Energy Review 06-2017
26 June 2017
Following the election on the 8th June, the United Kingdom has entered a period of uncertainty. Not only will there be intense discussions between potential coalition partners – the outcome of which will see who leads the country and who will fill the ministerial posts – but also there is uncertainty on how the UK will approach the negotiations with the EU regarding Brexit. Brexit discussions were due to commence on the 19th June but the UK has not yet (re)appointed its negotiation team whilst the newly appointed Cabinet seem to point in the direction of a “softer” Brexit. Brussels has said that it would delay talks until the UK has finally made up its mind as to what it is aiming for in the talks.
Energy is one of the key topics raised by one of the possible coalition partners, the Democratic Unionist Party of Northern Ireland (DUP). In its manifesto, the DUP stated that it would carry out a “fundamental review of energy policy to ensure that consumers and businesses have a secure energy supply which moves ever closer to the EU median price”. This review will include how best to support further development of the renewable sector at least cost to consumers and businesses. It is interesting to note that most of the oil and gas exploration and findings that are off the coast of the Emerald Isle are in republican waters – the DUP must rue the fact its Ulster residents and voters are missing out on this potential.
Plans by the Organisation of Petroleum Exporting Countries (OPEC) to limit production and push up the price of a barrel of oil appear to be scuppered as more and more oil enters the market. A leading commentary says, “Some analysts cite two factors which could render OPEC’s cuts ineffective. The first is simply that OPEC members will not abide by any agreement, as they have historically done. Certainly some members may overproduce their quotas, but OPEC is going to monitor global crude inventories. Those inventories had already begun to come down from record highs prior to the OPEC announcement, partly in response to declining US shale oil production. The second factor cited by sceptics is beyond OPEC’s control, and that is that US shale oil producers will now simply ramp up production as oil prices rise, negating the OPEC cuts.”
While there cannot be talk of LNG flooding markets, there are more discoveries and production is ever increasing. US sales to Europe are on the move. After the set-back in Groningen, the Dutch NAM has commissioned three new wells and expects to produce first gas by the end of 2018. The current spat with Qatar is not expected to affect the price of LNG greatly. Iran is probably quite happy for its neighbour to struggle with selling its gas as it ramps up its own production and exports.
Further to our report last month, there have been more moves by UK-based carriers to set up in the EU: QBE has opted for Brussels, while Luxembourg is the choice for RSA, Hiscox, CNA Hardy and FM Global. Markel, however, has chosen Munich. Not to be outdone in seeking newcomers, Greece also aims to attract UK ship-owners, insurers and brokers seeking Brexit HQs.
XL Catlin, Chubb and ACR feature in our “People on the Move” section.
As the summer gets underway we wish our readers plenty of sunshine and look forward to helping you with your enquiries.
Three workers die in Brazil rig blast
Three workers are now confirmed dead following an explosion on the 9th June on board the Odebrecht Oil & Gas (OOG) drillship NS-32 (Norbe VIII) while operating in the Marlim field for Petrobras in the Campos basin.
The explosion, which occurred at around 8:00 a.m. local time in one of the rig’s boilers, wounded one other worker.
There was no subsequent fire after the blast, and the emergency plan was triggered immediately after the explosion. Activities on the rig remain shut.
The drillship, one of six rigs OOG has on charter with Petrobras, is in safe condition, Petrobras said.
Norbe VIII is contracted for a 10-year period with Petrobras, until July 2021, for a day-rate of US$381,000.
Petrobras said it will investigate the causes of the accident. Sindipetro-NF claims the accident occurred during maintenance operations at the boiler.
Blast at China petrochemical plant kills eight, injures nine
An explosion rocked a petrochemical plant in China’s eastern province of Shandong on the 5th June, killing eight people and injuring nine, state media and local government officials said.
Deadly accidents are common at industrial plants in China, where anger is growing over lax standards after three decades of rapid economic growth marred by incidents ranging from mining disasters to factory fires.
