Property damage/machinery breakdown and business interruption, marine cargo and pollution liability all come into play

Oil spill off the coast of Rayong province, Thailand

Details have emerged of the operational insurance cover of Thailand’s largest integrated petrochemical and refining company, which was responsible for last weekend’s oil spill off the coast of Rayong province.

A PTT Global Chemical (PTTGC) oil pipeline leaked an estimated 50,000 litres, or 316 barrels, of crude oil into the sea on 27 July. The incident happened while an Omani tanker moored offshore was being transferred to the pipeline to deliver oil to a PTTGC refinery. Much of the leaked oil washed up on the west coast of Ko Samet island, a popular tourist destination.

Dhipaya Insurance provides cover for PTTGC’s refinery business unit. It includes property damage/machinery breakdown and business interruption cover to the value of $2.4bn. PTTGC has said it expects that parts and repair costs “will be minimal and below the deductible”.

Dhipaya’s marine cargo insurance has a maximum limit of $330m per shipment of crude oil. PTTGC said it was “currently investigating with the loss adjuster to appraise crude loss value”.

The insurance has a $50m limit on third-party liability, and PTTGC said it “expects clean-up expenses will be covered under the pollution liability section”.

In its latest update on the oil spill, PTTGC said: “Some 99% of the oil-slick debris has now been removed and an operation to transfer oil-stained debris off Praw Bay to Map Ta Phut industrial estate port was supported by the Royal Thai Navy and a team of about 750 volunteers.”

PTTGC said all affected equipment would be replaced by today, and it would seek authorisation from the Marine Department of Thailand to restart operations at the affected single-buoy mooring.