Application of Umbrella Insurance Agreements to cover the risks of upstream oil and gas operations

Achieving the results of upstream oil and gas operations in order to attract international investment is essentially possible by preventing or fully covering the risks posed by them, and to ensure this, several insurance methods have been used so far; Umbrella insurance agreement is one of the new innovations whose applications in the Iranian legal system have remained unknown and the purpose of writing this article is to identify this insurance method.

In order to achieve the objectives of the research, the authors have used the library method and review of sample agreements provided by some international insurance companies as well as similar insurance contracts.

In comparison with the usual insurance methods in the insurance industry and umbrella insurance agreements, the authors found out that Spending less time, paying lower premiums, conducting more negotiated negotiations, less contractual disputes, more flexibility in inserting insurance coverage and, most importantly, the ability to extend it to employers, major contractors and subcontractors involved in a project are some of the advantages that will be achieved if umbrella insurance agreements are used in upstream oil and gas projects.

In the course of this study, umbrella insurance agreements are able to cover the risks of all upstream oil and gas phases, including exploration, evaluation, development and production, also this kind of agreements can provide suitable insurance coverage under a single agreement for risks such as oil leakage from Wells, eruptions, loss of drilling mud, clogging of drilling tools in wells, breaking of wall pipes, damage to equipment during transfer to offshore areas, damage to production and extraction equipment, infliction of casualties and financial damage to third parties, Environmental pollution, suspension and delays in operations, damage to maritime cargo and the like, which reveals the need for immediate adoption of this insurance method in upstream oil and gas operations.