ADDITIONAL GENERAL CONDITIONS APPLICABLE TO ALL SUB-SECTIONS OF SECTION TWO
1. COVERAGE
Subject
always to its terms and conditions and to the Policy Schedule and Policy
General Conditions, the Insurers agree to provide coverage under this
Section for:
A. Control of Well Insurance (as per Sub-Section A).
B. Redrilling/Extra Expense Insurance (as per
Sub-Section B).
C. Seepage
and Pollution, Clean-up and Containment Insurance (as per Sub- Section C).
2. LIMITS OF INSURERS’ LIABILITY UNDER THIS SECTION
This
Section Two provides to the Insured (be they one or more) insurance coverage
only up to but not
exceeding the Combined Single Limits of Liability stated
in Item 5. of the Policy Schedule, including Defence
Costs, which are the total Combined Single Limits of
Insurers' liability to the Insured for any one Occurrence
and over all of Sub- Sections A, B and/or C, subject
always to the applicable underlying retentions.
3. INSURED'S RETENTION UNDER THIS SECTION TWO
The
Combined Single Limits of Insurers’ liability referred to in Clause 2. are
excess of the Insured's Retentions stated in Item 6 of the Policy Schedule.
4. REPORTING CLAUSE
The
Insured shall report to the Insurers within …... days after the expiry of this
Section Two the status of all
wells insured hereunder during the preceding period and
agrees to pay any additional premium if required at
the rates agreed with the Insurers. Premiums accruing
from this report are due and payable as the report is
made.
5. WELLS INSURED AND RATES
Covering
wells onshore and offshore India as stated in the schedule seen and agreed by
the Insurers and/or their Reinsurers and retained on file by the
Insured and their insurance brokers.
Applicable Rating Areas
and Rates are as agreed with and retained on file by the Insurers and/or their
Reinsurers and/or at the offices of their insurance
brokers. All wells not scheduled at inception are held
covered by the Insurers at rates, terms and conditions to
be agreed by their Reinsurers prior to spudding in or
attachment.
6. CO-VENTURERS
this insurance may be extended to insure the interests of co- venturers (defined as co-owners, partners and/or
other party (ies) having a financial and insurable interest in the wells insured hereunder), all of whom individually and collectively are non-operators (all hereinafter referred to as "Co- Venturers"), and provided the agreement to include such Co-Venturers is executed in writing between and/or among the parties prior to any occurrence giving rise to claim for reimbursement hereunder.
Such
Co-Venturers who comply with the above paragraph shall be deemed to be named as
additional Insureds
hereunder only in respect of wells insured hereunder and
only for the period(s) of time operations in respect
of said wells are insured hereunder as determined by
Clause 13. of these Additional General Conditions.
Any
cover granted hereunder to Co-Venturers shall be limited to operations in which
a Co-Venturer has a common interest with the named Insured and
shall be subject in all respects to the terms, conditions and rates and Combined Single Limits of Liability specified in this Section Two.
If
the Named Insured is not the operator of a well, then this insurance shall not
cover the operator without the Insurers' prior approval.
7. RATING PROVISIONS
A. Rates - as agreed with the Insurers:
(1) Drilling Rates, if any, apply for the period
a. during which any well is
being drilled and/or deepened and/or completed, and
b. during any remaining period
of this Section Two of the Policy, if any, during which
(i) such well, if any, is in its subsequent Producing
and/or Shut-In and/or Plugged and
Abandoned condition and
(ii) the Insured is purchasing
coverage hereunder for its other Producing and/or Shut-In
and/or Plugged and Abandoned Wells, if any;
(2) Workover
Rates, if any, cover for the period during which any well is being serviced
and/or worked
over and/or reconditioned; and
(3) Producing
and/or Shut-In and/or Plugged and Abandoned Rates, if any, are annual but shall
not
apply
to Producing and/or Shut-In and/or Plugged and Abandoned Wells, if any, for
which premium at Drilling Rates under Paragraph 7. A. (1)
of these Additional General Conditions has been paid under
this Section Two.
B. It is
understood and agreed that the rate per foot shall be applied to the total
footage drilled,
measured
through the hole from the surface of the ground or water bottom to the bottom
of the
well.
C. Premium applicable to deepening of wells and multiple completions shall be charged at 100% of the applicable drilling rate per foot and such rate shall apply to the final completed depth of the well
measured through the hole from the surface of the ground or water bottom to the bottom of the well.8. RATING AREAS
Onshore
India wells rated as Area 2, wet wells offshore India rated as Area 3 if water
depth less than 10,000 feet. Wet wells offshore India rated as Area 4 if water
depth is greater than 10,001 feet.
9. EXCLUSIONS
There shall be no indemnity or liability under this Section Two for:
A. any
fines or penalties imposed under the laws of any State or Nation or other
Government entity,
or any agency or subdivision thereof;
B. any
punitive or exemplary damages including any other damages resulting from
multiplication of
compensatory damages;
C. any claims whatsoever arising directly or
indirectly from any occurrence caused, in whole or in part,
by any breach of any of the General Warranties in Clause 1. of the
General Conditions or Clause
15 of these Additional General Conditions applicable to all
Sub-Sections of Section Two;
D. loss,
damage or expense caused by the infidelity of the Insured or any other person
or organisation
acting for or on behalf of the Insured;
E. loss, damage or expense as respects any well in
the course of being drilled, deepened, serviced,
worked over, completed
and/or reconditioned at the inception of this Insurance, until final termination of said drilling, deepening,
servicing, working over, completing and/or reconditioning, unless specifically
agreed to by the Insurers.
