Presented by Prof. A.W.J. (Tony) Fernandez Consulting Average Adjuster, & Risk Management Consultant...

Presented by Presented by

Prof. A.W.J. (Tony) FernandezProf. A.W.J. (Tony) Fernandez

Consulting Average Adjuster, & Risk Management ConsultantConsulting Average Adjuster, & Risk Management ConsultantFormerly Visiting Professor of Maritime Law & Insurance Law – Mumbai UniversityFormerly Visiting Professor of Maritime Law & Insurance Law – Mumbai UniversityForeign Associate Member – Association of Average Adjusters of the United StatesForeign Associate Member – Association of Average Adjusters of the United States

IMOL-2011, Insurance For The Offshore Sector © Prof. A.W. J. (Tony) Fernandez, Slide 01/30

International Maritime Offshore LogisticsInternational Maritime Offshore Logistics(IMOL 2011)(IMOL 2011)

INSURANCE FOR THE OFFSHORE SECTOR INSURANCE FOR THE OFFSHORE SECTOR

Presentation OverviewPresentation Overview

1. Managing Risk in the Energy Industry1. Managing Risk in the Energy Industry

2. Offshore Operations2. Offshore Operations

3. Drilling Contracts3. Drilling Contracts

4. Energy (Oil & Gas) Insurance4. Energy (Oil & Gas) Insurance


Gumperson’s Law of ProbabilityGumperson’s Law of Probability

The probability of anything happening is in The probability of anything happening is in inverse proportion to its desirability!inverse proportion to its desirability!


Risk Management Risk Management

1. Risk Assessment – Planning Phase1. Risk Assessment – Planning Phase

2. Risk Treatment – Organizing Phase2. Risk Treatment – Organizing Phase

3. Risk Financing – Motivating Phase3. Risk Financing – Motivating Phase

4. Risk Control – Controlling Phase4. Risk Control – Controlling Phase


Managing Risk – A ModelManaging Risk – A Model

RiskAssessment

Risk Treatment

Risk Financing

RiskControl

OrganizationalOrganizationalObjectivesObjectives

Hazard

Peril

Risk

Loss


Murphy’s ConstantMurphy’s Constant

Property will be damaged in direct proportion Property will be damaged in direct proportion to its value!to its value!


The Organising Phase of RMThe Organising Phase of RM

RiskTreatment

Risk Transfer

RiskReduction

ResidualRisk


Hazard

Peril

Risk

Loss


The Organising Phase of RMThe Organising Phase of RM(Continued)(Continued)

Risk TransferBy Insurance

CommercialInsurance

MutualInsurance

ResidualRisk


Hazard

Peril

Risk

Loss


The Organising Phase of RMThe Organising Phase of RM(Continued)(Continued)

RiskTransfer

ByInsurance

ByContract

ResidualRisk


Hazard

Peril

Risk

Loss


Offshore Life Cycle Offshore Life Cycle

1. Exploration Phase1. Exploration Phase

2. Developmental Phase2. Developmental Phase

3. Exploitation Phase3. Exploitation Phase

4. Revival Phase 4. Revival Phase

5. Removal Phase 5. Removal Phase


Risk Exposure – Offshore Oil & GasRisk Exposure – Offshore Oil & Gas

1. Causes of Accidents1. Causes of Accidents- Acts of God / Perils of the Seas- Human Frailty - Punch-through- Blowout and Cratering

2. Consequences of Accidents2. Consequences of Accidents

- Personnel – Injury / Disability & Death - Physical loss or damage – Partial / Total - Loss of Production / Loss of Profits- Liabilities – Legal and Contractual


The Foolproof LawThe Foolproof Law

It is impossible to make anything foolproof It is impossible to make anything foolproof because fools are ingenious!because fools are ingenious!


