Oil and Gas Training Lusaka April 2016

Oil and Gas Risk Exposures Oil and gas value chain Exploration & Development Hydrocarbon Production Shipping Refining & Blending Storage Distribution Marketing

Oil and Gas Risks and Exposures (E&P cycle) NIGERIAQIT CAMEROUN Abandonment Acreage acquisition LAGO S Reservoir Mgt Operations QI L Basin analysis Facilities installation Exploration and Production Life Cycle Prospect generation Facilities construction Facilities design Economic analysis ATA Field development Wildcat Drilling Field Development Plan Appraisal drilling Economic analysis 6 (Rated B+ by AM Best)

NO INSURABLE ACTIVITY AT THIS STAGE FIRST PHASE ACREAGE ACQUISITION NO INSURABLE ACTIVITY AT THIS STAGE

Production Sharing Contract (PSC) Agreement between Host Nation and Foreign Oil Company to explore for Hydrocarbons within an agreed ‘Block” Valid for a set number of years with a commitment for a minimum amount of exploration Price is paid to “lease” the block Royalty and/or % split of “Profit Oil” is determined.

Oil and Gas Risks and Exposures (E&P cycle) NIGERIAQIT CAMEROUN Abandonment Acreage acquisition LAGO S Reservoir Mgt Operations QI L Basin analysis Facilities installation Exploration and Production Life Cycle Prospect generation Facilities construction Facilities design Economic analysis ATA Field development Wildcat Drilling Field Development Plan Appraisal drilling Economic analysis 6 (Rated B+ by AM Best)

BASIN ANALYSIS AND PROSPECT GENERATION SECOND PHASE BASIN ANALYSIS AND PROSPECT GENERATION

Oil and Gas Formation

Oil and Gas Reservoir

Seismic Surveying

SEISMIC OPERATIONS PHYSICAL DAMAGE LIABILITY EXPLOSIVES - IN TRANSIT / IN STORAGE AUTOMOBILES SEISMIC VESSEL LIABILITY THIRD PARTY LIABILITY EMPLOYERS LIABILITY } OWN EMPLOYEES WORKMANS COMPENSATION LOW RISK PHASE OF OPERATION

READ THE CONTRACT NOT JUST THE INSURANCE SECTION OF THE CONTRACT INSURANCE CLAUSE LIABILITY CLAUSE INDEMNITY CLAUSE

Oil and Gas Risks and Exposures (E&P cycle) NIGERIAQIT CAMEROUN Abandonment Acreage acquisition LAGO S Reservoir Mgt Operations QI L Basin analysis Facilities installation Exploration and Production Life Cycle Prospect generation Facilities construction Facilities design Economic analysis ATA Field development Wildcat Drilling Field Development Plan Appraisal drilling Economic analysis 6 (Rated B+ by AM Best)

WILDCAT and EXPLORATION DRILLING THIRD PHASE WILDCAT and EXPLORATION DRILLING

Major Risks Associated with Oil and Gas Upstream Well Blowout: Costs of control: Loss of the Well:

Major Risks associated with Oil and Gas POLLUTION AND OTHER THIRD PARTY LIABILITY RISKS

Well Layout

Directional Drilling

Jack-Up Rigs

Semi-Submersible Rigs

Drill Ships

Drill Bits

Mud System

Drill Pipe

Well Casing

Blowout Preventer

Establishing Production

When Things Go Wrong!

Deepwater Horizon

Deepwater Horizon Recovery Measures

Major Risks Associated with Oil and Gas Upstream Well Blowout: Coverage required. Associated costs including Costs of control, Re-drilling costs, Clean-Up of seepage and pollution Operators Extra Expenses (OEE)

Major Risks associated with Oil and Gas Third party liabilities in all stages: (CGL) Comprehensive General Liability Insurance

EXPLORATORY DRILLING (1) PHYSICAL DAMAGE RIG DRILLING EQUIPMENT / CONSUMABLES IN HOLE EQUIPMENT AUTOMOBILES CARE CUSTODY AND CONTROL CARGO

EXPLORATORY DRILLING (2) LIABILITY OF OPERATOR THIRD PARTY LIABILITY EMPLOYERS LIABILITY WORKMANS COMPENSATION OPERATORS EXTRA EXPENSES (INSURANCE OF THE WELL) COST OF WELL CONTROL REDRILLING EXTRA EXPENSES CLEAN UP OF SEEPAGE / POLLUTION

DRILLING OPERATIONS OFFSHORE WELL Drilling Equipment offshore PHYSICAL DAMAGE and DRILLING OPERATORS LIABILITIES Drill ships Jack-up drilling units Semi-submersibles Submersibles/swamp barge

Oil and Gas Risks and Exposures (E&P cycle) NIGERIAQIT CAMEROUN Abandonment Acreage acquisition LAGO S Reservoir Mgt Operations QI L Basin analysis Facilities installation Exploration and Production Life Cycle Prospect generation Facilities construction Facilities design Economic analysis ATA Field development Wildcat Drilling Field Development Plan Appraisal drilling Economic analysis 6 (Rated B+ by AM Best)

