Risiko dan Coverage Asuransi dalam

Industri Minyak dan Gas (Migas)

AAUI Training

13 June 2024

Benny Harto - Vice President, Head of Broking

PT. Marsh Reinsurance Broker Indonesia

A business of Marsh McLennan

1. Tinjauan Umum Industri Migas
2. Tahapan Kegiatan Operasional Hulu Migas (Upstream Life Cycle)
- Discovering Reserves
- Drilling
- Construction
- Operational/Production
- Decommissioning
3. Polis Asuransi Utama di Industri Migas
- Operational Asset
- Rig Insurance
- Operator Extra Expenses (OEE)
- Construction

4. Contoh Klaim di Asuransi Migas

Agenda
Tinjauan Umum Industri
Migas
Upstream, Midstream and Downstream: A definition

Upstream (Hulu) :
searching for potential underground or underwater crude oil and natural gas fields, drilling of exploratory
wells, and subsequently drilling and operating the wells that recover and bring the crude oil and/or raw
natural gas to the surface

Midstream
the processing, storing, transporting of oil, natural gas and LNG

Downstream (Hilir) :
the refining, distribution, or marketing of oil and its derivative products e.g petrochemical
Upstream, Midstream and Downstream

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Tahapan Kegiatan
Operasional Hulu Migas
(Upstream Life Cycle)
Tahapan Kegiatan Hulu Migas (Upstream Life Cycle)

Setiap kegiatan operasi Hulu Migas memiliki lima fase berbeda dalam ‘siklus
hidup'-nya dengan karakteristik resiko dan risk transfer masing-masing

Discovering
Drilling Construction Operational Decommissioning
Reserves
1. Discovering Reserves
How to find Oil and Gas?

• Review of Geological Maps

• Geophysical Field Surveys
• Seismic Surveys (most common)
– Undertaken by ships
• Tow air or water gun arrays
• Streamers to collect echoes
• Develop two, three or four dimensional images

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1. Discovering Reserves
Typical Risks Associated with Seismic Activity

• Damage or injury to third parties

the seismic work
• Injury to Employees
• Damage to Contractors
equipment (including vessel)
• Damage to Vehicles
• Damage to Offices and office
content

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1. Discovering Reserves
Insurance / Risk Transfer required at this stage

• Third Party Liability

• Employers Liability/Workers
Compensation
• Auto Liability
• Equipment Insurance
• Marine Hull
• Office Insurances
• Motor Insurance
• Directors’ and Officers’ Insurance

Subject to risk allocation between

KKKS and Contractors

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2. Drilling

• Offshore and onshore rig types include:

– Jack Ups
– Semi-submersibles
– Drill ships
– Land rigs

• Offshore drilling provides greater challenges,

due to:
o Severe conditions:
Wind speeds / Wave height / Corrosion
o New technology required:
Platform design / Lifting equipment / Sub
sea developments
o Cost
Personnel /Health and safety

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2. Drilling

Onshore and offshore rigs (types) Average Value (in million $) Average Daily Hire Cost
Land rigs 10 - 25 $ 30,000 per day
Jack up 50 - 125 $ 85,000 per day
Semi submersible 200 - 350 $ 300,000 per day
Drill ships 250 - 350 $ 400,000 per day

$10M - $25M $50M - $125M $200M - $350M $250M - $350M

Values as at Q3 2023
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2. Drilling
Typical Risks Associated with Drilling Activity

• Blow Out during drilling

• Redrill Costs following blow out
• Seepage and pollution following blow out
• Standby costs following a blow out
• Damage to 1st party equipment caused by drilling
operations
• Damage or injury to third parties during the course
of the drilling work
• Damage to equipment caused by a terrorist act

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2. Drilling
Insurance / Risk Transfer required at this stage

• Operators Extra Expense (OEE) coverage - Energy Exploration & Development

Wording 8/86:
– Section A: Control of Well Insurance
– Section B: Redrilling / Extra Expense
– Section C: Seepage and Pollution, Clean-up and Contamination