The blast took place about an hour after midnight, triggering fires at the loading area of Linyi Jinyu Petrochemical Company Ltd. in the Linyi Lingang economic development zone, the state news agency, Xinhua, said.
The toll rose to eight, as authorities confirmed the deaths of seven people who had been reported missing, in addition to one death reported earlier, the local government said on its microblog.
Nine people were injured and the fires have been put out, the government said.
The “responsible person” at the company who runs the plant has been detained, Xinhua added, without giving details.
In 2015, huge chemical explosions in the port city of Tianjin killed more than 170 people, prompting a vow by President Xi Jinping that the authorities would learn the lessons paid for in blood.
Oil tanker attacked in key shipping lane off Yemen
Unknown assailants attacked an oil tanker on the 31st May in a strategic Red Sea waterway near Yemen in the latest flare-up in an area through which much of the world’s oil passes.
The EU Naval Force said in a statement that the attackers fired rocket-propelled grenades before breaking off their assault on the Marshall Islands-flagged tanker MT MUSKIE in the southern Bab-el-Mandeb Strait. The tanker is 70,362 tons deadweight.
A spokesperson for the EU force said the attack did not appear to have been launched by pirates and was likely related to “continuing instability at sea off the coast of Yemen.”
Vessels near Yemen’s southern coast have been attacked in recent months by Houthi militants who are fighting against Yemen’s Saudi-backed government in a civil war which has left millions of people starving.
Nearly four million barrels of oil as well as other commercial goods are shipped daily to Europe, the United States and Asia via the Bab-el-Mandeb Strait.
One dead in Anadarko tank battery fire
One oilfield worker has died and three others have been injured in an explosion and fire on the 25th May at a Colorado tank battery operated by US independent Anadarko Petroleum.
The blast happened in Mead in Weld County because of an “industrial accident” which occurred while maintenance was being performed on the battery, according to a release from the county sheriff’s office
Fire crews arrived on the scene to find the oil tank battery “fully engulfed” in flames.
Photos and videos shared on social media showed a plume of black smoke emanating from the tank battery site. On Friday, Mountain View Fire Rescue posted photos showing the fire had been extinguished.
“No hazards were posed to the neighbouring residents during the incident,” Mountain View Fire Rescue said.
The three workers who were injured were transported offsite for medical attention, according to the sheriff’s office. Two were taken to North Colorado Medical Center for burn treatment, and one was taken to Medical Center of the Rockies.
The worker who died was declared dead at the scene. The incident is under investigation.
The incident comes as Anadarko’s safety record faces increased scrutiny following a Colorado home explosion in April, which killed two people, and was linked to a dormant well owned by the company.
Anadarko shut in about 3,000 vertical wells in the state as a precaution following the blast and has said it would not re-start them before investigating their condition.
UK source warns of terrorist threat to LNG carriers
A senior source within the Royal Navy says that elite British dive teams have been actively working to thwart a terrorist attack on gas carriers entering UK waters.
Two years ago, intelligence indicated that a terrorist group sought to attack LNG tankers near terminals in England by planting limpet mines. The dive teams – drawn from the elite ranks of the Royal Marines’ Special Boat Service and the Royal Navy’s Fleet Diving Unit 1 – have been inspecting hulls ever since, dozens of them.
“The threat against gas tankers emerged a couple years ago and we have been training to counter it ever since. The concern is that tankers could be sailed into UK waters and destroyed either with mines or improvised explosive devices,” the source told a leading newspaper.
Vessels coming from the Middle East are believed to be most at risk.
LNG has an excellent safety record, and the exact dangers of such an attack are unclear.
Multiple studies have concluded that LNG tankers pose a low risk of explosion: their tanks are not pressurised, and the liquefied methane they contain would have to enter the vapour phase and mix with air in a precise ratio to ignite. However, some experts contend that the heat from a surface “pool fire” of spilled LNG would be highly destructive, even without an explosion.
Short of a major industrial disaster, the loss of a tanker could still create significant economic problems for Britain. “It is entirely possible a major incident could result in fuel shortages in the UK and this would be disastrous economically,” the Royal Navy source warned.