10. PARTIAL INTEREST CLAUSE
The
Combined Single Limits of Liability over all Sub-Sections of this Section Two,
the Insured's Retentions,
any separate limit of liability set forth in any
Endorsement to this Section Two, and the rates expressed herein
are for a 100% interest. In the event that the interest
of the Insured in any one well insured hereunder does
not amount to 100%, then said Combined Single Limits of
Liability, the Insured's Retentions, any separate limit
of liability set forth in any Endorsement and the rates
applicable to that well, shall be reduced proportionately
and shall apply in the same proportion as the total
interest of the Insured in said well insured hereunder bears
to 100%. In the event of an Occurrence giving rise to a
claim(s) recoverable hereunder, the Insurers shall in
no event be liable under any Sub-Section of this Section
Two or Endorsement to it for a greater percentage
interest in any such claim than the Insured's percentage
interest in the well with respect to which, and at the
time that, such Occurrence took place.
11. RESIDUAL VALUE
A. The
term “Well(s) Insured” shall be defined as oil and/or gas and/or thermal energy
wells:
(1) while being drilled, deepened, serviced, worked
over, completed and/or reconditioned until
completion or abandonment as set forth in Clause 13. of these
Additional General Conditions;
(2) while producing;
(3) while shut-in;
(4) while plugged and abandoned,
for the account of the Insured and as may be
included within the areas and types of wells
insured as set forth in Clause 5. of these
Additional General Conditions.
B. The
term “Defence Costs” shall be defined as investigation, adjustment, settlement,
litigation and
legal
expenses, premiums on attachment or appeal bonds, and pre and post judgement
interest and shall exclude all expenses for salaried
employees, general retainer fees normally paid by the Insured and office
expenses of the Insured.
13. ATTACHMENT AND TERMINATION OF
COVERAGE
A. Attachment of Coverage:
(1) In respect of any well(s) insured hereunder,
coverage shall attach when the Insured acquires
an interest in such well(s) unless coverage attaches later by operation
of any of Paragraphs 13.
A. (2), (3) or (4) below;
(2) In respect of any well(s) insured hereunder
spudded in during the period of this Section Two of
the Policy, coverage shall attach at the time of "spudding
in";
(3) In respect of any well(s) in the course of being
drilled, deepened, serviced, worked over,
completed
and/or reconditioned at the inception of this Insurance, and which would have
been insured hereunder at inception in the absence of the Earthquake Exclusion
of these Additional General Conditions, coverage shall attach
upon final termination of said drilling, deepening, servicing,
working over, completing and/or reconditioning;
(4) In respect of any other well(s) insured
hereunder, coverage shall attach at inception of this
Section Two of the Policy.
B. Termination of Coverage:
(1) In respect of any well(s) insured hereunder,
coverage shall terminate when the Insured ceases
to
have an interest in such well(s) unless coverage is terminated by operation of
any of Paragraphs 13.B.(2), (3) or (4) below;
(2) In respect of any well(s) which are insured hereunder during drilling only, by virtue of the Insured's electing not to purchase coverage for Producing and/or Shut-In and/or Plugged and
Abandoned Wells, coverage shall terminate upon either total and/or complete abandonment or completion of such well(s), which shall include the setting of the "Christmas Tree", pumpingequipment or wellhead equipment or the dismantling or removal of the drilling equipment from
the drill site, or the termination of the Insured's responsibility under contract, whichever shall
first occur, except that, if removal of the drilling equipment from the drill site occurs first, then
the period of time between complete removal of such equipment and the commencement of completion operations shall not exceed ….. days in order for said completion operations to be covered hereunder;
(3) In respect of any well(s) insured hereunder in
the course of being drilled, deepened, serviced,
worked
over, completed and/or reconditioned at the expiry or cancellation of this
Section Two of the Policy, coverage shall terminate upon
final termination of said drilling, deepening, servicing,
working over, completing and/or reconditioning, notwithstanding the fact that
said final termination may occur later than said
expiry or cancellation;
(4) In respect of any other well(s) insured
hereunder, coverage shall terminate at the expiry or
cancellation
of this Section Two of the Policy or (if plugged and abandoned wells are not
insured
hereunder) upon total and/or complete abandonment of such
well(s), whichever shall first occur.
14. DEFENCE
The
Insurers shall not be called upon to assume the handling or control of the
defence or settlement of any
claim made against the Insured but the Insurers shall
have the right, but not the duty, to participate with the
Insured in the defence and control of any claim which
may be recoverable in whole or in part under this Section
Two.
The
Insurers shall not be called upon to pay any Defence Costs in relation to any
claim until after the final resolution of such claim.
The
Insurers shall not be liable to pay any Defence Costs unless the prior consent
of the Insurers was obtained before those Defence Costs were incurred.
15. WARRANTIES
A. It is warranted that where the Insured is the
operator or joint operator on any insured well being
drilled, deepened,
serviced, worked over,
completed and/or reconditioned, a
blowout preventer(s) of standard make will, when in
accordance with all regulations, requirements and normal
and customary practices in the industry, be set on surface casing or on the
wellhead and installed and tested in accordance with usual practice.
When the Insured is a non-operator on any
insured well, it will endeavour to see that the operator complies with all the
warranties set out in this Clause 15.
B. It
is further warranted that the Insured will use every endeavour to ensure that
they and/or their
contractors
comply with all regulations and requirements in respect of fitting storm chokes
and
other equipment to minimise damage or pollution, and
that all equipment (including drilling and/or
workover rigs) will be manned by properly certified
personnel where required by regulatory
authorities.
C. It is further warranted that in the event of a
well becoming out of control or other escape or flow
of
drilling fluid, oil, gas or water, the Insured will use every endeavour to
control the well or stop the escape or flow.
D. It is
understood and agreed that all wells insured hereunder as defined in Paragraph
12.A. of
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