Japan’s lower house passed a bill on Friday, June 15 to provide government guarantees on insurance for Iranian crude cargoes, a key step towards it becoming the first of Iran’s big Asian oil buyers to get round new European Union sanctions, Reuters reported.
The bill will now be sent to the upper house, where opposition parties have the majority but have signalled their support. It will become law by around June 27 if passed before the current parliamentary session ends next Thursday, said a government official who requested anonymity.
The Japanese government, which has succeeded in getting a waiver from U.S. financial sanctions, wants to provide coverage of up to $7.6 billion for each tanker carrying Iranian crude bound for Japan in the event of accidents.
An EU ban on member countries importing Iranian oil takes effect on July 1 and includes a ban on EU insurance firms from covering Iran’s exports. That is a headache for Japan, South Korea, China and India, which together buy two thirds of Iran’s oil exports and rely on EU companies to insure them.
EU and U.S. sanctions aim to cut the oil revenues on which Tehran depends to force the Islamic Republic to curb its nuclear programme. The West suspects Iran aims to develop weapons, while Tehran says it needs reactors for electricity supplies.
Iranian oil accounted for nearly 9 percent of Japan’s crude imports last year. Japan has reduced the flow already to comply with U.S. sanctions requiring buyers to make sizeable cuts, but wants to avoid more drastic reductions that may drive up energy import costs and hurt the world’s third-largest economy.
Refiners cut their purchases even as the country has needed more oil to fire power stations after last year’s Fukushima disaster shut down the country’s nuclear power capacity.