If carried out, a limpet mine attack would not be the first attempted act of terrorism involving an LNG tanker.
Last October, unknown assailants approached the gas carrier Galicia Spirit near the Strait of Bab-el-Mandeb and fired a rocket-propelled grenade (RPG) in her direction. Her owner, Teekay, said in a statement that none of the attackers managed to board the vessel and that the crew was unharmed. In a later update, the firm revealed that the small boat was carrying a “substantial amount of explosives”, raising the possibility that the incident could have been an attempted suicide bombing.
Fire breaks out at Mexico’s top refinery, nine people hurt
A major fire broke out at Mexican state oil producer Pemex’s Salina Cruz refinery on Wednesday 14th June after a crude spill, injuring nine people and extending the shutdown of the plant into a second day, the company said.
The blaze began in the pump house of Salina Cruz, Mexico’s largest refinery, on Wednesday morning, and the company was working to put it out, a Pemex spokesperson said. They added that the fire had not yet reached the refinery’s nearby massive storage tanks, and efforts were underway to prevent that from happening.
Eight of the injured have been released from the hospital, the company said on its Twitter page.
Images sent by local emergency workers showed a tall, thick plume of black smoke spewing from towering flames at the refinery on the Pacific Coast, in the southern state of Oaxaca.
An official at the Oaxaca state emergency services said some of the local neighborhoods near the refinery had been evacuated.
The fire occurred a day after heavy rains prompted the refinery to suspend operations and evacuate personnel.
Tropical Storm Calvin provoked flooding that busted though dams meant to contain a form of heavy oil, causing a spill that later ignited, the company statement said.
It added the blaze had been contained. However, it was unclear when operations might resume.
The refinery has a capacity of 330,000 barrels per day.
North Sea gas leak reported by ENGIE E&P
The Company has reported a gas leak at its Gjøa field located in the North Sea, West of Florø, on the West coast of Norway. The situation is under control.
The situation quickly came under control, and no injuries have been reported. The gas leak has been stopped and the situation on board the Gjøa platform is under normalisation. Production is currently shut down.
The installation had 49 people on board when the incident occurred. 19 people were demobilised by helicopter and brought to a support centre in Florø.
The company’s emergency response organisation has been mobilised to coordinate all support required and is in dialogue with the relevant authorities.
CNA Hardy, Hiscox and RSA pick Luxembourg for post Brexit office
The re/insurance sector in the UK is worried that it might lose its passporting rights after the UK leaves the EU. The mechanism provides a company authorised in one member state the ability to conduct cross-border business without being required to apply for any additional authorisation or hold assets locally. Official Brexit negotiations with the EU are expected to start in 2017.
CNA Hardy is setting up a new office in Luxembourg with the process due to be completed by early 2019 as it prepares for Brexit.
The specialist commercial insurance provider for clients within the Lloyd’s and company markets said the new European subsidiary came in an uncertain political environment and that it must ensure continuity for employees, customers and brokers.
David Brosnan, CEO of CNA Hardy, commented, “Luxembourg is the optimum jurisdiction for our European Union base due to its geographic location between three of our Continental European offices, its stable economic and political environment and the professional approach of the Luxembourg regulator.
“We will be recruiting a local management team to be based in Luxembourg, comprising risk, finance and compliance functions.”
Hiscox has also announced that Luxembourg will be the home of its European subsidiary following Britain’s decision to leave the EU.
The two potential destinations were either Luxembourg or Malta. Luxembourg was picked because of its “pro-business position, strong financial services experience and well-respected regulator, as well as being close to many major markets”.
All future retail business in Europe, a target growth area for Hiscox, will go through the new EU subsidiary. Hiscox presently employs 350 people across seven EU countries outside the UK with such operations continuing to “operate without interruption”.
A new team of ten people will be bought in to oversee core functions such as compliance, risk and internal audit. There will be no underwriting function at Hiscox’s new EU base.
