Energy risk insurance

Energy Risk Insurance

The largest losses that can occur during the development and operation of oil, gas and water wells are associated with a breakdown or failure of well processes and an unplanned flow of drilling mud, oil, gas or water blowing out to the surface or to the seabed.

What energy risk insurance covers

It makes it possible to compensate the costs associated with restoration, firefighting, redrilling and other
work to restore the operation of the well.

Insured risks:

• well control costs;
• seepage and pollution;
• redrilling;
• evacuation costs;
• well safety assurance;
• underground blowout;
• relief well drilling;
• equipment in care, custody and control (third-party property).

Additional risks:

• stuck pipe string;

• interformation crossflow of formation fluids;

• accidents during well logging and perforating/blasting operations;

• loss of drilling and/or cement slurry circulation;

• casing string leaks;

• accidents involving drill string components;

• accidents involving rock-cutting tools;

• foreign objects falling into the well;

• collapse of the drilling rig or its components.

Why energy risk insurance is needed
• High costs of killing a blowout well;
• High costs of cleaning up the blowout area and the consequences of the blowout. Well operators/owners may bear strict liability for environmental pollution;
• Redrilling a well to the depth it had reached before the blowout may cost twice as much as the original drilling.

Insurance rate and insurance premium
The rate is set depending on the terms of the insurance contract, the amount of the deductible, the type of well, the number of risks, the depth of the well and other factors. The insurance premium is directly related to the insurance rate, as it is its monetary expression. The rate may be influenced both by the risk conditions and by the capabilities of the insurance company.

Energy risk insurance contract

Energy risk insurance is a voluntary type of insurance. The insurance contract is concluded in writing. For advice, please contact the insurance brokers and agents listed in the association registry.