• Third Party Liability

• Rig Insurance (onshore and offshore)

• Kidnap and Ransom

• Corporate insurances as before

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Drilling – insurance considerations
• Underwriting considerations in respect of OEE - adequacy of information for rating purposes:
– are the wells on or offshore?
– what types of wells are they?
– who is drilling them?
– What rig type/specification, including BOP type and rating?
– Well and Water depth?
– High Pressure wells?
– High Temperature wells?
– Any H2S?
– Vertical or Horizontal/Directional Drilling

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 3. Construction and Installation of
Production Assets

• Fabrication of a steel jacket:

1. Constructed onshore
2. Towed out to the field
3. Launched from a barge
4. Up-ended by controlled flooding
5. Piles secure the structure
6. Additional modules lifted on to the jacket

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3. Construction and Installation of
Production Assets
Float Out a Steel Jacket

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3. Construction and Installation of
Production Assets
Typical Steel Jacket

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3. Construction and Installation of
Production Assets
Types of Installation

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3. Construction and Installation of
Production Assets
Typical Risk associated with Construction Activities

• Damage to project assets during fabrication
• Damage to project asset during transit
• Damage to project assets during offshore
installation
• Damage to any existing infrastructure
• Damage to project assets/equipment during
testing and commissioning
• Damage to project assets/equipment during
maintenance period
• Blow out during suspended phase
• Redrill Costs during suspended phase
• Seepage and pollution during suspended
phase
• Damage to contractors equipment during
the project
• Liability for contractors personnel

• Defective parts used in the construction

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3. Construction and Installation of
Production Assets
Insurance / Risk Transfer required at this stage

• Construction All Risks (CAR)

- Onshore CAR
- Offshore CAR (WELCAR)
• Damage to Existing Property
• Third Party Liabilities

• OEE cover for existing wells

• Project Cargo
• Marine Hull
• Equipment Insurance
• Kidnap and Ransom
• Corporate insurances as before

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4. Operational / Production assets Operational

• Key functions of production

assets:
– Oil and gas production
– Gas or water injection
– Oil and gas processing
– Cleaning produced water
– Housing personnel

Picture of Aker’s Johan Sverdrup Complex

660,000 boepd (25% of Norway’s Production)
USD 12,000,000,000 value
4. Operational / Production assets Operational

Typical Risk associated with Operational / Production Activities

• 1st party damage to property during operational use

• Damage caused by natural disaster
• Damage to third party equipment whilst in the use of the project team
• Damage caused by maintenance/modifications works
• Loss of hydrocarbons during transit
• Damage to pipelines
• Damage to project equipment caused by war, terrorist act or civil unrest
• Damage caused by poor operational procedures/substandard equipment
• Removal of debris following an event
• Loss minimisation following an event
• Control of well and ensuing pollution and redrill during production phase
• Loss of Production Income (LOPI)
4. Operational / Production assets Operational

Insurance / Risk Transfer required at this stage

• Physical Damage to Own Assets

– Platforms – London Standard Platform Form
– General Equipment / Drilling Equipment – Oil & Gas Drilling Tools Floater Form
• “All Risks” subject to Exclusions
• Downhole Equipment always covered on a named perils basis
• Removal of wreck and/or debris
• Sue and labour expenses
• Minor Works
• Property in Care Custody or Control

• Producing OEE Coverages:

– Control of Well Insurance
– Redrilling / Extra Expense
– Seepage and Pollution, Clean-up and Contamination
4. Operational / Production assets Operational

Insurance / Risk Transfer required at this stage

• Loss of Production Income (JR2005/003A – Standard form)

– Form of business Interruption
– Interruption in production
– Coverage is provided for a loss in production income resulting from a loss
recoverable under Section Property Damage
– Indemnity Period – 12, 18, 24, 36 months.
– Usually agree a unit price per barrel
– Need to provide Production Values and Maximum recovery period
– Contingent Business Interruption