RSA Insurance Group
RSA Insurance Group has also advised that they are planning to set up a new subsidiary entity in Luxembourg as the headquarters of its existing EU branches in Belgium, France, Germany, Spain and the Netherlands.
“Luxembourg is an ideal location with multi-national expertise, strategically located within RSA’s existing EU branch network and has an experienced regulator,” the company explained in a statement.
RSA’s EU branches are a core element of the Global Risk Solutions segment of RSA’s UK & International business, the insurer noted.
While Brexit is not a major issue for RSA, the move allows the sensible reconfiguration of the branch network in light of the UK’s exit, according to the statement.
QBE opts for Brussels EU base
QBE will follow in the footsteps of Lloyd’s and set-up its post-Brexit base in Brussels, according to reports.
The giant insurer will move its business into mainland Europe as part of a Part VII transfer, which means existing policies are moved to the new entity, as well as new business.
QBE already has 70 to 80 employees in Brussels and Richard Pryce, Chief Executive of QBE’s European operation, said that the Belgian city represents the biggest existing European presence for the business.
“It was important to us that we are in the centre of Europe,” Mr Pryce said, “We have an operation which is scalable and we know the regulator. In the end it wasn’t a particularly difficult decision.”
Mr Pryce noted that QBE’s decision was unrelated to that of Lloyd’s, which made the decision to base its European business in Brussels earlier this year.
QBE’s new subsidiary is expected to be up and running by the end of 2018.
Mr Pryce did not reveal how many more staff would transition to the new European hub but noted that one of the reasons the insurer chose its new territory was due to a stable regulatory regime.
Greece aims to attract UK ship-owners, insurers & brokers seeking Brexit HQs
The Greek government wants to persuade ship-owners and shipping insurance companies based in London to move their European Union headquarters to Greece as the UK prepares to exit the bloc.
“We’re in contact with five large ship insurance brokers who are considering various EU member countries for the transfer of their headquarters,” Shipping Minister Panagiotis Kouroumblis said in an interview in Piraeus, Greece’s biggest port. Mr Kouroumblis declined to name the firms as the talks are private. “We’ll meet by the latest in June to discuss the terms they’d like in order to choose Greece,” he said.
The government has also asked UK-based Greek ship-owners to consider returning their headquarters to Greece after Brexit, even though the country can offer little in the way of financial incentives given its tight financial situation, the minister said. Greece will instead attempt to appeal to the ship-owners’ patriotism, he said.
Greece is the world’s largest ship-owning nation, accounting for over 16% of the global merchant fleet ahead of Japan and China, according to the United Nations. Greek-owned vessels account for 22% of the world fleet and 50% of the EU’s maritime carrying capacity, Mr Kouroumblis added.
The government wants Piraeus to become “one of the world’s largest shipping centres and a modern maritime cluster,” Mr Kouroumblis said. “We want to create a service centre for shipping in Piraeus,” he said.
The shipping ministry is also working with the Hellenic Capital Markets Commission to attract Greek ship-owners to the Athens exchange, rather than other bourses, to issue a bond.
There’s interest from two or three large Greek shipping companies, Mr Kouroumblis said. “We’ll perhaps see the first such bond issue in September.”
Cybercrime to cost businesses US$8 trillion
Criminal data breaches over the Internet will cost businesses around the world a total of US$8 trillion over the next five years, according to a new report.
The report, by Juniper Research, also forecasts that the number of personal data records stolen by cyber criminals will reach 2.8 billion in 2017, and almost double to five billion in 2020.
All this, says Juniper, despite new and innovative cyber security solutions emerging, and with cyber security problems becoming particularly acute when businesses integrate.
Juniper attributes the massive increase in data breaches over the next five years to higher levels of internet connectivity and “inadequate” enterprise-wide security.
The research found that small and medium enterprises (SMEs) are particularly at risk from cyber-attacks, spending less than US$4,000 on cyber security measures this year.
Juniper also notes that only marginal increases in security spend are expected over the next five years and that SMEs also tend to run older software which, it claimed, WannaCry and other recent cyber-attacks have exploited.
