The challenges in the current offshore market are still in full swing. The price of oil has recently taken a new plunge and the offshore renewable industry is under pressure to cut costs as it is moving away from government funding. The market conditions for many offshore operators remain demanding. Recent commercial contracts awarded for offshore work seem to follow an upcoming trend where the workability of a vessel has to be specified and calculated to the day, sometimes with penalties for extra days not worked. Another upcoming trend that can be seen is projects being executed during periods traditionally determined as off season due to the forecasted weather.
Determining the workability of a vessel can be a lengthy process including many hours engineering work and is based on a lot of assumptions and conservatism. The market is responding to these new contract demands and this article will outline two new products that can assist vessel owners with mitigating the risk that can be involved.
Weather downtime insurance
Strong winds, heavy seas: weather conditions bringing offshore operations over the scheduled time, resulting in additional costs for labor and use of equipment. Covering these cost overruns is now an insurable risk.
How does this work?
Before the work starts, criteria like specific weather conditions (eg. Wind, wave height, current) that impact on the employability of people and equipment will be determined. These determined daily costs will be the basis for payment. Actual support from specialists is available to precise the required parameters.
After completion of the work the overrun of time will be calculated, expressed in the number of days lost by the predetermined criteria. The weather downtime cover provides direct right to compensation for the fixed amount per day which is lost through bad weather.
Not only contractors can improve their competitiveness by using this methodology -customization per project- but also for Principals this is a very effective tool to achieve cost control in construction, inspection, repair and maintenance projects of offshore installations and structures.
This protection against failure due to weather conditions will be accommodated with one of the most solvent insurance companies in the world.
Motion forecasting software
Traditional workability demands and decision making is based around using wave height as an absolute parameter to determine if a vessel can work or not. However, it is not the wave height that limits the operation, it is the vessels motion response to these waves that determines if an operation can take place or not.
Combining advanced software with the option of a Weather downtime insurance can give operators the combined advantage of higher workability and less risk of financial setbacks on the project.
Written by Nico de Wit from Intramar Insurance and Marleen Lenting from MO4