Analysis of Risk Allocation of Blowout and Kick in Offshore Drilling Contracts and ‎Insurance Coverage of those Risks

Since 150 years ago, when oil exploration began, significant developments ýhave been made in exploration technologies; however, drilling is still the only ýdefinitive method for ýdetermining the presence of the hydrocarbon ýreservoirs in a formation. Due to the nature of the drilling and lack of ýsufficient information in the oil and gas fields, exploration projects carry ýhidden risks. ‟Loss ýcirculation” that can cause‟ Blow out” and ‟Kick” is one of ýthe most risks of Exploration Drillings. Risk ýmanagement in offshore ýexploration contracts is of the utmost importance and one of the ýefficient ýrisk management´s methods is ‟Insurance”. In this article the allocation ýof ýrisks in Day rate, Turnkey, and Footage Drilling Contracts for‟ Blow out” ýand ‟Kick” risks will be examined and ýaccording to the Insurability Criteria ýand Energy Exploration and Development (EED) ýpolicy wording it will be ýshowed that “Kick” as a drilling risk and a kind of “Blow out”- ýdepending on ýthe situation- is not insurable through the standard available ýinsurance ýpolicies in the market.ý