The research highlights a need for companies to put more money into cyber security and system upkeep, which Juniper says should be treated as a vital element of workplace safety.
“The attacks on hospital infrastructure show that inadequate cyber security can now cost lives as well as money,” said Juniper research author James Moar.
“Businesses of all sizes need to find the time and budget to upgrade and secure their systems, or lose the ability to perform their jobs safely, or at all.”
Juniper’s threat analysis also shows that ransomware is becoming a far more advanced form of malware, as ransoming stored data and devices becomes easier and more valuable than stealing financial details.
The research firm says it expects ransomware to develop rapidly into simple-to-use toolkits, the same way banking trojans developed into “products which required little or no programming knowledge to use”.
European Council authorises signing of EU-US re/insurance agreement
The European Council has agreed to the signing of an agreement with the US on insurance and reinsurance which is set to enhance regulatory certainty in transatlantic re/insurance operations.
The agreement eliminates, under specified conditions, local presence requirements imposed by a party or its supervisory authorities on an assuming reinsurer which has its head office or is domiciled in the other jurisdiction, as a condition for entering into any reinsurance agreement with a ceding insurer which has its head office or is domiciled in its territory or for allowing the ceding insurer to recognise credit for reinsurance or credit for risk mitigation effects of such reinsurance agreement.
Furthermore, the agreement eliminates, under specified conditions, collateral requirements imposed by one party or its supervisory authorities on an assuming reinsurer which has its head office or is domiciled in the other jurisdiction, as a condition for entering into any reinsurance agreement with a ceding insurer which has its head office or is domiciled in its territory or for allowing the ceding insurer to recognise credit for reinsurance or credit for risk mitigation effects of such reinsurance agreement.
The conclusion of the agreement will lead to enhanced regulatory certainty in the application of insurance and reinsurance regulatory frameworks for insurers and reinsurers operating in the EU and the US, as well as to improved protection for policyholders and other consumers through cooperation between supervisors on the exchange of information, according to a press release.
The text of the agreement was negotiated by the European Commission on the basis of a mandate approved by the Council in April 2015. It includes provisions on reinsurance, group supervision and the exchange of information. A joint committee will oversee its implementation.
The Council’s decision provides for provisional application of some of the agreement’s provisions, pending the completion of the procedures necessary for its conclusion. The Council also requested the consent of the European Parliament for conclusion of the agreement.
Swiss Re sets up Asian property/casualty underwriting hub in Singapore
Swiss Re is to form a combined property/casualty underwriting hub for the Asia-Pacific region within its reinsurance business unit.
The company has appointed Sharon Ooi to lead the unit as Head P&C Underwriting for Asia, Australia & New Zealand. In the newly-created role, Ms Ooi will be tasked to bring together all the expertise of Swiss Re’s underwriting teams, including facultative business, to serve its customers.
Ms Ooi will continue to be based in Singapore and work closely with Swiss Re’s local business heads in the region. She will also continue to serve as the Chief Executive Officer for Swiss Re Singapore.
The creation of one hub handling the full range of property and casualty underwriting will enable Swiss Re to support its clients more efficiently with a focus on profitable growth across the region, the company said.
Victor Kuk will take on the role of Head, P&C Client Markets for Southeast Asia, India, Korea, Hong Kong and Taiwan, from Ms Ooi. Mr Kuk is based in Hong Kong.
Beazley, Chaucer and Talbot launch political risk consortium in Asia
Beazley, Chaucer and Talbot have joined forces to form a political risk consortium in Asia offering increased capacity for a wide range of political and contract frustration risks.
The three Lloyd’s re/insurers will collectively provide the capacity of up to US$130 million for individual risks, with a policy period of up to seven years, through the new Lloyd’s consortium based in its Singapore hub.
Michael Lum, Political Risks and Trade Credit Underwriter at Beazley in Singapore, said, “The new political risks consortium at Lloyd’s Asia allows local companies to protect themselves against risks related to larger investments in potentially unstable geographies, backed by the collective expertise of three leading Lloyd’s syndicates.
