Japan discusses tanker cover for sanctions-hit ships

The Japanese government may yet step in to to compensate for the insurance shortfall faced by tankers carrying Iranian oil.

According to Reuters, the Japanese transport ministry has held discussions with the Japan Shipowners' Association regarding the provision of insurance.

Speaking at a conference in Tokyo yesterday, Akimitsu Ashida, chairman of the group representing the country's shipping companies, reportedly confirmed that discussions are taking place.

Speculation has been rife, as far back February, that oil-dependent Asian nations such India and China may resort to sovereign guarantees to lessen the impact of sanctions against Iran oil shipments.

All but 5% of the world's tankers will not be able to carry Iranian oil without losing third-party and environmental liability insurance, as their insurers are impeded by the European Union embargo that takes effect on 1 July.

Under pressure, Japan has significantly reduced the amount of oil it imports from Iran, but has not agreed a blanket boycott.

Japan's ship owners said they will ask the government to help provide insurance if the EU does not "appreciate" the country's efforts to reduce imports from Iran, said Ashida, who is also chairman of Mitsui O.S.K.Lines, the world's largest owner of supertankers.

According to Reuters, Chinese ministers have also held a special meeting on the issue and are determined to ensure that shipments do not drop.