Analysis of Risk Allocation of Blowout and Kick in Offshore Drilling Contracts and ‎Insurance Coverage of those Risks

Document Type : ISI

Authors

1 Associate Professor of Law & Political Sciences Faculty of Allameh Tabataba'i University

2 Ph. D student of Management of International Oil and Gas Contracts, Law & Political Sciences Faculty of Allameh Tabataba'i University

Abstract

Since 150 years ago, when oil exploration began, significant advances‎have been made in exploration technologies. Notwithstanding this, drilling is still the only ‎definitive method for ‎determining the presence of the hydrocarbon ‎reservoirs in a formation. Due to the nature of the drilling and lack of ‎sufficient information in the oil and gas fields, exploration projects carry ‎hidden risks. ‟Loss ‎circulation” that can cause “Blow-out” and ‟Kick” is one of ‎the most prominent hazards in Exploration Drillings. Risk ‎management in offshore ‎exploration contracts is of the utmost importance and one of the ‎efficient ‎risk management’s methods is ‟Insurance”. In this article the allocation ‎of ‎risks in Day rate, Turnkey, and Footage Drilling Contracts for “Blow-out” ‎and ‟Kick” risks will be examined and ‎according to the Insurability Criteria ‎and Energy Exploration and Development (EED) ‎policy wording it will be ‎showed that “Kick” as a drilling risk and a kind of “Blow out”- ‎depending on ‎the situation- is not insurable through the standard available ‎insurance ‎policies in the market.

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Main Subjects


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