Offshore energy insurance has, to a large degree, been based upon the traditional principles and practices established in the marine insurance market. However, it has, in time, evolved into a distinct brand offering products that are unique to the insurance industry and tailor-made to the energy industry. Exploration and production of hydrocarbons in a marine environment is a risky business. It requires significant capital expenditure and highly specialised equipment, techniques and manpower and, for all the skills and expertise that have collectively been acquired within the industry.
Author: David Sharp
Published: February 2021
Read the Nautilus Telegraph's review of Upstream and Offshore Energy Insurance, 3rd Edition
Content:
Chapter 1 History and Development of the Offshore Insurance Market
1.1.0 Background and Introduction
1.2.0 Brief History of Offshore Drilling and Production
1.3.0 Evolution of the Offshore Energy Insurance Product
1.4.0 Development of the Marine Offshore Insurance Market
1.5.0 The Petroleum Community
1.6.0 Organisation of the Energy Insurance Market
1.7.0 Offshore Insurance Law and Jurisdiction
Chapter 2 Exploration 1 – Background
2.1.0 Introduction
2.2.0 Mobile Offshore Drilling Units (MODUs or Rigs)
2.3.0 Risk Factors Associated with MODUs
2.4.0 The Drilling Operation
2.5.0 The Drilling Contract – the Daywork Contract
2.6.0 Responsibility for Loss or Damage Under Daywork Contract
2.7.0 Footage and Turnkey Contracts
Chapter 3 Exploration 2 – Insurances on Mobile Offshore Drilling Units (MODUs)
3.1.0 Introduction
3.2.0 The London Standard Drilling Barge Form (9th March, 1972) (LSDBF)
3.3.0 Adapted Conventional Hull Policy Wordings
3.4.0 The Norwegian Marine Insurance Plan of 1996 (the Norwegian Plan, or the ‘Plan’)
3.5.0 London Market Offshore Mobile Unit Form (LMOMUF)
3.6.0 Overview Summary of the Forms
3.7.0 Liabilities
3.8.0 Liability Coverage in the Conventional Market
3.9.0 Market Practice for Mobile Drilling Rigs
Photo Gallery
Chapter 4 Exploration 3 – Control of Well Insurance
4.1.0 Introduction – Blowout
4.2.0 Risk Considerations
4.3.0 Evolution of the Coverage Form
4.4.0 The EED 8/86 Wording (EED) – Overview
4.5.0 EED Control of Well – Section A
4.6.0 EED Redrilling/Extra Expense (Section B)
4.7.0 EED Seepage and Pollution, Clean-up and Contamination – Section C
4.8.0 EED Form General Conditions
4.9.0 Additional Optional Coverages
4.10.0 Overview of LSW 614A (Comparison with EED)
4.11.0 Control of Well Premium Rating
4.12.0 Market Practice
Chapter 5 Offshore Construction (1)
5.1.0 Background and Introduction
5.2.0 Construction Methods and Phases
5.3.0 The Marine Warranty Surveyor (MWS)
5.4.0 Contractual Issues and Arrangements
5.5.0 Responsibility for Insurance
Photo Gallery
Chapter 6 Offshore Construction (2) – Essential Principles
6.1.0 Introduction to Scope of CAR Policy
6.2.0 Assured
6.3.0 Period
6.4.0 The Insured Works
6.5.0 Valuation
6.6.0 Coverage Scope
6.7.0 Third Party Liabilities
Chapter 7 Offshore Construction 3 – The WELCAR 2001 Policyform – General Conditions and Physical Damage
7.1.0 Historic Background
7.2.0 WELCAR – Policy Construction
7.3.0 Scope
7.4.0 General Terms and Conditions
7.5.0 Section 1 – Physical Damage
Chapter 8 Offshore Construction (4) – The WELCAR 2001 Policy Form – Terms and Conditions for Section 1
8.1.0 Terms and Conditions (Section 1 only)
8.2.0 Basis of Recovery
8.3.0 Incorporated Clauses
8.4.0 Project Alterations and Amendments
8.5.0 Defective Parts
8.6.0 Additional Expenditures under Section 1
8.7.0 Maintenance
8.8.0 Other Aspects
8.9.0 Definitions for Section 1
8.10.0 Exclusions for Section 1
Chapter 9 Offshore Construction 5
WELCAR Form – Section II (Liabilities) and Marketing Practice for CAR insurance
WELCAR FORM Section II (Liabilites)
9.1.0 Introduction
9.2.0 WELCAR Section II Third Party Liability – Insuring Agreement
9.3.0 Terms and Conditions for Section II
9.4.0 Exclusions
9.5.0 Coverage Buy-Backs
