Embargo Hits Bermuda Firm’s Tankers
New European Union sanctions on Iranian oil will extend to about 95 percent of the global tanker fleet — including those operated by at least one major Bermuda shipping company – because they are insured under rules governed by European law.
The International Group of Protection & Indemnity [P&I] Clubs insures all but five percent of the global tanker fleet and its 13 member clubs follow European rules to participate in the claim-sharing pool, Andrew Bardot, the London-based secretary and executive officer told the Bloomberg financial news service today [Jan. 27].
Carrying Iranian oil would invalidate the ships’ cover against risks including spills and collisions, he said.
“Any EU-regulated insurer will not be able to provide insurance to cover any ship engaged in the carriage of Iranian oil and petrochemicals to the EU and elsewhere,” Mr. Bardot said. “We have already notified ship owners of the effect on their trading activities and our ability to cover.”
Among the firms impacted is Bermuda’s Frontline Ltd., one of the world’s largest oil tanker shipping companies .
Owned by shipping tycoon Jon Fredriksen, Hamilton-based Frontline operates one of the world’s largest tanker fleets consisting of 82 ships in total with 18 more on order. Already buffeted by a global decline in tanker charter rates, Frontline recently completed a major restructuring of its operations.
Bloomberg said while the embargo on Iranian oil only covers the EU’s 27 member states, the extent of the region’s role in insuring ships will curb trade globally.
Iran is the second-biggest member of the Organisation of Petroleum Exporting Countries [OPEC], and sends oil to China, Europe, Japan, India and South Korea. EU foreign ministers agreed to the ban on January 23, seeking to increase pressure on Iran over its nuclear programme, which the nation says is for civilian and medical purposes.
Vessels carrying oil from the nation will have to use “questionable” insurance, said Simon Schnorr, the London-based marine client director at Aon Risk Solutions, a unit of the world’s largest insurance broker.
The EU sanctions will still apply to shipping companies with no European link because of their insurance policies, according to Intertanko, the largest trade group representing tanker owners. Members include Frontline Ltd. and Tokyo-based Kawasaki Kisen Kaisha Ltd.
