Japan's government is likely to provide insurance for tankers that import Iranian oil to Japan in the wake of the European Union sanctions on Iran in July 2012.

The Nikkei business daily was cited by Reuters as reporting that it is expected that the government is likely to assist the Japan Shipowners’ Mutual Protection & Indemnity Association (JPIA) in providing coverage to damages exceeding $8m and within $7.6bn just to tankers.

The scheme is expected to be applicable for 16 tankers in the initial year, and a JPY20-30m ($250,300-$375,400) annual fee per tanker would be charged for the shipping companies seeking the additional government coverage, the daily added.

As per the Japanese law, shipping companies are required to obtain liability insurance for damages that occur due to accidents, including oil spills and fatalities.

The US and EU sanctions on Iran’s oil exports is aimed at halting a suspected nuclear programme undertaken by Iran to produce nuclear weapons.

Following the enforcement of the sanctions, EU insurers will be banned from covering liabilities relating to imports of Iranian crude oil.