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Insurance companies form body to cover risks in oil and gas industry
Insurance companies form body to cover risks in oil and gas industry
What you need to know:
Insurers have formed a consortium that will allow companies to insure against risks in the oil and gas industry, Martin Luther Oketch writes.
The Oil and Gas industry is constantly changing. From drilling operations to services contractors to manufactures of related parts and products, insurance covers should be created for safety.
Uganda is currently at the development stage of its oil and gas industry. Apart of from infrastructure, it also requires insurance covers against risks. Uganda’s insurers are gearing up for the oil rush. Besides what is going on in the oil and gas development, insurances companies are also preparing themselves by forming a consortium body to provide insurance services to players in Uganda’s oil and gas industry.
To meet the needs of an industry as demanding as oil and gas, oil companies need an insurance agency that is committed to building a relationship with your business. Oil companies have the power to ask any question that comes to their mind and they can expect all of their concerns will be addressed diligently and professionally.
In the face of the above, Uganda’s Oil and Gas sector has to be insured by the insurance companies in the country to guard against calamities.
The coordinator of Oil and Gas Uganda Insures Association, Ms Margie Lokowe, in an interview with Daily Monitor, said Uganda insurance companies are preparing to provide insurance services to players in Uganda’s oil and gas industry. They have already formed an insurance consortium comprising of 14 insurance companies with members contribution reaching $2 million.
Ms Lokowe said two more insurance companies will be joining the consortium, which will bring its membership to 16 companies ready to provide insurance services to oil companies operating in Uganda.
“We have been engaging international oil companies to provide insurance services to them. Some of the areas which we are going to provide insurance services is the East African Crude Oil Pipeline internally under the guideline of local content policy before the oil or gas can get reinsured outside Uganda,” she said.
Local insurance companies are being trained about the policies that will protect workers in the oil and gas industry.
Ms Lokowe said: “We are gradually increasing capacity to bring in more members and write bigger risks in the Oil and gas industry in Uganda.”
The impact of insurance in the growth of oil and gas industry in any given country producing oil is that insurance plays a vital role in the petroleum sector from the mining of petroleum products to its final use.
ABM Insurance &Benefit Services, Inc OF America says the current picture globally and domestically indicates that the austere climate in the oil and gas industry will require companies to do more with less as they struggle to balance operational efficiency and work safety. Even when expenditures are constrained, it is vital that executives keep in mind how hazardous the industry can be, and continue to prioritise employee safety.
The sharp increase in automation in oil and gas exploration and production also affects safety standards. Automated processes have helped reduce workers’ exposure to injury, but the inherent dangers of working in this business persists. Improvements in technology have created a new type of threat-complacency.
Companies occasionally confuse a reduction in risk with immunity to risk and as a result, may fail to monitor safety processes as closely as they should. Better technology cannot fully eliminate safety risks, whatever the economic conditions.
For these reasons, insurers say companies must remain diligent while proactively pursuing good safety practices. One low-intensity but high-yield option is to send more employees to safety education and training programmes.
Locally, oil and gas executives and companies alike are grappling with the most challenging business environment in recent history, ranging from accidents to drops in oil prices and diminished cash flow. Some exploration and production companies are limiting capital expenditures and slashing payrolls, in preparation for what could be a sustained downturn.
“While such course corrections are necessary to protect the bottom line, reducing a company’s commitment to safety and well-being of its workforce should not become an unintended consequence. Prudent safety practices and talent retention efforts can go a long way towards easing the blow of challenging conditions,” says AMB.
ABM and Benefit Insurance Inc adds: “For machinists, electrical contractors, business consultants, engineers and small engine repair providers who work in the oil and gas industry, a large many situations that could lead to a serious accident without a moment’s notice.”
The first and foremost danger that oil companies are faced with every day is that oil and gas are two of the most flammable substances out there.
Secondly, there are risks of an oil or gas spill. Some of the most common accidents that take place in the oil and gas industry include: gaseous blowouts of hydrocarbon, high pressure accidents, Hydrocarbon spills and leaks, Pipeline explosions and tanker accidents. Such accidents can severely alter an employee’s physical ability and appearance. This is just one of the many reasons why local insurance companies should be adequately prepared with an efficient oil and gas insurance policy.
DANGEROUS
The oil and gas industry is by far one of the most dangerous fields of employment. Workers are physically handicapped and lose their lives doing this work every year. Therefore, it is important to have the right insurance policy for this industry.
