iranian imports in the fiscal year ending March 31.

In the first 10 months of the current fiscal year, India reduced Iran crude imports by nearly 22 percent on the year, data from trade sources shows.

-Reuters

 

[panduranghari]

Its sad that we cannot buy the readily available and comparatively guaranteed oil from Iran all under the pressure from Uncle Sam.
This is a great read.

Our Man in Iran
How the CIA and MI6 installed the Shah.
Leon Hadar | February 16, 2013
The Coup: 1953, the CIA, and the Roots of Modern U.S.-Iranian Relations, by Ervand Abrahamian, The New Press, 277 pages, $26.95.

http://http://reason.com/archives/2013/02/16/our-man-in-iran

Both the critics and the admirers of the Central Intelligence Agency have tended to portray it as an all-knowing, all-powerful, invulnerable entity and to exaggerate the ability of America's spies to determine the outcome of developments around the world. An American reporter interviewing an ordinary citizen—or an official—in Cairo, Buenos Aires, or Seoul may hear that "everyone knows" that the CIA was behind the latest rise in the price of vegetables or the recent outbreak of flu among high-school kids. It's like you Americans aren't aware of what's obvious (wink, wink).

New histories of the agency, drawing on recently released classified information and memoirs by retired spies, provide a more complex picture of the CIA, its effectiveness, and its overall power, suggesting that at times Langley was manned not by James Bond clones but by a bunch of keystone cops. My favorite clandestine CIA operation, recounted in Tim Weiner's Legacy of Ashes, involves its 1994 surveillance of the newly appointed American ambassador to Guatemala, Marilyn McAfee. When the agency bugged her bedroom, it picked up sounds that led agents to conclude that the ambassador was having a lesbian love affair with her secretary. Actually, she was petting her two-year-old black standard poodle.

But the CIA's history does include efforts to oust unfriendly regimes, to assassinate foreign leaders who didn't believe that what was good for Washington and Wall Street was good for their people, and to sponsor coups and revolutions. Sometimes the agency succeeded.

Topping the list of those successes—if success is the right word for an operation whose long-term effects were so disastrous—was the August 1953 overthrow of Iran's elected leader and the installment of the unpopular and authoritarian Shah in his place. Operation Ajax, as it was known, deserves that old cliché: If it didn't really happen, you'd think that it was a plot imagined by a Hollywood scriptwriter peddling anti-American conspiracies.



Ervand Abrahamian isn't a Hollywood scriptwriter but a renowned Iranian-American scholar who teaches history at the City University of New York. With The Coup, he has authored a concise yet detailed and somewhat provocative history of the 1953 regime change, which the CIA conducted with the British MI6. If you don't know anything about the story, The Coup is a good place to start. If you've already read a lot about Ajax and the events that led to it, the book still offers new insights into this history-shattering event.

Abrahamian constructed his narrative by analyzing documents in the archives of British Petroleum, the British Foreign Office, and the State Department as well as the memoirs of the main characters in the drama. These characters—British spies and business executives, American diplomats and journalists, Soviet agents, Communist activists, Nazi propagandists, Shiite mullahs, Iranian crime bosses—have double or even triple agendas to advance as they jump from one political bed to another and back, lying, cheating, stealing, and killing. It all makes the CIA-led extraction of the American hostages in Iran, depicted in the film Argo, look kind of, well, boring.

On one side there was Muhammad Mossadeq, the democratically elected prime minister of Iran from 1951 to 1953, a secular, liberal, and nationalist leader who wanted to join the "neutralist" camp that disavowed commitment to either of the superpowers during the Cold War. An aristocratic and eccentric figure who welcomed foreign officials into his house wearing pajamas, Mossadeq introduced many progressive social and economic reforms into the traditionally Shiite society, and sent shock waves across the world when he moved to nationalize Iran's oil industry, which had been under British control since 1913 through the Anglo-Persian Oil Company.

