Iran oil cargoes 'uninsurable'

As SA foreign minister Maite Nkoana-Mashabane fights for relief from European Union (EU) sanctions on Iran oil imports – which used to supply a quarter of our crude – SA underwriters’ hands are currently tied as far as insuring Iranian oil cargoes is concerned. And, according to Mike Brews, chief operating officer at Associated Marine, the knot binding those hands is tightly tied. “SA is a signatory to the EU agreement,” he told FTW, “so the country has to follow all the sanctions, and the same applies to all insurance companies.” The fact that all SA underwriters place their re-insurance contracts overseas – mostly in Europe and especially the UK – further tightens the knot. “Any attempts to insure Iran oil shipments would, therefore, have a massive impact, and set alarm bells ringing all across Europe,” Brews added. He is also not too sure just how easy SA would find it to look for alternative suppliers of any big quantities of oil. “You’d probably find that other oil producers already have well-established supply agreements with other countries,” he said. “Prices are much the same supplierto- supplier – because oil is an international commodity and priced in commodity exchanges. But I would think that sourcing from Nigeria – which government has indicated could be preferred as our main alternative supplier – could be a pretty expensive source as it has high inflation, and that would push up our oil costs.” Meantime, despite the government’s appeals to the EU for sanctions relief, SA would appear to have taken the EU restrictions to heart. The latest reports show that SA imported no crude oil from Iran in July, according to recently released customs data. This is seen as a sign Pretoria is avoiding Iranian shipments until it can be certain to avoid European sanctions. In May, imports from Iran totalled 285 524 tonnes. But, but since June, SA has replaced shipments from Iran with crude from other suppliers, especially Saudi Arabia. Even though the US granted SA an exemption from financial sanctions after cuts in Iranian imports in recent months, Pretoria is still facing problems because of the EU sanctions, which do not provide any waivers. CAPTION Mike Brews … ‘Attempts to insure Iran oil shipments would set alarm bells ringing all across Europe.’