There are no significant differences in the principal insurance structure in the energy sector or in the project and infrastructure sectors. (Please see attached web-link.)
However, in respect of the insurance lines in Upstream Energy Development and Production, there is a unique line of business in this project field, which is not seen in other project fields. That is “Cost of Control Insurance in Blowout Incidents”. (We call it “COC/COW/OEE” as per below.) Such special insurance will be introduced briefly below.
|Insurance line||Contents of the Terms|
|Energy Exploration and Development Insurance（COC/COW/OEE)
We describe it as…
COC (Cost of Control)
COW (Control of Well)
OEE (Operator’s Extra Expense)
|This insurance covers the costs which the policyholder paid in respect of controlling the blowout as per below items.
* Drilling wells (exploration wells, appraisal wells, development wells), production wells, suspended wells, injection wells, plugged & abandoned wells, workover wells.
* Relief well will be covered subject to prior notice and agreement with insurers.
* Limit should be calculated on a combined single limit basis, which also should be summed from Section A to Section C.
* It is generally said that the standard of limit of liability for this coverage is about 3 to 5 times the AFE amount for drilling at a project field, and 4 to 6 times the AFE amount in deep-sea (water-depth more than 1,000m) areas, e.g., the Gulf of Mexico. Your choice of how what amount to set as the limit should depend on project plans and any other factors such as well depth and pressure.