COVERAGES AS PER EXPLORATORY DRILLING FOURTH PHASE APPRAISAL DRILLING COVERAGES AS PER EXPLORATORY DRILLING

Oil and Gas Risks and Exposures (E&P cycle) NIGERIAQIT CAMEROUN Abandonment Acreage acquisition LAGO S Reservoir Mgt Operations QI L Basin analysis Facilities installation Exploration and Production Life Cycle Prospect generation Facilities construction Facilities design Economic analysis ATA Field development Wildcat Drilling Field Development Plan Appraisal drilling Economic analysis 6 (Rated B+ by AM Best)

FIELD DEVELOPMENT CONSTRUCTION FIFTH PHASE FIELD DEVELOPMENT CONSTRUCTION AND INSTALLATION

Major Risks Associated with Oil and Gas Loss of or damage to production/process equipment during Construction Fabrication, load-out, installation, testing and commissioning: (CAR or OFFSHORE BUILDERS’ RISKS)

Construction and Installation (1) PHYSICAL DAMAGE CONSTRUCTION INSURANCE ON PRODUCTION FACILITIES (ON/OR OFFSHORE) DRILLING EQUIPMENT / CONSUMABLES IN HOLE EQUIPMENT AUTOMOBILES CARE CUSTODY AND CONTROL CARGO FSO/FPSO AND ALL MOORING FACILITIES

Construction and Installation (2) LIABILITY LIABILITY UNDER CONSTRUCTION POLICY LIABILITY FOR DRILLING OPERATIONS EMPLOYERS LIABILITY WORKMANS COMPENSATION OPERATORS EXTRA EXPENSES (DRILLING AND EXISTING) COST OF WELL CONTROL REDRILLING EXTRA EXPENSES CLEAN UP OF SEEPAGE AND POLLUTION

Construction of Fixed Platform

Oil and Gas Risks and Exposures (E&P cycle) NIGERIAQIT CAMEROUN Abandonment Acreage acquisition LAGO S Reservoir Mgt Operations QI L Basin analysis Facilities installation Exploration and Production Life Cycle Prospect generation Facilities construction Facilities design Economic analysis ATA Field development Wildcat Drilling Field Development Plan Appraisal drilling Economic analysis 6 (Rated B+ by AM Best)

FACILITY OPERATIONS AND RESERVOIR SIXTH PHASE FACILITY OPERATIONS AND RESERVOIR MANAGEMENT

Major Risks Associated with Oil and Gas Loss of or damage to production/process equipment during operation: Operational All Risks Insurance Upstream Downstream

PRODUCTION (OPERATION) (1) PHYSICAL DAMAGE ONSHORE PRODUCING ASSETS OFFSHORE PRODUCING ASSETS OIL STOCKS OIL AND GAS STOCKS FSO/FPSO AND MOORING SYSTEMS PIPELINES DRILLING EQUIPMENT / CONSUMABLES IN HOLE EQUIPMENT AUTOMOBILES CARE CUSTODY AND CONTROL CARGO

PRODUCTION (operational) 2 LIABILITY THIRD PARTY LIABILITY EMPLOYERS LIABILITY WORKMANS COMPENSATION OPERATORS EXTRA EXPENSES (DRILLING AND EXISTING) COST OF CONTROL REDRILLING EXTRA EXPENSES CLEAN UP OF SEEPAGE AND POLLUTION

Oil and Gas Risk Exposures Oil and gas value chain Exploration & Development Hydrocarbon Production Shipping Refining & Blending Storage Distribution Marketing

Other insurances in the value chain REFINING,STORAGE and DISTRIBUTION

Refining and storage Physical Damage and Liabilities Refineries LNG plants Petrochemical plants Fertiliser plants Storage depots Stocks of crude and product All Risks coverage Machinery Breakdown Business Interruption Liabilities

Transportation Physical damage and liabilities Pipelines/Compressor Stations Road tankers (land) Oil tankers (sea) LNG carriers LPG carriers Product in transit Product in pipelines Coverage Hull Cargo All risks Property All Risks Auto Associated liabilities

Recommended coverage Operator extra expenses (Insurance of the wells drilling, in production, work over and suspended) Coverage: EED8.86+ALL EXTENSIONS Well control Re-drilling extra expenses Clean up of seepage and pollution Combined single limit for offshore operations a minimum of five times AFE for onshore a minimum of three times AFE

Recommended coverage Liability Offshore operations minimum limit $100million any one occurrence. Onshore operations minimum limit $50million any one occurrence.

Recommended Coverage Physical Damage of production assets under construction (offshore): WELCAR 2001 WITH EXTENSIONS Sum insured: Full contract value plus 25% Sub limits for defective parts, leak search, removal of debris, mobilisation & de-mobilisation etc

Recommended coverage Physical damage of production assets in operation: ALL RISKS POLICY FORM. Sum insured: New replacement value Sub limit removal of debris.

Other Coverages Construction Delay in Start up Operational Loss of Revenue/Business Interruption

THANK YOU