--India oil ministry asks shipping ministry to allow crude imports via Iranian ships
--Oil ministry asks finance ministry to press local insurers for providing insurance to Iran cargoes
--India working on sovereign guarantees for crude imports from Tehran
(Recasts the first paragraph, adds context and background in 2nd, 3rd, 9th to 11th paragraphs, adds oil secretary's comment in 6th paragraph, comments from oil minister in 12th paragraph)
By Rakesh Sharma and Santanu Choudhury
NEW DELHI--India is speeding up efforts to ensure insurance cover for tankers which bring in crude oil from Iran, about a week before the onset of European Union sanctions that will effectively cut off insurance services for oil shipments from the Islamic Republic.
The move by India's oil ministry comes close on the heels of the South Asian nation getting exemptions from U.S. sanctions. India and South Korea were among the countries exempted earlier this month from U.S. sanctions after the U.S. believed they had significantly reduced oil imports from Iran.
India, however, continues to face logistical challenges in importing oil from Iran as the EU sanctions, which will come into effect July 1, are affecting its ability to get insurance for ships carrying Iranian crude.
Oil Secretary G.C. Chaturvedi said Friday that the oil ministry has asked the shipping ministry to allow refiners to import crude from the Persian gulf nation in Iranian ships.
The current system favors Indian shippers in importing oil as part of the federal government's policy to support the local shipping industry. Allowing Iranian ships to bring crude to India will free refiners from the responsibility of arranging insurance for the tankers.
"The ministry of shipping is considering our proposal," Mr. Chaturvedi told reporters.
He said the oil ministry has also asked the finance ministry to press state-owned reinsurer General Insurance Corp. to provide insurance cover to Indian ships carrying crude from Iran. Besides, the oil ministry is working to get sovereign guarantees for Indian vessels, he added.
"We are providing for the contingency. We are taking all steps to ensure supplies are not hit," Mr. Chaturvedi said.
Asian countries such as India, Japan and South Korea, which import oil from Iran, have been working to find a way around EU sanctions. Earlier this month, Japan passed a bill that would enable the government to back insurance plans for tankers carrying Iranian crude oil to the country.
India has been reducing its oil shipments from Iran saying it wants to cut dependence on a single nation. Shipments from Iran fell 5.7% in the financial year ended March 31, 2012, to 17.44 million tons, or 349,300 barrels a day. That led to Iran slipping to the fourth position from second among oil suppliers to India.
Indian refiners have targeted to cut Iranian imports by 11% to about 15.5 million tons this fiscal year.
"We are receiving supplies from Iran," said Oil Minister Jaipal Reddy. "We are adopting all possible legitimate means," he said, adding that India has "decided not to discus these things too loudly and too frequently."
Reddy earlier this month met energy ministers from Saudi Arabia, Qatar and Algeria, seeking additional supplies for India.
Write to Rakesh Sharma at rakesh.sharma@dowjones.com and Santanu Choudhury at santanu.choudhury@dowjones.com
