Skip to main content
Marsh logo

Q1 2022

Demystifying common clauses

In the offshore oil and gas sector, an operator of an offshore facility will often route its own production through a third-party-owned platform.

Sea oil rig. Offshore oil drilling platform in the sea over yellow sun. Crude oil extraction and refining. Vector industrial landscape.
Person's name and title

By John Cooper , 

Global Chief Client Officer, Energy & Power, Marsh Specialty

01/05/2022 · 57 sec read

In the offshore oil and gas sector, an operator of an offshore facility will often route its own production through a third-party-owned platform.

These ‘tie-ins’ allow the operator of a remote well(s) to use the third party’s production facilities (such as compression) without the need to build its own platform. The third-party platforms are referred to as “host platforms”.

Many first-party physical damage policies contain a host platform endorsement that indemnifies the insured for costs contributed to the repair or replacement of the structure, or for rerouting production (to the same capacity) via another location in the event of a total or constructive loss if the owner does not replace the platform. Typically, a host platform endorsement will exclude “sue and labour” and/or “removal of wreck” costs, and will be limited to the lessor of an agreed limit, and cost of the least expensive practical alternative available to the insured.

Often there is a clause that requires the insured to not disclose this coverage to the operator of the host platform, to avoid the potential of the host platform owner relying on the insured’s policy to cover repair or replacement of the facility.

The above is a general overview of some of the coverage often provided by the aforementioned clause. It is not intended to be an extensive and exhaustive analysis of the insurance coverage provided by such clauses. The comments above are the opinion of the Marsh Specialty only and should not be relied on as a definitive or legal interpretation. We encourage you to read the terms and conditions of your particular policy, and seek professional advice if in any doubt.

If readers have particular clauses they would like us to consider including in this feature in the future, or have any comments on the above please contact John.Cooper@Marsh.com

Explore the newsletter

Renewable energy, wind energy with windmills

State of the market overview Q1 2022

05/05/2022
Aerial view of international port with Crane loading containers in import export business logistics with cityscape of Bangkok city Thailand at night

Regional updates Q1 2022

04/05/2022
Oil Drill pipe. Rusty drill pipes were drilled in the well section. Downhole drilling rig. Laying the pipe on the deck. View of the shell of drill pipes laid in courtyard of the oil and gas warehouse.

News briefs Q1 2022

03/05/2022
Law and Order, legal symbol the Scales of Justice.

Legal roundup Q1 2022

02/05/2022
Placeholder Image

Atlantic named windstorm season update Q1 2022

30/04/2022
Placeholder Image

Focus on: 100 Largest Losses in the Hydrocarbon Industry

29/04/2022

Q1 2022

Energy & Power Insurance Quarterly Newsletter

 

Explore the full report Download the PDF

Previous editions

Offshore oil and gas central processing platform in sunset, petroleum business for worldwide energy.

Article

Energy & Power Insurance Newsletter Q1 2022

21/01/2022
Placeholder Image

Article

Global Market Update

26/10/2021
Placeholder Image

Article

Energy & Power Newsletter Q2 2021

01/07/2021
Placeholder Image

Article

Energy & Power Newsletter Q1 2021

29/04/2021