Economic Feasibility of the Profitability of Insurances Related to Oil and Gas Wells

Sadeghi Shahedani, Mehdi and Askari, Mohammad Mahdi and Maleki Nejad, Amir (2017): Economic Feasibility of the Profitability of Insurances Related to Oil and Gas Wells. Forthcoming in: World Journal of Environmental Biosciences , Vol. 6, No. Supplementary (9 September 2017): pp. 6-14.

Abstract

Insurance is among the most important tools that have been devised to prepare readiness for dealing with threats. These valuable man-made tools with their capabilities have controlled many undesirable effects of unforeseen events. In each country, growth and development of insurance industry is considered as an indicator for evaluating the level of development. From the perspective of insurers, the risks of energy, especially the oil and gas industry, are known as high risks. Economic feasibility of the profitability of insurance related to oil and gas wells is the aim of this study that was performed through damage coefficient indicators and profit margin with scenario planning using engineering economics method. The results of this research indicate that the damage coefficient of this field of insurance is much lower than the whole insurance industry and have a suitable and very high profit margin. Therefore, due to the low damage coefficient and high profit margin and the stability of these types of insurance, their profitability is confirmed economically and investment and providing insurance coverage is adequately justifiable for these types of risk.

• Item Type: MPRA Paper
• Language: English
• Keywords: economic feasibility, profit margin, insurance, oil and gas wells.
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G22 - Insurance ; Insurance Companies ; Actuarial Studies; P - Economic Systems > P4 - Other Economic Systems > P48 - Political Economy ; Legal Institutions ; Property Rights ; Natural Resources ; Energy ; Environment ; Regional Studies

References

Bahmani, Haidar, (2012) "Principles of engineering and blowout control operations and Containment of oil and gas wells" Tehran: Publication of Science and Technology Park, Tehran University

BP, (2010). Deepwater Horizon accident investigation report, Bp express

Collin, Leach. (2013) “deep water well control”, Argonauta Drilling Services L.L.S, 2-3

DaghighiAsli, AR, M, NouroziShima, (2012) economic feasibility of establishing specialized company of oil, gas and petrochemical insurance in Iran, Journal of Insurance, twenty-seventh year, No. 2, pp. 158-135.

Danaher, B., (1994). Risk management an oil and gas industry perspective. Represented in Health & Safety Conference.

Derakhshan M., (2010) Development of insurance coverage in oil and gas and petrochemical industries, Journal of energy range, fourth year, No. 45

Dezhipeng David, (1993), Insurance and Legal Issues in The Oil Industry, Kluwer Academic Publishers Group.

Doukas, H., Flamos A. and Psarra, J. (2011). Risks on the security of oil and gas supply. Energy Sources, vol.6, no. 4.

Ebrahimi, Seyednasrolah (2009), the need for mutual interaction of Insurers and policyholders in implementing upstream projects of oil and gas industry, 26 and 27 of September 2009, Tehran, Second Conference of Oil and Gas and Petrochemical insurance, Tehran

Fossli, B. and Sangesland, S. (2004): “Managed Pressure Drilling for Subsea Applications; Well Control Challenges in Deep Waters,” Proc., 14th Deep Offshore Technical Conference, New Orleans.

Grace, (2003). Blowout and well control handbook. Houston: Gulf Professional Publishing.

Greene, Mark R.; Trieshman, James (1988). Risk and Insurance,9th ed, Cincinnati. Ohio: South- western Pub. Co.

HeidarBahmani, Khalil Shahbazi, M, Makvandi, Mustafa MoradiNejad (2011), blowout control operations and Containment of Naftshahr 24 oil well, The scientific journal of exploration and production of oil and gas, No. 80, p. 35-41

Imran, Muhammad. (2013), A Critical Review of an Improved Well Control Procedure for The Prevention of Blowouts, Dalhousie University, Faculty of Engineering, Halifax, Nova Scotia, for the degree of MEng in Petroleum Engineering

IXTOC-1 Mexico, (1979). The IXTOC-I Well Blowout: The Gulf of Mexico.

King, Rawle O. (2010), Deepwater horizon oil spill disaster: risks, recovery, and insurance implications, US congressional research service.

NoussiaKyriaki (2012), Environmental Pollution Liability and Insurance Law Ramifications in Light of the Deepwater Horizon Oil Spill, Springer-Verlag Berlin Heidelberg.

Panahi Azad Maryam et al (2012), investigating the role and structure of insurance in risk management of oil, gas and petrochemical industries, presented in the second Conference of Planning and Environmental Management

Patricia Birnie, Alan Boyle, Catherine Redgwell, (2009), International law and the environment, Oxford; New York: Oxford University Press, 3rd ed.

Saki ZadehMojtaba, (2013), the need for a more effective interaction of insurance with oil and gas industry the scientific journal of exploration and production of oil and gas, Issue 104

Seog, S. Hun, (2010) The Economics of risk and insurance, wiley-blackwell.

Shami M, Khanifar Hussein, Hamid Reza Hassanzadeh, (2014) investigating the barriers of Energy Insurance growth in the insurance industry of the country and suggesting suitable strategies, management of organizational culture, Volume 12, Number 4, Ss696-681.

Sharp, D. W. (2010), offshore oil and gas insurance, London:withererby.

Skalle, P. and Podio, A.L. (1998). Trends extracted from 1,200 gulf coast blowouts during 1960-1996. World Oil; 219: 67–72.

SPE 149555, (2012). Drilling Fluid: State of The Art and Future Trend.

Statistical Yearbook of Insurance Industry (2014), Planning Management, Department of statistical analysis, the Central Insurance of Iran, Tehran.

Stevens, Paul (2011), "Energy Economics", translated by Taherifard, Ali et al., University of Imam Sadeq (AS), Tehran.

Zhaoguang Yuan, YahyaHashemian, Daniel Morrell, (2015), Ultra-deepwater blowout well control analysis under worst case blowout scenario, Journal of Natural Gas Science and Engineering.