The Chinese government is considering insuring its private oil tanker fleet to transport Iranian crude in order to defy European Union sanctions set to come into effect in July, according to a report.
The move would nullify planned sanctions banning EU-based ship insurers and re-insurers -- who cover 90 percent of the world's tankers -- from covering vessels carrying Iranian crude, the head of China's shipowners' association told Reuters.
[Ship] operators are worried that if the insurance issue cannot be resolved, they will not be able to take orders for shipping Iranian oil any longer, Zhang Shouguo, secretary general of China Shipowners' Association, told Reuters.
The Chinese proposal comes as India and South Korea also mulled the idea of guaranteeing their fleets.
With most of Iran's 2.2 million barrels-of-oil-per-day output destined for Asia, major buyers there are desperate to find a way around the sanctions.
One solution proposed by Indian firms is to operate with limited or no insurance cover, leaving them financially exposed if a spill or accident were to occur.
We have put forward our concern and related government departments are studying the issue. We are paying great attention to this, the country has the need for oil and it's our responsibility to move the crude, said Zhang.
But we need a solution from the government so we can avoid such risk.
Chinese insurers, according to Zhang, would not be prepared to back native firms such as China Shipping, COSCO Group and Nanjing Tankers, who are all covered by European insurers.
While Zhang did not say when a decision would be made, he noted that several government departments were actively discussing the proposal, including the Ministry of Finance, China Insurance Regulatory Commission, Ministry of Transport and National Development and Reform Commission (NDRC), according to Reuters.