Insurance in iraq
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Transcript of Insurance in iraq
Always moving forward
Senior Insurance Officer
Sergey Lapko
UAE, DubaiNovember 7, 2012
Insurance in Iraq
Always moving forward
Iraq
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The Republic of Iraq
Population 31 million people
GDP USD 145 billion, 10% growth in 2011
Oil reserves: 10% of global reserves(143 billion bbl, world's #5)
Share in production: 3,75% of global production (3,1 million bbl/day in 2011, world's #7)
Target production: 8,5 million by 2017
Planned investment in Energy Sector: 500 billion USD by 2030
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Insurance Regulatory Environment
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Insurance regulations
In place:1. Civil Code2. Insurance Business Law #10-2005.3. Licensing Procedures4. Capital requirements5. Calculation of Reserves6. Solvency Margin Calculation7. Law on Mandatory Motor Insurance
Regulations yet to issued:1. Procedure regulating insurer's reporting to Diwan.
Regulations cancelled:1. Mandatory 25% cession to Iraq Re.
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Regulatory Environment
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Insurance regulations
Key facts:1. Insurers, Brokers and Loss adjusters must have a license.
2. License annually renewed.
3. Minimum capital for insurers: 5 billion IQD (4 million USD).
4. No mandatory cession to state reinsurer Iraq Re.
5. Mandatory types of insurance: Motor Liability.
6. Mandatory Construction insurance: contradicting sources.
7. Head of Diwan has the authority to "issue statutes obliging the persons to ensure against the specified risks" Law 10-2005, Article 103.
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Insurance Market
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Regulator:Iraqi Insurance Diwan
The Market:2 state direct insurers and 1 state reinsurer.Approx. 30 licensed insurers.
5 insurance traded on Iraqi Stock Exchange. (Market cap. 1,5-5 million USD)
Issues:1. Undercapitalized insurers.2. Communication and interaction.3. Limited number of qualified personnel.4. Gaps in regulations.5. Lack of information about the market.6. Licensing requirements towards the loss adjusters.
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The Operators
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LUKOIL TODAY
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1% of global oil reserves
2.2% of global oil production
0.4% of global gas reserves
0.6% of global gas productionLUKOIL operates in 37 countries of the world.
Exploration 11 countries
Proven oil reserves 6 countries
Proven gas reserves 4 countries
Oil production 6 countries
Gas production 4 countries
Oil Processing 6 countries
Petrochemical 3 countries
Fueling Stations 27 countries
LUKOIL among the global private companies:Number 1 in the amount of proven oil reservesNumber 3 in the amount of proven HC reservesNumber 3 in oil production
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EXPLORATION AND PRODUCTION
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LUKOIL In Iraq
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LUKOIL In Iraq
Mega-Project West Qurna-2One of the largest fields in the worldRecoverable reserves - about 14 billion barrels Start of production - 2013Target production level - 1.800 thousand barrels per day - 2017
Exploration Block 10 - 4th bidding round in 2012with Inpex (Japan)
120 km west of Basra
Country Year Number of wells Oil production
Russia 2010 ~24,000 90 million tons p.a.
Iraq 2017 ~600 96 million tons p.a.
Always moving forward
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Always moving forward
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West Qurna-2
DPSC development and production service agreement
Signed: December 2009Period: 20 yearsPeak production 1.8 M bopdRemuneration fee: $1.15 per barrel Stakeholders:
75%
0.25
Project Share
100%
Financing Split
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Extent and Capex of the Project
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3% 1% 1%
15%
55%
6%
19%
TOTAL CAPEX 2010-2013 ($5,6 bln)
Prospect Drilling 3D SeismicResearch and other Well drillingFacilities construction Supplementary costsOther
Total investment until 2030:
30+ billion dollars
West Qurna-2 is the largest project in LUKOIL Overseas history
Early Oil 150 - 400K bbl/day (2013) Full Development 1 800K bbl/day
(2017)
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Insurance for the WQ-2
Major types of insurance purchased:
CAR/EAR OEE Property Damage TPL
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What kind of risk one should expect in Iraq? The LUKOIL case
- Investment program 5+ billion USD (Early Oil)- Standards Best international practice
QA/QCComprehensive Risk Management System
- Contractors
- Logistics Support from SOCCustoms Control zone in WQ-2 areaLevy exemptionThe "Iraqi factor"? Emergency clearance
- Emergency LUKOIL fire brigades and equipment2 well control companies contractedNo customs procedures in case of
emergency15
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What kind of risk one should expect in Iraq? The LUKOIL case
- Safety Terrorism threat:Physical protection, Oil Police, Stationary Safety Posts, Olive Group Situational Centre in Basra.
- Personnel International and local.Training Centre in Basra: 1300 trainees
- Local Population CSR ProgramsJobsSupport of Local Economy
- TPL exposure Remote location, No surrounding industry.Non-litigious society
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Always moving forward
IS NOW THE RIGHT TIME?
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THANK YOU FOR YOUR ATTENTION