Kampala, Uganda | THE INDEPENDENT | Over 50 local insurers have received training on how to address risks related to Uganda’s nascent oil and gas sector. The training was conducted by Insurance Broker Minet Uganda Limited, together with its correspondent partner in the United Kingdom, AON.
Uganda has six billion barrels of proven oil reserves, with the development stage already commencing. The development and eventual production will see between USD 15 to 20 billion invested in the country in the next 3 to 7 years in especially infrastructure like roads, an airfield, a refinery and an export pipeline through Tanzania to the international markets.
This unprecedented investment in the country, however, presents a number of risks which, if not well insured could be disastrous to not only Uganda but also to the international oil companies and their suppliers and subcontractors. Already, the oil companies have invested over four billion US Dollars in the oil and gas sector.
Insurance opportunities in the oil and gas sector include oil well drilling equipment, rigs, in-hole equipment, bulk cargo, construction all risk (CAR), business interruptions, and delayed start-up. Other risks are waste in transit, works and infrastructure of disposal units, pipeline, heating equipment, oil and gas stocks, and storage facilities, production storage facilities goods in transit and vessels and camps.
Minet Uganda chief executive Maurice Amogola says that insurers need to start appreciating the risks that the new market situation would bring. According to Amogola, Ugandan insurers and reinsurers need to prepare themselves to ably cover the risks associated with the sector ahead of the first oil, expected in 2022.
AON’s Neil Genders, from its UK office, said it is sensible for the local Uganda market to build up its capital base slowly and efficiently and not take on more than it can afford to pay out in claims.
Deepak Pandey, the chief executive of Jubilee Insurance, and a trainee hailed the workshop as coming at an opportune time as Uganda seeks to grow its level of expertise in oil and gas insurance.
Uganda’s Local Content Policy 2018 commits to supporting the participation of Ugandans in the oil and gas sector, through improving the country’s human resources, employment of local citizens and enterprises plus improve local competitiveness and in-country research, development and technology transfer to Ugandans.
The oil and gas sector is expected to boost Uganda’s insurance penetration which currently stands at 0.8 percent. Globally, just under three billion US Dollars is spent on insurance premium on oil and gas per year.