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Shs50.4b underwritten by local firms in oil insurance consortium
The oil rig during the assembling process at Kingfisher oil field in November last year. PHOTO/COURTESY OF CNOOC
What you need to know:
- Some of the main projects insured include the crude oil pipeline and the KingFisher project. New prospects according to officials are underwriting oil and gas risks, contractors’ all risks, claims and loss adjusting, liabilities and business interruption, and reinsurance for oil and gas risks.
The local insurance sector players under the Insurance Consortium for Oil and Gas Uganda (ICOGU) say that in 2023, they posted 13 million dollars (about Shs50.4 billion) out of the total investment of $20 million (about Shs77.6 billion).
Some of the main projects insured include the crude oil pipeline and the KingFisher project. New prospects according to officials are underwriting oil and gas risks, contractors’ all risks, claims and loss adjusting, liabilities and business interruption, and reinsurance for oil and gas risks.
Speaking to the media about a three-day symposium on oil and gas in Kampala, Mr James Maguru, Consortium leader ICOGU said that Uganda’s oil and gas consortium under the local content law has already underwritten risks from the Tilenga, Kingfisher and East African Crude Oil Pipeline (EACOP) project with an eye on more to come.
“For the Tilenga project which is our largest project and for which we issued three policies; the contractors' all-risk policy, the excess third party liability policy and the operators' extra expenses. Three policies for Tilenga unlocking a premium of $12.8 million,” he said.
He added: “The other project that we did work on is East African Crude Oil Pipeline (EACOP) for that project; for the policies issued in Uganda, we generated $2.3 million out for the two policies issued. The third one is the Kingfisher development project. We issued three policies that are contractors' all-risk policies, the excess third-party liability policy and the operator's extra expenses, for those we generated $5 million. In total we summed up 20 million dollars.”
In effect, of the underwritten premium about 64 per cent has been collected.
He added that the insurance projects are aimed at de-risking which requires insurance policies issued to be locally placed.
Notable is that of the expected more than 10 billion dollars to be invested in the development stage, how could the whole insurance sector of Uganda have underwritten only 20 million dollars?
Mr Denzel Mensah, the Chartered Insurance broker at Price Forbes & Partners said there is a reason for things starting up slowly in this kind of industry.
“There is a huge risk being taken upon and it would be unwise to ascertain rights and risks without having the capacity. To the expertise, these things happen in baby steps,” he said.
The insurance sector has now organised a three-day oil and gas symposium to address and brainstorm on the opportunities and challenges in the fast-evolving oil and gas sector in Uganda.
Mr Jonan Kisakye, chief executive officer of the Uganda Insurers Association (UIA) noted that the biggest challenge is the human resource capacity.
“The symposium will address the human resource capacity. Unless we have the required skills in terms of skills transfer to the Ugandans who are negotiating these risks; then we are in a bit of a challenge,” Kisakye revealed.