The Offshore Players The Offshore Players

1. The Operator (Venturer / Co-Venturer)1. The Operator (Venturer / Co-Venturer)

2. The Various Contractors & Sub-Contractors2. The Various Contractors & Sub-Contractors

3. The Various Oil Field Service Providers3. The Various Oil Field Service Providers

4. Other Service Providers (Including Insurers)4. Other Service Providers (Including Insurers)


Fixed Assets – Offshore Fixed Assets – Offshore

1. The Offshore Oil / Gas Field1. The Offshore Oil / Gas Field

2. The Reservoir2. The Reservoir

3. The Well3. The Well

4. The Platform / Sub-sea Equipment4. The Platform / Sub-sea Equipment


Movable Assets – Offshore Movable Assets – Offshore

1. Jack-up Drilling Rig1. Jack-up Drilling Rig

2. Semi-submersible2. Semi-submersible

3. Drill Ships3. Drill Ships

4. Other Special Purpose Ships4. Other Special Purpose Ships


Offshore ContractsOffshore Contracts

1. Responsibility Clause1. Responsibility Clause

2. Indemnity & Hold Harmless Clause2. Indemnity & Hold Harmless Clause

3. Insurance Clause3. Insurance Clause

4. Waiver of Subrogation Clause4. Waiver of Subrogation Clause


Offshore Insurance For OperationsOffshore Insurance For Operations

1. Exploration Drilling 1. Exploration Drilling

2. Construction2. Construction

3. Drilling / Production / Work Over3. Drilling / Production / Work Over

4. Removal of Platforms4. Removal of Platforms


Offshore Insurance For OperationsOffshore Insurance For Operations

1. “All Risks” Cover For Physical Loss / Damage 1. “All Risks” Cover For Physical Loss / Damage

2. Control of Well (Blowout / Cratering)2. Control of Well (Blowout / Cratering)

3. Re-drilling Expenses / Pollution / Seepage3. Re-drilling Expenses / Pollution / Seepage

4. Liabilities – Marine & General 4. Liabilities – Marine & General


Insurance of Legal LiabilitiesInsurance of Legal Liabilities

1. Common Law Liabilities- Collision Damage Liabilities

- Contact Damage Liabilities

- Other Liabilities to Third Parties

2. Admiralty Law Liabilities - Maritime Salvage - General Average

3. Statutory Liabilities- Removal of Wreck Liability- Pollution Liability- Other Statutory Liabilities


Insurance of Contractual LiabilitiesInsurance of Contractual Liabilities

1. Under the Drilling Contract1. Under the Drilling Contract

- Control of Well Costs

- Re-drilling Expenses

- Pollution – Seepage & Clean-up

2. Under other Contracts2. Under other Contracts - Down Hole Equipment Contracts - Contracts of Towage - Contracts of Carriage


Express Warranties In Energy Risk PoliciesExpress Warranties In Energy Risk Policies

Tug, Tow, Towage and Storage WarrantyTug, Tow, Towage and Storage Warranty

Location Approval for Jack-upsLocation Approval for Jack-ups

Jack-up Moves on and off Location Jack-up Moves on and off Location

Blowout PreventersBlowout Preventers


On July 6, 1988, 167 lives perished on the

Piper Alpha Platform, located in the icy

North Sea. The worst offshore oil accident

In history, the Piper Alpha disaster quickly

revolutionized the offshore oil industry.

Today the offshore oil industry is

dramatically different.

Piper Alpha DisasterPiper Alpha Disaster


Piper Alpha Prior to DisasterPiper Alpha Prior to Disaster

Slide 23/30

Piper Alpha What Remained After The DisasterPiper Alpha What Remained After The Disaster(1988 – 167 Lives Lost)(1988 – 167 Lives Lost)

Slide 24/30

http://gcaptain.com/?attachment_id=519

Bombay High North Complex Prior to DisasterBombay High North Complex Prior to Disaster

Slide 25/30

The BHN DisasterThe BHN Disaster

Slide 26/30

MSV SAMUDRA SURAKSHAMSV SAMUDRA SURAKSHA

Slide 27/30

BHN Platform What Remained After The DisasterBHN Platform What Remained After The Disaster

Slide 28/30

ConclusionConclusion

Highly TechnicalHighly Technical

Highly Volatile Premium Rates & WordingsHighly Volatile Premium Rates & Wordings

Highly Dynamic - Need Based Policies & Claims Highly Dynamic - Need Based Policies & Claims

Continuous LearningContinuous Learning


AcknowledgementAcknowledgement

With deep affection and respect, I dedicate this

Presentation to Late Mr. Harry Noronha and toto

Mr. Narender Menon, with whom I surveyed

and adjusted India’s first Offshore Insurance

Claim of “SAGAR VIKAS” Blowout.


Presented by Prof. A.W.J. (Tony) Fernandez Consulting Average Adjuster, & Risk Management Consultant...

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