"We have not imported any oil from Iran this fiscal but we have contracts (to buy oil from Iran)," HPCL director (Refineries) BK Namdeo told reporters in Delhi. With European reinsurers refusing to provide cover to refineries that process Iranian crude oil, the government is setting up a Rs 2,000 crore fund to provide cover to both private and public sector refiners.

"We expect the insurance pool to be operational by December and if that happens we can in the remainder four months of the current fiscal import about 6 parcels (shiploads) of crude oil from Iran totalling 0.8 million tonne," he said.

The insurance fund is to be operated by state-run insurance company GIC would be responsible for discharging the obligations arising from the re-insurance commitments undertaken with regard to the assets of the petroleum importing companies under this arrangement.

Oil Industry Development Board (OIDB) will provide Rs 1,000 crore for the insurance pool while an equal amount will come from the state insurers. The fund is to address the needs of the four companies importing crude oil from Iran: Indian Oil Corp, Mangalore Refineries and Petrochemicals Ltd (MRPL), HPCL and private sector player Essar Oil.

HPCL, which has refineries at Mumbai and Vizag in Andhra Pradesh, imports some 12 million tonne of oil annually. It would buy nearly 5 million tonne from Iraq this fiscal. Saudi Arabia will supply it with 2.5 million tonne of crude while UEA about 1 million tonne, he said.

Officials said the need for the insurance fund, called the Energy Insurance Pool, arose after domestic insuers said the contracts entered into by them with the traditional offshore insurance companies directly or through GIC and other PSU insurers had become uncertain with regard to whether the claim would be honoured or not on account of sanctions clause being inserted in the contract.

The Energy Insurance Pool is being created to enable provision of re-insurance services for the assets of oil importing companies. The oil companies would be given the option of obtaining insurance services from a combination of four public sector insurance companies and GIC would be addressing the re-insurance aspect.

(Agencies)

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