“Beazley’s Singapore office has been steadily growing along with Lloyd’s overall business in the region and the increased capacity of the consortium will increase the ability of Asia Pacific companies to cover these risks locally.”
Margaret To, CEO of Chaucer Singapore, added, “Our brokers and clients told us they needed help solving the problems associated with transacting business in emerging markets.
“We took this on board, and have responded to the challenge by establishing the new political risk consortium. With greater dedicated capacity, more access to expertise and local representation for the Asia-Pacific region, the new Consortium and Chaucer Singapore provides brokers and clients with direct access to market-leading political risks solutions.”
Lloyd’s political risks insurance cover include government intervention, confiscation and physical damage due to war, currency inconvertibility and contract frustration related to defaults, and non-payment by sovereign entities.
Singapore is the largest Lloyd’s market hub outside of London with gross written premiums of US$680 million in 2015.
Insurers moving few personnel out of the UK in Brexit move
Insurers based in the UK are creating new entities in the EU to ensure access to the market after Brexit, but the move is set to involve low numbers of staff, Standard & Poor’s (S&P) has suggested in a briefing in London on the 16th May.
Brexit has been a great disruption for insurers in terms of cost and management time, said Mark Nicholson, Director, Insurance Ratings at S&P. Insurers are following the logic of a “hard Brexit” and setting up subsidiaries on the continent, he explained.
Lloyd’s, for example, has selected Brussels as its new EU hub location. American International Group has announced its plan to locate an insurance company in Luxembourg.
After a majority in the UK voted in favour of leaving the EU in a referendum, the re/insurance sector in the UK has been particularly worried about the possibility of losing its passporting rights. The mechanism provides a company authorised in one member state the ability to conduct cross-border business without being required to apply for any additional authorisation or hold assets locally.
Frankfurt, Luxembourg, Paris and Dublin have been lobbying to attract business from London.
There are around 700 insurers in the UK using the passport option, Mr Nicholson said. “When we talk to insurers about them relocating to different centres, generally the number of personnel tends to be relatively low.”
Lloyd’s has said that the headcount for its new EU operation will be in the “tens, not the hundreds,” with some people moving from London and some recruited locally.
While some legislative developments in the UK, such as changes to the taxation on the life side and on the non-life side on competition or whiplash in motor, might be slowed as the government tackles Brexit, a Scottish independence referendum may cause some major disruptions in the sector if it results in a majority for the separation.
The impact would be particularly felt in the life sector, according to S&P. “If you have existing life companies having to split their back books with potentially different currencies or different tax systems, that could be extremely fiddly indeed,” Mr Nicholson said.
Markel to open office in Germany in Brexit move
Markel plans to open an office in Munich as it seeks to meet the needs of its clients in the remaining 27 EU countries.
The company is in discussion with Germany’s financial regulatory authority as it seeks approval to establish an insurance company in the country.
The insurer said it wanted to ensure that, whatever the outcome of the Brexit negotiations, it was able to meet the needs of clients in the remaining 27 EU countries.
Richard Whitt, Co-Chief Executive Officer at Markel, said, “We are focused on building upon and extending the global reach of our businesses. That means that we are committed to a strategy of profitable growth of our continental European business. Establishing a new insurance company in Germany will enhance Markel’s ability to do just that.”
Subject to approval from the German regulator, BaFin, Markel has committed to incorporating and capitalising the new insurance company within the first half of 2018 and no later than the end of Brexit negotiations.
It added that Markel International has already been doing business in Germany through a branch office since 2012 in Munich.
Markel, through its wholly-owned subsidiary Markel International, currently writes business worldwide from its London-based platforms and through branch offices around the world.
Clyde & Co moves down Mexico way
Clyde & Co has opened its first office in Mexico via a merger with Mexican law firm Garza Tello & Asociados.
Not content with growing its North American footprint, insurance law firm Clyde & Co has merged, in May, with Mexico City-based firm Garza Tello, which specialises in marine, insurance and energy litigation.
