Japan's parliament approved government guarantees on insurance for crude oil cargoes from Iran on Wednesday.
This move paves the way for Japan to become the first of Iran's big Asian oil buyers to get round new European Union sanctions.
The law will take effect on 27th June, a government official who requested anonymity told Reuters on Tuesday.
The new law allows the Japanese government, which has succeeded in getting a waiver from US financial sanctions, to provide cover of up to $7.6 bill for each tanker carrying Iranian crude bound for Japan in the event of an accident.
An EU ban on member countries importing Iranian oil takes effect on 1st July and includes a ban on EU insurance companies from offering cover for Iranian exports. This affects Japan, South Korea, China and India, which together buy two-thirds of Iran's oil exports and rely on EU companies to insure the shipments.
According to Reuters, Iranian oil accounted for nearly 9% of Japan's crude imports last year. Japan has already reduced the flow to comply with US sanctions requiring buyers to make sizeable cuts, but wants to avoid more drastic reductions that could drive up energy import costs and hurt the world's third-largest economy.
Refiners have cut their purchases even though Japan needs more oil to fuel power stations after last year's Fukushima disaster led to a halting of reactors providing nuclear power.
India's government, which has also won an exemption to US sanctions, has been trying without success to work out how it will get around the EU sanctions. Iran's top buyer China has yet to detail how it plans to resolve the insurance problem, but industry sources there have said the country will find a way to keep imports flowing. South Korea will reduce imports to zero in July, due to the insurance ban, industry sources said.
Like Tokyo, Seoul has lobbied the EU to delay, or get a waiver on implementing the ban on insurers, but is not considering state guarantees, according to government sources.
However, the EU will not cancel, or delay the embargo on Iranian oil tankers, EU Energy Commissioner Guenther Oettinger said at an industry conference a week ago.
- Tanker Operator