JAPAN GOVT TO BOOST TRADE INSURANCE

The Japanese government is to increase by more than 200% the amount of trade insurance it underwrites for the development of natural resources. As part of an effort to increase the availability of oil through the promotion of exploration and product, the level underwritten by the government via Nippon Export & Investment Insurance will rise to ¥1tn ($9.28bn) from the previous ¥300bn. The cover, which is priced at about 50% to 70% lower than ordinary trade insurance, covers losses incurred by banks, trading houses and other firms that have backed exploration or development if a project is halted because of natural catastrophe or terrorism. Investors are also protected if a project is nationalised by the resource-producing country. Nippon Export & Investment introduced the insurance last year ( ID Asia , February 22 2007) after two Japanese trading houses decided to cut their investment in the Russian Far East Sakhalin-2 oil and natural gas development project, citing as a reason a lack of trade insurance on offer from the Japanese government. The increased scope of the offering will also cover exploration for rare metals in South America, Southeast Asia and Africa. The insurance will also be available to projects led by foreign companies, if Japanese companies are involved and some of the output will be exported to Japan.