1. The Standard Club
P&I Cover for Offshore Operations
25 October 2016

2. What do we mean by offshore P&I?
Offshore operations are not pure contracts of carriage of cargo/people from A to B.
Directly or indirectly involved with oil and gas exploration and production or construction.
Higher and disproportionate risks.
No or limited access to poolable cover because of the nature of the contract, activity or type of ship.
What do we mean by Offshore P&I – why is it different from conventional shipping.
Read slide :
LINK TO SLIDE : Here are 2 well known examples of the high risks this industry

3. Standard P&I Poolable cover
Mutual Cover for mutual risks
rules cover
crew
pollution from the ship
wreck removal of ship
collision / dock damage
cargo / property on board
Limits
$7.6 billion (approx)
$2bn in respect of passengers
$3bn in respect of passengers and crew
$1bn pollution
Poolable cover governed by the POOLING AGREEMENT

4. Non-pool risks Fall in to 3 basic categories: contracting
type of activity
type of ship.

5. Contracting INDEMNITIES – basic premise
Not to contract for liabilities that would not have arisen but for terms of the contract.
at law
Knock for Knock

6. Type of contract Semi Submersible Towage
A semi submersible ship carrying very expensive cargo
Loss of drilling unit, its wreck removal and the impact on the drilling and production campaign can be expensive .
Tug towing very expensive FPSO- line snaps due to bad weather , lose FPSO ,poss wreck removal of FPSO and daily loss production and for how long.
LINK TO SLIDE : Is it any wonder why conventional ship owners do not think that is mutual risk? Let us see what the PA says about semi submersible ships and ships providing towage services
Semi Submersible
Towage

7. Heavylift
Pool cover in respect of cargo carried on semisubmersible heavy lift ship
(or other vessel exclusively designed for the carriage of heavy lift cargo)
BUT only when contracting on heavycon terms
non-poolable extension required – any contractual exposure to cargo.
Which market is appropriate? First party property risk or third party liability?

8. Towage By an entered ship:
No liability for loss of, damage to or wreck removal of tow
Except where saving life or property at sea.

9. Type of activity Specialist operations
Rule 5.11 – Non Exhaustive Definition
“including but not limited to dredging, blasting, pile driving, well stimulation, cable or pipe laying, construction, installation or maintenance work….”

10. Type of activity Specialist operations Pooled if:
personal injury
wreck removal
pollution from entered ship
Not poolable: liabilities to 3rd parties arising
(i) during the course of performing specialist operations
(ii) as a consequence of the specialist nature of the operation
Excluded: failure to perform / fitness for purpose / contract work

11. Type of ship – FPSO & MODU

12. Type of ship Drill Exclusion 5.12.1 of the P&I rules currently reads:
“Liabilities incurred in respect of the ship, being a ship or any other description of vessel or unit constructed or adapted for the purposes of carrying out drilling operations in connection with oil or gas exploration or production”.
What does this mean?
All P&I liabilities are non poolable.

13. Type of ship Production
“Liabilities incurred in respect of the ship….employed to carry out…. production operations in connection with oil or gas exploration, to the extent that such liabilities arise out of or during drilling or production operations”.
What does this mean?
navigation = potentially poolable
production operations = non poolable from entry to the field.
NB Storage unit directly connected to the well or oil and gas separation equipment on board are NON poolable.

14. Standard Offshore Rules
BUT Excludes ‘Field Risks’:
Pollution from hole/subsea (and damage caused by pollution)
Control of well costs (e.g. blow out)
Property well side of PLEM
Wreck removal of down hole property.

15. Type of ship
Accommodation vessels:

16. Type of ship Accommodation vessels:
Contractual extension required – Liability for non marine personnel (unless approved contract – undefined – but must be k4k)
Non pool absolutely where integral to production or drilling operation.
Generally accepted that if with bridging span of drill/ production platform not pooled.

17. P&I Solutions Mutual (poolable) P&I.
P&I with extended (non-poolable) covers:
salvors’ extension
offshore extension
contractual extension.
Standard Offshore P&I rules.
Highest non-pool limits available in the market with A rated security or higher.
And so to summarise what those covers look like.
Poolable /Mutual cover
Non Pool Extended Covers for salvors, Offshore Extension ( such as sp op/ divers /ROV) Contractual Extension
Non Pool Standalone covers for MODU and FPSOs.
And we will look at some of these non pool covers shortly.
LINK TO NEXT SLIDE :The Club’s Non Pool RI programme provides cover of up $1 bn ( unique as no other competitor has this high limit ) and the Club has full underwriting authority to provide the cover .

18. Regulatory status
The Standard Club Ltd is regulated by the Bermuda Monetary Authority. The Standard Club Ltd is the holding company of the Standard Club Europe Ltd and the Standard Club Asia Ltd. The Standard Club Europe Ltd is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The Standard Club Asia Ltd is regulated by the Monetary Authority of Singapore. Charles Taylor Services Limited (CTS) is authorised and regulated by the Financial Conduct Authority to carry out general insurance mediation activities for commercial clients. For more details please see or call the FCA on CTS is a wholly-owned subsidiary of Charles Taylor Holdings Limited. The ultimate parent and controlling company is Charles Taylor plc.