Reports suggest that Mumbai-based shipping firm Mercator last month gave its vessel the Omvati Prem to the Iran-based National Iranian Tanker Company (NITC) on charter basis for ferrying crude oil to India.
This is for the first time the state-run tanker company of Iran NITC chartered an Indian vessel covered under an insurance scheme arranged by New Delhi through state-run insurers, reports suggest.
In December 2012, NITC used the vessel to carry an oil cargo that sailed from Iran for Indian refiner Mangalore Refinery and Petrochemicals. The deal included cost, insurance and freight (CIF), reports indicate.
India’s junior oil minister Panabaaka Lakshmi in a written reply to a question in parliament in November on the insurance scheme did not specify if Iran could charter vessels with Indian insurance cover for supplies.
Use of the scheme effectively transfers the liability for any damage or spill to India’s state-run insurers, and ultimately to New Delhi. When NITC uses its own vessels, the liability stays with its Iran-based insurer.
India established the scheme to keep some oil flowing after EU sanctions came into effect and disrupted shipping. The government arranged emergency cover that was meant for use by Indian flagged vessels chartered by local refiners.
There was little appetite for Indian shippers for the scheme as the insurance was limited to $50 million, a fraction of the $1 billion coverage that a supertanker would typically have from reinsurers against personal injury and pollution claims.
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