Offshore Oil Drilling Insurance to Shrink as Providers Flee BP-Like Risk

[highplainsdem]

Source: Bloomberg

Offshore Oil Drilling Insurance to Shrink as Providers Flee BP-Like Risk
By Natalie Obiko Pearson - Jun 23, 2010


BP Plc’s rig explosion that caused the worst oil spill in U.S. history is set to curtail insurance coverage for offshore drilling, forcing companies to self-insure or exit deepwater fields.

BP’s leak in the Gulf of Mexico is “a market-changing event,” said Dieter Berg, senior executive manager marine at Munich Re, the world’s biggest reinsurer and among those exposed to losses. “Buyers and sellers of coverage will be reevaluating their appetites for offshore energy risk,” said Berg in a June 11 e-mail response to questions.

Proposals in Congress to raise U.S. liability costs to $10 billion to drill for oil in the Gulf could leave just three companies -- BP, Exxon Mobil Corp. and Royal Dutch Shell Plc -- with the finances to self-insure, energy consultant PFC Energy said June 15 in a memo to clients.

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Insurers are charging 50 percent more for policies covering oil rigs in deep waters since the BP leak, Moody’s Investors Service said on June 3. R.S. Sharma, chairman of India’s biggest explorer Oil & Natural Gas Corp., said June 11 it would have cost the state-owned company three times as much if it had renewed its offshore policy after the disaster.

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Read more: http://www.bloomberg.com/news/2010-06-24/offshore-oil-drilling-insurance-to-shrink-as-providers-flee-bp-like-risk.html

[lonestarnot]

1. Interesting.

Is the last line really what you meant?

[Heywood J]

2. After this, someone realistically expects BP to

still have the money to self-finance? By the time the lawsuits and payouts finish, it'll be interesting to see whether they're still solvent.