London | 11 April, 2022
According to a new report by Marsh, the world’s leading insurance broker and risk advisor, the global hydrocarbon extraction, transport, and processing industry experienced a significant reduction in the number of major property damage losses during 2020-2021, due to the combined impact of the COVID-19 pandemic and well-executed business continuity planning.
The report, 100 Largest Losses in the Hydrocarbon Industry, which is published by Marsh Specialty, details the most significant property damage losses in the global hydrocarbon industry since 1974 (based on asset values at December 31, 2021).
In the 27th edition, only two new major property damage losses enter the top 100. Both were incurred in 2020 totaling US$500 million; a fire and explosion at an oil refinery in South Africa (July 2020), and a fire at a LNG facility in Norway (September 2020). Combined, these incidents amount to the lowest average amount for any two-year period recorded in the report since 1995/1996.
According to the report, concerns of increased losses which arose at the outset of the pandemic failed to materialize, possibly in part due to a reduction in site-based activity and the industry’s effective approach to safe work practices. However, Marsh notes that emerging risks – such as extreme weather events and cyber perils – pose a growing threat to energy assets and security of supply.
Losses not categorized exclusively as energy property damage events – such as the Port Of Beirut ammonium nitrate explosion in 2020, Winter Storm Uri, and the six-day blockage of the Suez Canal in 2021 – are not captured within the analysis. However, the report notes that their impact on the energy industry highlights the need for greater operational resilience and improved process safety practices to reduce the risk of future losses.
Andrew George, Global Head, Energy & Power, Marsh Specialty, said: “Throughout the COVID-19 pandemic, the global energy industry maintained essential services and supplies amid fluctuating demand, and in the face of many challenges related to people and process risk. Building greater resilience to emerging risks in particular is crucial as the energy sector continues to transition and evolve.”