World’s largest oil company looking for war insurance

WNM | Dec 5, 2019 at 1:00 PM

LONDON/RIYADH, December 4 (WNM/Reuters/ Carolyn Cohn/Stephen Kalin/Marwa Rashad) - Saudi Aramco is looking to buy insurance against war and terror attacks after a damaging drone and missile attack on some of its oil facilities in September, two sources told Reuters.

Aramco, the world's largest oil company, has been looking for cover from insurers including those based at Lloyd's of London and elsewhere in the London market, they added.

The firm is seeking cover for facilities in Saudi Arabia's Eastern Province, its oil heartland, where it suffered the September attacks, one of the sources said.

Aramco said in the prospectus of this month's planned listing that it did not insure against all risks and its cover may not protect it from terrorism or acts of war.

At the launch of the IPO, which could be the world's biggest and raise up to $25.6 billion, Aramco said that it did not expect the Sept. 14 attack to have a material impact on its finances and operations.

Aramco declined to comment.

Available insurance options range from cover against a terror attack or sabotage through to full coverage, which includes war or civil war, along with compensation for the cost of business interruption.

An initial loss estimate from the strikes on Aramco's plants was 2 billion riyals ($533 million), a third source said.

Aramco insures much of its property itself through a so-called captive insurer, Bermuda-based Stellar Insurance.

Although one of the sources said Aramco also has an "excess of loss" cover with international insurers for any property damage above $200 million, this does not cover war or terror attacks, or revenue losses due to business interruption.

Aramco, which said in October it had fully restored oil output after the September attacks on its facilities, did have war cover around five years ago, the source added.