Petroecuador to Call for Insurance Bids mid-July
Ecuador's state oil company Petroecuador will call for bids for insurance policies by mid-July, a company source told BNamericas. Petroecuador's board aims to approve bidding rules in early July and the 10 pre-qualifiers - including the company's current main insurer Colonial, as well as Rocafuerte, La Union, Condor, Equinoccial, Panamericana and Interoceanica - will have until end-August to submit bids, the source said. A winner must be decided by September 27, which is the date when the insurance policy must come into effect, the source added.
Petroecuador is seeking coverage of up to US$500mn in damages, which is the maximum estimated cost of any catastrophic event, the source said. The company's assets were valued at US$3.6bn in 2001-2002, falling to US$3.2bn in 2002-2003 because some fields, such as Palo Azul, were awarded to private companies.
Petroecuador subsidiaries are required to submit reports detailing the value of their infrastructure to be insured by the end of June, the source said. Petroecuador paid US$28mn in insurance premiums in 2002-2003, but has increased its budget this year to US$30mn to provide some "cushion" if bids come in higher than last year. The company will call for bids on 15 other policies in October, the source said, adding the estimated cost of those policies is US$1.5mn-2mn. The company is seeking two types of coverage: total oil risk, which covers damage or loss of equipment, installations and oil products resulting from force majeure events such as fire or earthquake; and civil responsibility, which covers workers' accidents.
The company's insurance arm, Unidad de Seguros, wants to reduce the average deductible amount by covering different industry areas such as refineries, pipelines, and storage facilities separately, the source said, adding, "Petroecuador is a buyer, and it's really up to the market to decide on the conditions."
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