India, Iran decide to resolve reinsurance issues

New Delhi will continue to purchase crude oil from the sanctions-hit country

India and Iran today decided to take steps to solve the reinsurance woes faced by Indian refiners importing crude from this sanctions-hit West Asian country.

In a meeting between petroleum minister M Veerappa Moily and his Iranian counterpart Rostam Ghasemi here, both sides reportedly decided to find a solution to the issue of reinsurance cover for the composite insurance of Indian refineries, which has recently hit India's crude purchase from Iran.

According to a Reuters report, Iran has offered insurance for Indian refiners to boost its crude sales. An Iranian delegation led by Ghasemi is on a three-day visit to India to woo Indian companies to go for more Iranian imports. The oil and gas-rich nation is expected to lose more than $2.5 billion of revenue due to global sanctions. Moreover, importing countries are forced to go for payment to Iran through exchange of goods and local currency.Western nations accuse Iran of developing a nuclear bomb and have imposed multiple sanctions on the country. Iran, however, says its nuclear programme is for peaceful purposes.

India's two state-run refiners, Mangalore Refinery and Petrochemicals Ltd, a subsidiary of Oil and Natural Gas Corp, and Hindustan Petroleum Corp Ltd had stopped importing crude from Iran since April due to insurance woes.

Compared to the 18.5 million tonnes (mt) of crude in 2010-11, India's imports from Iran came down to 17.4 mt in 2011-12 and to around 13 mt in 2012-13.

The Reuters report, quoting sources, said Qasemi had offered a production-sharing deal to Indian firms to develop the Farzad B gas field in the Farsi block and asked New Delhi to boost exports. Both sides also agreed to discuss outstanding issues related to the development of Farzad B gas field, a petroleum ministry statement said.

The countries also agreed to continue the cooperation in supply and purchase of crude oil. The two sides also discussed the marine insurance charged by the Iranian insurance companies for shipment of oil to India and arranging ships for carrying out the voyage. "The Indian side requested the Iranian side to consider sourcing more goods from India to rectify the trade balance. The Iranian side agreed to consider this request," the statement added.