On the other side there was Kermit "Kim" Roosevelt, Jr., Teddy's grandson, a legendary spymaster, a self-promoter who dined with major world leaders and business executives but also befriended power-hungry Iranian military generals, corrupt politicians, merchants in the bazzar, and quite a few thugs, who helped him achieve what became Washington's goal: to remove Mossadeq and his political allies, which included liberals, social democrats, and Communists, from power; to return the oil industry into British hands (with more American presence in Iran's oil business); and to place reliable pro-western politicians in power.

It seemed to work beautifully. The United States gained a key strategic ally in the Middle East. American companies received a considerable share of Iran's enormous oil wealth. Other oil-producing Middle Eastern nations got a lesson in what might happen if they nationalized. At a time when the Americans were facing challenges from nationalists such as Egypt's Gamal Abdel Nasser and were trying to contain the so-called Soviet threat in the Middle East, Our Man in Tehran welcomed American soldiers and investors (and purchased a lot of American weapons). It all looked good until it didn't.

While the coup did set back the nationalization of the oil resources in the Middle East, the delay ended in the 1970s. In that decade, Abrahamian writes, one country after another—not just radical states such as Libya, Iraq, and Algeria, but conservative monarchies such as Kuwait and Saudi Arabia—"took over their oil resources, and, having learned from the past, took precautions to make sure that their oil companies would not return victorious."

At the same time, the coup decimated the secular opposition, leaving Shiite clerics as the most viable political force when the Iranian Revolution deposed the Shah in 1979. The pro-American puppet gave way to a radical and anti-American Islamic Republic where the secular and liberal opposition remains weak and leaderless. That, as they say in Langley, is blowback.

The coup also intensified what Abrahamian calls the "intense paranoid style prevalent throughout Iranian politics." While the Iranian clerics worry that Washington wants to do a rerun of the 1953 regime change, many members of the opposition are counting on that to happen. In Tehran, they still think the CIA makes the world turn around.




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[pmaitra]

How does this work out? Can someone with knowledge on this insurance business explain? How do European (Re)Insurers have control over Insurance? What are the alternatives? What can we do to ensure we continue to get Iranian oil?
@panduranghari, @Sakal Gharelu Ustad

 

[Blackwater]

Well, Are we getting anything in return from ammerikka???

 

[panduranghari]

How does this work out? Can someone with knowledge on this insurance business explain? How do European (Re)Insurers have control over Insurance? What are the alternatives? What can we do to ensure we continue to get Iranian oil?
@panduranghari, @Sakal Gharelu Ustad

Lloyds maintains a global insurance book. Everything that is insured has a counter party willing to make the loss whole if the insured goods are lost damaged. The Lloyds of London is the biggest insurer there is. If AIG was biggest in the USA which was insuring bank mortgages and all CDS, Lloyds is even bigger. This institution is based in the famed Square mile within the city of London. They insure things like super tankers shipping containers. When Venezuela moved its gold from US Federal Reserve back to Venezuela, only one insurer could do it. When the Rafale will be delivered to India, lloyds will insure it. When Russia was sending armed shipment to Syria, lloyds cancelled insurance as soon as the ship entered Mediterranean sea under the pressure from British government.

The oil which is pumped is sent by super tankers. The super tanker moves through a volatile persian gulf then close to Somalia. Terrorists, pirates, oil spill etc put the shipment at risk. Iran can get insurance but their premium may be twice that of Saudi. If we can get an oil pipeline from iran to india under the sea bed, the insurance will be minimal. The Lloyds of London apparently is owned by Rothschilds.

The insurance industry in really like vampire. It wants its share of the spoils.


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[desicanuk]

About time!Iran used to be our friend.Alas this is no longer true.Can Iran sympathisers please illuminate me in what way this mullah dictatorship is India friendly.The mullahs consider the shiakillers to our west as their friend!!!

 

[p2prada]

About time!Iran used to be our friend.Alas this is no longer true.

We are still as friendly with Iran as we were before.

The insurance industry in really like vampire. It wants its share of the spoils.

Can we not use the large Chinese market as a hedge for reinsurance? Or would that have more risks?

This is a really prickly situation for the govt.

 

[amoy]

Iran has had an insurer Kish set up to cover tankers. As for China sovereign guarantees are provided for her ships.