The Mexican arrivals will work with disputes specialists with Latin American experience in the firm’s offices in Miami, London, Madrid and New York, and will complement its existing offices in Brazil and Venezuela. The move follows close rivals, Kennedys, opening in Mexico in January 2017.
Notable figures in the four-partner law firm include Arturo Arista, a leading insurance and reinsurance litigator, and Arturo Bello, who leads the litigation department, including acting as an advocate in civil and commercial trials, working across all of the firm’s sectors.
Simon Konsta, Clyde & Co’s Senior Partner, said in a statement that they had worked with the firm for a decade, adding, “Its sector focus complements our own and having a presence on the ground in Mexico is important as the market continues to liberalise and provides new opportunities for both our local and international clients.”
Enrique Garza, Senior Partner of the Mexican office and an energy specialist, called the move “a very natural decision” in broadening its existing offering, as well as servicing new businesses investing in Mexico and the wider Latin American region.
Lee Bacon, London-based International Arbitration Partner and co-chair of the Latin America strategy group, said Latin America was an important region for the firm, while the Mexican opening represented a key milestone, in fulfilling a long-held aspiration to have an on-the-ground presence there, in both the insurance and energy markets.
Both sectors are important to the firm, as witnessed by their 2017 partner promotions round, while it hired two experienced energy litigators to bolster their Africa practice recently. Now Latin America offers new prospects to rival those in the US, said Bacon. “Mexico is an important country and economy in its own right and serves as a gateway to the wider Spanish speaking region.”
He added that clients had used Garza Tello for advice in looking to expand into the newly deregulated energy market in Mexico, as well as acting as counsel for the wider Central American region and with well-established links with energy, marine and insurance firms in Latin America. The merged firm in Mexico also includes a satellite presence in the Gulf of Mexico port city of Ciudad del Carmen.
Energy Transfer Partners fined US$431,000 for oil pipeline spill in Ohio
The construction of Energy Transfer Partners’ new Rover Pipeline through Ohio only began mid-February but the project has already resulted in 18 incidents involving mud spills from drilling, storm water pollution and open burning which violated the US Clean Air Act.
The Dallas-based company, which is also the operator of the controversial Dakota Access Pipeline, has been fined US$431,000 by the Ohio Environmental Protection Agency (EPA) for water and air pollution violations across various sites in Ohio.
The incidents occurred from late March up to the 200-gallon release of mud in Harrison County. The largest discharge leaked millions of gallons of bentonite mud, a drilling lubricant, into a protected wetland in April.
Notably, Craig Butler, the Ohio EPA Director, said that the largest spill could reach five million gallons, much higher than the original two million gallon estimate.
An Energy Transfer Partners spokesperson responded, “We have no idea where they came up with those figures.”
Mr Butler said that two of the spills affected drinking water supplies and that two municipalities needed to adjust their filtration systems to protect drinking water.
As for Energy Transfer’s response, Mr Butler said the company has been “dismissive”, “exceptionally disappointing” and unlike any other response he has seen. According to Mr Butler, the company claimed that the state EPA lacks the authority to interfere with the Rover project.
Mr Butler said he arranged a meeting with Energy Transfer Partners executives to say “how upset Ohio was” and to arrange new response plans. However, the company said it would continue to operate and has not yet paid any of its fines.
An Energy Transfer spokesperson told reporters that the “small number of inadvertent releases of ‘drilling mud’ during horizontal drilling in Ohio … is not an unusual occurrence when executing directional drilling operations and is all permitted activity by (the Federal Energy Regulatory Commission).”
“We do not believe that there will be any impact to the environment,” they said, adding that the company is managing the Rover Pipeline situation in accordance with its federal- and state-approved contingency plan.
Ohio EPA officials contacted the Federal Energy Regulatory Commission for an analysis of the project. Mr Butler said the state EPA is also examining other legal options.
The finished 713-mile pipeline will carry fracked gas across Pennsylvania, West Virginia, Ohio, Michigan and Canada, and crosses three major rivers – the Maumee, Sandusky and Portage – all of which feed into Lake Erie. The pipeline is designed to transport 3.25 billion cubic feet of domestically produced natural gas per day.
