Japan may seek approval from parliament this month to provide sovereign insurance to tanker operators that import Iranian crude as European sanctions block access to private providers, according to two government officials familiar with the proposed legislation.
The cabinet will make a proposal to the diet, or national parliament, this month, according to the officials who declined to be identified because the bill is not public yet. The government wants to provide as much as $7.6 billion in cover, according to one of the officials. The Japan Ship Owners’ Mutual P&I Association, the body that covers owners against the risk of oil spills and tanker collisions, is likely to lose access to Europe’s reinsurance market after the sanctions come into force July 1, according to the officials.
Asian shipowners are seeking alternative sources of insurance for Iranian cargoes because the EU’s embargo extends to 95 percent of the world’s tankers that are covered by the 13 members of the London-based International Group of P&I Clubs.
The U.S. and EU are trying to pressure Iran over its nuclear program, which they say is aimed at producing atomic weapons. The government in Tehran, facing four sets of United Nations sanctions, says the project is for civilian purposes.
Japan’s sovereign guarantees will replace the $7.6 billion in cover that the country’s P&I club currently buys from the International Group, according to one of the officials. The government plans to provide reinsurance for claims above $8 million from July 1, the official said.
A spokesman for the Ministry of Land, Infrastructure, Transport and Tourism was not available for comment when contacted by telephone.
Even after Japan’s crude imports from Iran fell 22 percent from a year earlier in the fiscal year ended March 31, the Persian Gulf nation remained Japan’s fourth-biggest supplier, according to data from the Ministry of Economy, Trade and Industry.