Marsh has issued a warning on the risks presented by decommissioning offshore oil assets.
A recent Marsh workshop identified 33 separate risks — from environmental concerns to brand and reputational risks.
Ray Spreadbury, senior vice-president at Marsh's marine and energy practice, said: “Most decommissioned offshore assets have little insurable value, which means the insurance issues come down to possible liabilities during their removal and disposal, or reputational risks surrounding possible environmental damage and perceived obligations when removing the platforms.
“Basic insurance cover tends to take into account general third party liabilities, pollution and removal of debris. This overlooks the increasing need for reputational protection as the power of non-government organisations rises. Protests regarding the disposal of the Brent Spar oil buoy in 1995 demonstrated the influence of such groups on decision making in terms of risks.
“Companies are now choosing to dispose of their offshore platforms in a manner which addresses the concerns of environmental groups, which requires risks beyond the physical removal to be considered. Risks such as removal of wreck, property damage or bodily injury are high when removing redundant commercial items from operation.”
He added: “In our experience, insurance should be flexible enough to deal with these uncertainties, particularly in a field where there is so much risk in both the planning stages of decommissioning and the actual operation. Marsh takes the approach of making sure operators and contractors have the comfort of knowing insurers are flexible to pre-approve the action.”