People on the Move
XL Catlin appoints new international environmental head
XL Catlin’s insurance operation has promoted Adias Gerbaud to the position of Head, International Environmental.
In her new role, Ms Gerbaud will be responsible for managing XL Catlin’s environmental portfolio while leading a team of eleven underwriters across the UK, Western Europe and Australia. She is based in Madrid.
Ms Gerbaud joined XL Catlin’s Spanish operation in 2007. She was appointed Underwriting Manager, Environmental, Southern Europe & Latin America in 2013 and Head, Environmental, EMEA in 2016.
XL Catlin said that Ms Gerbaud’s promotion is in line with its drive to further strengthen its environmental insurance capabilities across its EMEA, LatAm and APAC regions and provide a range of solutions for businesses exposed to environmental risks, including pollution & remediation, legal liability and contractors’ pollution liability.
Ai Hoon Kwek appointed as new Senior Cargo Underwriter at Aspen Singapore
Reporting to Paul Hackett, Head of Marine, Singapore, Ai Hoon Kwek will assist in managing and developing Aspen Insurance’s Asia Pacific and Middle East Cargo portfolio.
Ms Kwek was previously Cargo Underwriter with XL Catlin in Singapore.
Chubb appoints regional cyber risk manager for Europe
Chubb has appointed Kyle Bryant to the newly-created role of Regional Cyber Risk Manager, Europe.
Mr Bryant will be based in London, reporting to Head of Financial Lines for the UK and Ireland, Grant Cairns, and Chief Operating Officer for Continental Europe, Adrian Matthews.
In his new role, Mr Bryant will be tasked to bring together Chubb’s dedicated local cyber risk expertise across its European region into a single practice. It will additionally include management responsibility for the company’s cyber risk proposition in the UK and Ireland, as well as its London-based wholesale division, Chubb Global Markets.
Since 2015, Mr Bryant has been responsible for the strategy, development and performance of Chubb’s cyber risk portfolio in Continental Europe.
ACR Capital Holdings appoints new deputy group chief executive
ACR Capital Holdings has appointed Bobby Heerasing as Deputy Group Chief Executive and Deputy ChEef executive of its full-owned subsidiary Asia Capital Re.
Heerasing joins ACR with over 20 years of re/insurance industry experience, most of which was spent at Catlin and subsequently XL Catlin. He previously worked in London and Houston, but since 2002 has been largely based in Singapore where he took on various management and underwriting roles for Asia Pacific.
Prior to the Catlin and XL merger, Heerasing was the Chief Underwriting Officer of Catlin Asia Pacific, responsible for its insurance and reinsurance divisions. Following the Catlin-XL merger, he was appointed Regional Underwriting Director, Asia Pacific (Insurance). In 2016, he took on the additional role of Distribution Director.
Everest Insurance hires from AIG to boost energy unit
Everest Insurance, a subsidiary of Bermuda-based Everest Re Group, has appointed Jeff Engelbrecht as a senior executive within the energy team.
Engelbrecht joins Everest from AIG, where he had worked in various leadership roles since 1995, most recently as Executive Vice President, Excess Casualty, Energy and Construction Leader.
In his new role, Engelbrecht will be principally responsible for working with the many evolving national account relationships, while providing in-house expertise across the entirety Everest Energy underwriting team.
XL Catlin expands its underwriting team in Latin America
The insurer has strengthened its marine underwriting team in Latin America with a series of new hires and promotions.
In Brazil, Karina Amaral was appointed Marine Cargo Underwriter; Cintia Takahashi has turned Marine Liability Underwriter; and Aline Watanabe has been promoted to Marine Cargo Manager. They report to Paulo Alves, Head of Marine, Brazil.
In Mexico, Francisco Campos has been hired as Marine Cargo Underwriter; Rubén Chanona promoted to Head of Marine, Mexico; and Nalini Vargas elevated to Marine Cargo Junior Underwriter. Campos and Vargas will report to Chanona.