Perils encountered by oil and gas facilities can be classified generally under two headings, in terms of existence:
Onshore and offshore risks.
And in terms of types, they can be classified into
1/ Perils of physical damage such as
(a) Fire: Fire is considered as the most expected perils because of the flammable materials and oil and gas blast.
(b) Chemical perils such as explosion and boiling
(c) Natural perils such as, hurricanes, floods, earthquake, volcanoes, lighting and rain.
(E) Social and political perils such as demonstrations, turmoil, riots, and malicious accidents.
(f) Other perils for example: air crash, objects falling.
This peril could be a real obstacle for the continuation of operation. Sometimes it causes halt of production for a long period and that in turn can cause considerable material losses. Corrosion is defined as " the degradation of materials by chemical reaction with the environment in which the material resides " this because of the metal oxidation
the presence of hydrocarbon, sulphur dioxide and nitrogen in the form of gas or liquid some of which go in the air and other leak into the water causing pollution. This peril can be categorized under public liability.
4/ Perils of public liability.
5/ Perils of the Dependent risks.
It should be taken into account that an installation can be exposed to such risks at any phase of oil exploration and it could even be exposed to all these risks.
Factors of pricing and subscription
1-Totally excluded risks (absolute exclusions) which cannot be covered even by additional premium, such as:.
2-Excluded perils however it could be covered by additional premium (perils are excluded according to standard policy) .Perils of this type includes: subsidence landslip, sabotage and terrorism.
3-Excluded perils, because they have specialized policies such as: machine and vehicle breakdown, marine insurance and so on.
It is to be noted that, there are some coverage offered by the policy without imposing additional premium like: