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09 December 2023

Refineries world over lost $2bn in past five years

By Shashank Shekhar

The hydrocarbon industry faced losses worth billions of dollars in the period 2004 to 2009 due to reasons varying from an explosion to mechanical damage, according to a new report by Marsh.

While oil refineries the world over faced a loss of close to $2 billion (Dh7.34) in the past five years, the petrochemical industry lost $1bn in the period.

Gas processing plants lost about $200 million in the period. The hydrocarbon terminals and distribution plants have lost about $500m in catastrophic losses in the past five years, while upstream oil projects have lost about $2.2bn in the same period, said the report.

In total, the hydrocarbon industry has lost $ 30 bn so far in accidents, Marsh said in its report.

Apart from the high number of casualties and financial losses, the accidents have especially brought trouble to the insurance industry.

"The energy sector produces some of the biggest insurance losses. At times, it is considered synonymous with danger," an insurance company official said. The Middle East, which has a high concentration of hydrocarbon companies, remained largely absent from the list of worst catastrophes that Marsh published.

An explosion in a refinery based in Mina Al Ahmadi in Kuwait in June 2000 that resulted in loss of five people and $410m was the only accident listed in the 20 largest losses in the sector so far.

However, Marsh reported accidents in gas processing units in Saudi Arabia and Qatar. "That has to do with the national oil companies in the Middle East managing their projects efficiently," James R Pierce Jr, the Chairman (Energy Practice) with London-based insurance broker and advisor of Marsh told Emirates Business.


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