• Third Party Liabilities

• Cargo / Oil in Transit
• Terrorism / Political Risk
• Protection & Indemnities (for FPSO, FSO, FLNG, FSRU)
• Corporate insurance as before
5. Decommissioning Decommissioning

The options are…

• Leave in situ
• Remove entirely either in pieces or whole
• Cut off below sea level
• Topple to create artificial reefs
5. Decommissioning Decommissioning

Risks associated with decommissioning activity

• Damage to third party whilst removal from the sea

• Removal of debris following an event
• Loss of decommissioned asset in transit
• Blow out during plugged and abandoned phase
• Redrill Costs during plugged and abandoned phase
• Seepage and pollution during plugged and abandoned phase
5. Decommissioning Decommissioning

Insurance / Risk Transfer required at this stage

• Decommissioning Liability policy

• Decommissioning All Risks (DAR) policy
Coffee Break
Polis Asuransi Utama di
Industri Migas
Operational Asset Insurance Program
Upstream Energy

Program Asuransi untuk operational asset di upstream sector biasanya di design dalam sebuah
Energy Package Insurance Program; yang sebuah polis yang terdiri dari beberapa section

• Section 1 - Onshore Material Damage (Onshore Property)

• Section 2 - Offshore Physical Damage (Offshore Property)
• Section 3 – Operator Extra Expenses (OEE)
• Section 4 – Marine Hull and Machinery

Optional
- Section 5 – Loss of Production Income (LOPI)
- Section 6 – Third Party Liability
- Section 7 – Construction All Risk
Operational Asset Insurance Program
Downstream Energy

Program Asuransi untuk operational asset di downstream energy sector tidak jauh berbeda dengan
polis Industrial All Risk yang lain yaitu

• Section 1 - Physical Damage (Onshore)

• Section 2 – Business Interruption (optional)

Policy form yang dipergunakan secara umum adalah Munich Re IAR Wording, meskipun ada juga
yang mempergunakan manuscript wording untuk beberapa resiko yang cukup besar
Rig Insurance

Onshore Rig
- All Risk Oil and Gas Well Drilling Tool
Floater Form
Rig Insurance

Offshore Rig
▪ London Standard Drilling
Barge Form
▪ London Market Offshore
Mobile Unit Form LSW
678
▪ Nordic Marine Insurance
Plan v 2023 (Nordic
Plan)
Operator Extra Expenses (OEE)
Coverage

Energy Exploration & Development (EED) 8/86 Policy

Form

• Section A - Control of Well

Menjamin biaya-biaya yang timbul untuk mengendalikan
semburan liar (blowout) dari suatu sumur. (cost of well
control)

• Section B - Redrilling/Extra Expenses:

Menjamin biaya-biaya untuk pengeboran kembali sumur
pengganti sampai kedalaman yang sama.

• Section C - Seepage, Pollution and Contamination

Menjamin biaya-biaya yang timbul akibat polusi,
pencemaran dan kontaminasi selama terjadinya blow out

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Operators Extra Expenses (OEE)
EED 8/86
Three sections:
• Section A – Control of well.
• Section B – Redrilling Expenses.
• The cost of redrilling or restoring a well to the depth
reached prior to the loss, not exceeding 130% of
original well costs.
• Section C – Seepage and Pollution.
• Essentially the cost of remedial measures/ clean
up/ removing/ nullifying of polluting substances.
• Coverage afforded under sections B and C are
triggered by the existence of a valid claim under
Section A.
Definition: Well Blow Out
“A well shall be deemed out of control only when there is
unintended flow from the well(s) of drilling fluid, oil, gas, or
water above the surface of the ground or water bottom.
1. Which flow cannot promptly be
i. Stopped by the use of the equipment on site and/or
the blow out preventer required by the due diligence
and warranties clauses herein, or
ii. Stopped by increasing the weight by volume of
drilling fluid or by the use of other conditioning
materials in the well(s), or
iii. Safely diverted intro production. Or
2. Which flow is declared to be out of control by the
appropriate regulatory authority.”
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Operators Extra Expenses (OEE)
Perluasan cover yang dapat di beli dengan additional premium

• Care Custody and Control.

