Japan to pass bill to insure Iran oil imports

Japan's lower house is set to pass a special bill on Friday to allow it to provide insurance for continuing Iranian crude imports, making it the first country to attempt to initiate sovereign cover once EU sanctions on Iran are expected to start in July, the Yomiuri newspaper said on Thursday, Reuters reported.

The bill is expected to be passed during the current session of the parliament that ends on June 21, as the secretary generals of the biggest opposition Liberal Democratic Party and its former partner, the New Komeito, have backed the bill, the report said.

The backing of the main opposition parties would clear a hurdle for the bill's smooth passing. Although the lower house is controlled by the ruling Democratic Party, the opposition has the majority of the upper house.

The government wants to enact the bill into law this month so that it can provide protection coverage of up to $7.6 billion per tanker carrying Iranian crude bound for Japan in time when the European Union's ban on reinsurance takes effect as early as July 1.

The EU ban is part of a raft of Western sanctions aimed at shrinking Tehran's oil revenues to force it to halt its controversial nuclear programme.

Iranian oil accounted for nearly 9 percent of Japan's crude imports in 2011 and the government has come up with the bill to minimize the impact on the world's third-largest economy.

Japan's crude purchases from OPEC's second-largest producer have fallen sharply, to comply with U.S. sanctions on Iran, despite an increase in overall oil demand after last year's Fukushima disaster shut down the country's nuclear power stations.

Edited by: S. Isayev