Liability rise from $75m to $10bn will leave just three drillers
PFC Energy says raising the liability cap in the Gulf on Mexico from $75m to $10bn will make insurance so expensive 100 small operators will pull out, leaving just BP, Shell and ExxonMobil, the FT reports.
The PFC report says:
- Raising the cap to at least $10bn appears inevitable
- Smaller operators will be priced out by higher insurance rates and impractical bond options
- Operators with large shareholder equity can establish self-insurance. Companies such as Shell and ExxonMobil could benefit as small firms exit.
- Small operators may need to band together under a form of group insurance.