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[SajeevJino]

So India Halted oil Import from the Iran by withdrawn of Insurance not an Pressure from Israel or the US and $ 1 billion per month transaction could hit hard to Iran and their Nuclear Programs


Thanks to Insurance Companies

 

[pankaj nema]

The Govt of India will have to step in and help the oil companies

This is not just an accounting matter There is a LOT at stake here

Already India Iran relations have been hit by the US sanctions

Our trade and investment has been hit

Maintaining relations with Iran is the job of GOI no matter how they do it

After 2014 IF at all we want any influence in Afghanistan and Central Asia ;
then only Iran can help us to reach there

Let GOI loosen its purse strings and throw some rules out of the window

 

[Bhadra]

About time!Iran used to be our friend.Alas this is no longer true.Can Iran sympathisers please illuminate me in what way this mullah dictatorship is India friendly.The mullahs consider the shiakillers to our west as their friend!!!

India does not decide her foreign policy based on theology. Nor Iran decides it solely based on religion.

 

[Bhadra]

Well, Are we getting anything in return from ammerikka???

yes - technology denial, MTCR, FMCT, etc etc...

 

[LordOfTheUnderworlds]

doesn't Iran support Pakistan's position over Kashmir?

 

[Bhadra]

doesn't Iran support Pakistan's position over Kashmir?

why Iran, the OIC is supporting of Pakistan. That does not mean India will stop trading relations with all of them.

 

[panduranghari]

We are still as friendly with Iran as we were before.



Can we not use the large Chinese market as a hedge for reinsurance? Or would that have more risks?

This is a really prickly situation for the govt.

Do we control the chinese market? No. Does what India say matter with regards to the Iran? No. It would matter a lot if we grow some balls and stand up to the bullying tactics.

Without oil we are doomed. Without cheap oil , we can forget about having high GDP growth rate.


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[Singh]

It makes sense for India to put pressure on Iran

1. They screwed up our investments, after we discovered oil and gas, they kicked us out.
2. They didn't allow us to use Chahbahar and Zelranj Highway to access Astan, we could've played a major role in this.
3. They are playing hardball on Iran India pipeline, by not alleviating our concerns.
4. They have never given us sweet heart deals like the GCC
5. They are a sinking ship. Their economy is down, they don't have any influence, and we can get better and more secure sources than Iran.

Iran thinks its speaking from a position of strength, lets bring them to their knees.

 

[Shirman]

well what do i say everybody brace for urself for more Hike in Petrol prices n diesel prices.......People in India have 2 suffer the current govt with its subsidized public sec refineries will simply hike the prices n more inflation 2 aam junta...........:thumb:

 

[Singh]

well what do i say everybody brace for urself for more Hike in Petrol prices n diesel prices.......People in India have 2 suffer the current govt with its subsidized public sec refineries will simply hike the prices n more inflation 2 aam junta...........:thumb:

Why would the price be hiked ?
Iran is selling us on international rates (not sure if its Spore or London crude?). We can easily shift to Saudis who will offer us perhaps better terms and more reliable services.

 

[Shirman]

Why would the price be hiked ?
Iran is selling us on international rates (not sure if its Spore or London crude?). We can easily shift to Saudis who will offer us perhaps better terms and more reliable services.

1st iran is selling us on intl rates but r we common indian on street get petrol on intl pricing
2nd what is the guarantee Saudis offer us on better terms n conditions with reliable services saudis can't just pump more oil from anywhere an fullfill Indian requirement n quota....
3rd i am more concerned that now the oil ministry under present govt will have a new excuse n reason that due 2 increasing demand n Iranian problem we r hiking the prices just like they did uptill now .......though both u n me will agree its no so....what what we can do.......

 

[p2prada]

Do we control the chinese market? No.

Does that mean we control the European market?

It would matter a lot if we grow some balls and stand up to the bullying tactics.

Can you point out how we can tackle this issue unilaterally? Meaning, can the refineries continue to work without insurance?

It doesn't look like the supertankers will have their insurance withdrawn for carrying Iranian crude. So, I suppose we are talking only refineries. Specific refineries can be given an alternative form of insurance by the Indian govt only to refine Iranian crude. I simply don't know whether the govt is capable of doing it. The article suggests the govt cannot.