Insurance Restrictions Ease for Petrochemical Shipments

Insurance Restrictions Ease for Petrochemical ShipmentsInsurance Restrictions Ease for Petrochemical Shipments

Most restrictions on providing insurance coverage for shipments of Iranian petrochemical products have been lifted and a number of European banks have resumed dealings with Iran in the petrochemical sector.

Ahmad Mahdavi, secretary-general of the Association of Petrochemical Industry Corporation, made the above statement, IRNA reported on Tuesday.

"The main issues on insurance coverage for the petrochemical sector, which includes the transport of products, have been resolved," he said without elaboration.

The US and EU sanctions imposed against Tehran's nuclear program deterred most international companies from doing business with Iran. Consequently, most international insurers pulled the plug on coverage for tankers and ships that carried Iran's crude oil and petrochemicals during the sanctions, stifling the export of Iran's most important commodities.

But the historic nuclear deal with six world powers in July, which came into force on January, has given Iran a fresh lifeline to reintegrate its sanctions-hit economy with the world and grease the wheels of its petrochemical sector.

The net volume of petrochemical exports in the past five months has soared by more than 30% compared to pre-sanctions levels. But persistently low price of crude oil has curtailed any significant boost in the value of exports.

The official added that some banks in Germany, Italy and Spain have effectively resumed operations with Iran. But some financial setbacks are still in place.

"Some money transfers are still conducted via currency exchanges," Mahdavi said. "But we are hoping that hurdles will be cleared in the near future."

Iran's petrochemical exports stood slightly above 18 million tons in the year that ended on March 19, 2016, but the volume is expected to increase markedly with the easing of trade and banking restrictions.

The share of petrochemicals in non-oil exports reached 33% from 28% in the last Iranian year, but the chunk is planned to reach 35% by March 2017. The petrochemical sector is Iran's second-largest industry after oil and gas.

Iran plans to double its output capacity by 2020 and bump it to 180 million tons a year in the space of a decade.