China mulls guarantees for ships carrying Iran oil
China is considering sovereign guarantees for its ships to enable the world's second-biggest oil consumer to continue importing Iranian crude after new EU sanctions come into effect in July, the head of China's shipowners' association said.
Tough new European Union sanctions aimed at stopping Iran's oil exports to Europe also ban EU insurers and reinsurers from covering tankers carrying Iranian crude anywhere in the world.
Around 90 percent of the world's tanker insurance is based in the West, so the measures threaten shipments to Iran's top Asian buyers China, India, Japan and South Korea.
Global crude oil prices have risen nearly 20 percent since October, partly on fears over supply disruptions from Iran.
Iran, OPEC's second-largest producer, exports most of its 2.2 million barrels of oil per day to Asia, and major buyers have yet to find a way around pending EU sanctions.
Like China, India and South Korea were also mulling sovereign guarantees for their tankers. Indian shipping firms indicated last week they would continue to transport Iranian oil even if limited insurance cover exposed them financially to a spill or accident.
According to analysts, most of China's tanker fleet, owned by firms such as China Shipping CNSHI.UL, COSCO Group COSCO.UL and Nanjing Tankers (600087.SS), were covered by European insurers.
Most maritime insurers pool their coverage and tap into the reinsurance market when coverage exceeds $8 million (4.9 million pounds). A typical supertanker - the biggest can ferry some 2 million barrels of oil - is covered for $1 billion against personal injury and pollution claims.
Until recently, China was Iran's top customer, taking more than 20 percent of its crude exports but customs data last week showed China halved its Iranian crude imports in March compared with the same month in 2011.
Edited by: S. Isayev