9.6.0 Marketing Practice for CAR Insurance
Photo Gallery
Chapter 10 Operating Insurance 1 – Principal Considerations
10.1.0 Introduction
10.2.0 Offshore Structures
10.3.0 Risk Hazards
10.4.0 Certification Requirements for Offshore Installations
10.5.0 Essential Insurance Considerations
Chapter 11 Operating Insurance 2 – Physical Damage Wordings
11.1.0 Introduction
11.2.0 Issues Normally Forming Part of Declarations or Schedules
11.3.0 Coverage
11.4.0 Exclusions
11.5.0 Limit of Liability (Basis of Recovery)
11.6.0 Other Clauses
11.7.0 Other Clauses Customarily Included in Manuscript Policies
Chapter 12 Operating Insurance –
(A) FPSO and Contractors’ Vessels, Pipelines and Onshore Land Rigs and Equipment
(B) General Market Practice
12.1.0 Introduction – FPSOs and Contractors Vessels
12.2.0 FPSOs and FSUs – War Risks Cover
12.3.0 FPSOs and FSUs – Crude Oil in Store
12.4.0 Pipeline Operating Forms
12.5.0 Land Rigs and Onshore Equipment
B. General Market Practice – Operational Risks
12.6.0 Introduction
Photo Gallery
Chapter 13 Business Interruption, Delay in Start-up and Loss of Hire
13.1.0 Introduction
13.2.0 Essential Principles and Practice – Business
Interruption Coverage
13.3.0 Loss of Production Income Wording (Production Loss Sustained) JR 2005/003A) (LOPIW)
13.4.0 Insuring Clauses
13.5.0 Exclusions
13.6.0 Delay in Start Up (DSU)
13.7.0 DSU Underwriting Practice
13.8.0 Loss of Charter Hire and Loss of Hire
Chapter 14 Offshore Liability Risks
14.1.0 Introduction
14.2.0 Synopsis of Liability Exposures
14.3.0 Liability Policy Forms (Generically)
14.4.0 Excess Liability Claims Made Policy – LSW 244
14.5.0 Endorsement Containing Energy Exclusions – LSW 245 4
14.6.0 The LPO 418 (B) – London CGL Wording
14.7.0 Other Manuscript Policies
14.8.0 Market Practice
14.9.0 The Piper Alpha Litigation
Chapter 15 Pollution Insurance
15.1.0 Introduction and Background
15.2.0 Spillage, Clean-up and Containment
15.3.0 International Legislative and Voluntary Agreements
15.4.0 The Offshore Pollution Liability Agreement (Hereinafter Referred to as OPOL or the Agreement)
15.5.0 The Outer Continental Shelf Lands Act (OCSLA) and 1978 Amendments (the Amendments)
15.6.0 Oil Pollution Act 1990 (OPA)
15.7.0 Position in Respect of FPSOs/FSUs
15.8.0 Insurance Coverage for Pollution Risks
Chapter 16 The Mutual Entities – Oiland Ocil513
16.1.0 Introduction
16.2.0 Overview of Coverage and Limits Provided by OIL
16.3.0 Rating Formula
16.4.0 OIL Coverage – Construction of the Policy
16.5.0 Insuring Agreement 1 – Physical Damage
16.6.0 Insuring Agreement 2 – Sue and Labour, Control of Well, Removal of Debris, Restoration and Redrilling Expense
16.7.0 Insuring Agreement 3 – Seepage, Pollution and Contamination – Coverage
16.8.0 Other Main Conditions
16.9.0 OIL Coverage as Vehicle for Construction
16.10.0 Oil Casualty Insurance Limited (OCIL)
Photo Gallery
Chapter 17 War, Terrorists and Political Risk
17.1.0 Introduction
17.2.0 Drilling Barges – The Institute War and Strikes Clauses – Hulls – Time 1.11. 95 (War and Strikes policy)
17.3.0 Mobile Offshore Units – Norwegian Practice under Norwegian Marine Insurance Plan (the NMIP or the Plan)
17.4.0 Fixed Offshore Facilities
17.5.0 Onshore Terrorism
17.6.0 Other Political Risk Exposures and Coverages
Chapter 18 Decommissioning and Abandonment
18.1.0 Introduction
18.2.0 International Legislative Background
18.3.0 National Enactments
18.4.0 Abandonment Options
18.5.0 Insurance Products
18.6.0 Post Abandonment Liabilities
18.7.0 Provision of Decommissioning Security
Appendix A WELCAR 2001
Appendix B Energy Exploration and Development Insurance
Appendix C London Standard Platform Form
Appendix D London Market Offshore Mobile Unit Form
Appendix E Loss of Production Income
Appendix F Excess Liability Claims Made Policy – LSW 244
Appendix G Oil and Gas Well Drilling Tools Floater Form (All Risks)
Appendix H Offshore Facilities Limited Terrorist Cover, Form 2
Photograph Credits
Index
