The 16 tankers owned by Cosco Shipping Tanker (Dalian) that have been caught up in the current wave of Iran sanctions will continue to receive cover from the International Group of P&I Clubs following assurances from the US government.
While clubs have been tightlipped on the issue, TradeWinds understands that the US Office of Foreign Assets Control (OFAC) has told members of the International Group that non-US insurers are safe to cover Cosco Dalian’s fleet of owned tankers.
The understanding was reached during talks between the International Group and OFAC after Cosco Dalian was listed as a “specially designated national” (SDN) for breaching US sanctions on Iran in late September.
The clubs are relying on Section 3 of US Executive Order 13846, which in effect does not prohibit non-US entities from providing “material support or engaging in significant transactions with such non-Iranian SDNs”.
In an alert to members, the Swedish Club said: “Non-US persons would appear to remain free to have continued business dealings with the entities that became designated on 25 September.”
Conditions remain
However, there are conditions. There cannot be any involvement in other sanctionable activity such as trading in Iranian petroleum, petroleum products or dealing with Iranian SDNs.
So the Cosco tankers will have to keep out of the Iran oil trades to continue to receive cover from the International Group.
In addition, any business undertaken cannot involve any US nexus, such as payment in US dollars.
One insurer familiar with the situation told TradeWinds: “The clubs have been told as long as you are a non-US insurer, and there is no US nexus, then there is no reason why you can’t cover the ships.
“It is not like the NITC [National Iranian Tanker Co] where insurers were told you simply cannot cover these ships.”
Six International Group members — Gard, Skuld, West of England, Steamship Mutual, North P&I and the UK P&I Club — are listed as providing owner’s protection and indemnity cover to Cosco Dalian.
All 16 owned Cosco Dalian tankers remain listed as being covered by International Group members. Some clubs are also providing charterers’ P&I cover to Cosco Dalian ships.
Defection unlikely
The US sanctions were expected to prompt a widespread defection of Cosco Dalian tankers from the International Group membership, but that now appears unlikely to materialise.
However, the reinsurance of Cosco Dalian’s hull and machinery cover remains an issue. Cosco uses its own captive insurance company to provide war-risk and hull and machinery cover to its ships. But it reinsures much of the risk in the US markets.