• Underground Blow Outs.
• Extended Redrill.
• Unlimited Redrilling.
• Evacuation Expenses.
• Making Wells Safe.

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Polis Konstruksi dalam Industri Migas

Kegiatan konstruksi dalam industry Migas dapat

dibagi dua yaitu :

1. Konstruksi Offshore :
Yaitu semua kegiatan konstruksi yang
dilaksanakan dilepas pantai / di atas air.
(Policy Wording: WELCAR 2001)

2. Konstruksi Onshore :
Yaitu semua kegiatan konstruksi yang
dilaksanakan di darat.
(Policy Wording: Munich Re Standard
Wording)
WELCAR 2001
An Offshore Construction Project Policy

• A Principal Controlled Package Policy covering

activities including the Procurement, Construction,
Fabrication, Load Out, Towage, Installation, Testing
& Commissioning and Maintenance phases of
offshore oil and gas development projects

• The Insureds being the Field Operator and their Co-

Venturers, Contractors (of any tier), Manufacturers,
Suppliers and any Project Managers.

• The policy form was developed by the Lloyd’s

Syndicate, Wellington 2020
*Acquired by Catlin in 2007 → XL Catlin → AXA XL

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WELCAR 2001
An Offshore Construction Project Policy - Coverage

Section 1 – Physical Damage

Covered activities include: procurement, construction, fabrication, load out, loading/unloading,

transportation by land, sea or air (including call(s) at port(s) or place(s) as may be required),
storage, towage, mating, installation, burying, hook-up, connection and/or tie-in operations, testing
and commissioning, existence, initial operations and maintenance, project studies, engineering,
design, project management, testing, trials, pipelaying, trenching, and commissioning

Section 2 – Third Party Liabilities

Damage to Existing Properties (DTEP)

First Party and Third Party as referenced in the schedule of DTEP

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WELCAR 2001
An Offshore Construction Project Policy - Key Coverage

• Sue and Labour Expenses

• Removal of Wreck
• Terrorist “Buy-Back” Clause
• Offshore Cancellation Costs
• Expediting Expenses
• Forwarding Charges
• Stand- by Charges
• Tests, Leak and/or Damage Search Costs
• Defective Part Exclusion Buy Back

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Contoh Klaim di
Asuransi Migas
Lapindo Mud Flow, May 2006

- Lumpur menggenangi 16 desa di 3 kecamatan

- Tak kurang 10.426 unit rumah terendam
lumpur dan 77 unit rumah ibadah terendam
lumpur.
- Lahan tebu seluas 25,61 ha di Renokenongo,
Jatirejo dan Kedungcangkring; lahan padi
seluas 172,39 ha tergenang lumpur
- Sekitar 30 pabrik yang tergenang terpaksa
menghentikan aktivitas produksi dan
merumahkan ribuan tenaga kerja. Tercatat
1.873 orang tenaga kerja yang terkena
dampak lumpur ini.

Kerugian lebih dari Rp. 6 Triliun.

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Deepwater Horizon, April 2010

Missed opportunities

Prior to the incident, risk improvement

recommendations were identified for the integrity of
the well's cementing and the functionality of the
blowout preventer.

The work was not commissioned due to the

significant cost, and the consequences of plant a
failure were grossly underestimated. 11 fatalities,
~$40bn impact.

Other factors included:

• Mechanical Integrity

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 THANK YOU

A business of Marsh McLennan Copyright © 2024 PT Marsh Indonesia. All rights reserved.

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