SPE 82004
The Utilization of Loss Matrix to Determine the Risks of an
Offshore Petroleum Production Unit
Armando Celestino Gonçalves Neto, DSc/Cunningham Lindsey
Copyright 2003, Society of Petroleum Engineers Inc.
This paper was prepared for presentation at the SPE Hydrocarbon Economics and Evaluation
Symposium held in Dallas, Texas, U.S.A., 5–8 April 2003.
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Abstract
The main purpose of this paper is to provide a
methodology of decision which will help the Oil Companies
Risk Managers to deal with some specific material risks,
utilizing insurance coverage, in projects with private partners
assuming the financial support of a new offshore facility
construction and operation instead of Public sources.
To that end, we will discuss a possible Risk Management
process, which encloses the Loss matrix for risk assessment, in
order to evaluate the worst loss scenario that can impact the
cash flow of the business, which is structured by Project
Finance modeling.
1. Introduction
Nowadays, it is remarkable how the Government
Authorities in developing countries have been looking for
private resources in order to supply their needs of capital to
implement the new infrastructure projects. The actual
economic environment hides other typical measures used in
the past, mainly the appearance of taxes to increase
Public budget.
Otherwise, as Aschauer (1) have mentioned in opposition
to Keynes’ classical Theory, in the present days there are
many doubts that an increase on Public expense would result
in an economic growth.
Besides these facts, it has been a difficult task the
attainment of funds from oversea institutions, either from
Multilateral Agencies such as from International Banks or
Syndicates. The aftermath of those harm conditions has been
transforming the capital funding structure around the world.
The traditional way of money borrowing (Corporate Finance)
has been changed – from infrastructure projects to Project
Finance basis.
Virgílio José Martins Ferreira Filho, DSc/UFRJ
At the point of view of Corporate Finance, the lenders of a
new project have been focused basically on recover their
capital without bearing or at least considering risks involved
others than the sponsors’ capacity of debt service repayment.
They analyze only the economic sponsors’ health. Thus, they
will spread an interest tax reflecting their financial sensibility
of this kind of risk.
On the other hand, with a different perspective, the Project
Finance Model tries to split the risks into all players of a new
project. Although it is a more complex risk analysis form, it
would generate a stronger financial structure in order to
preserve all players rights enclosed.
The Project Finance modeling has some specific features,
which will be shown below:
a) The main guarantee is the cash flow generation by the
project itself, not the sponsors assets:
b) The business risk or the so called market risk is segregated
from project risks themselves by the creation of a new
company, whose entity is different from sponsors and
lenders and others players juridical structures, called
Special Purpose Company (SPC). This artifice allows
some particular differences from Corporate Finance basis:
B1- Project Finance, in its pure form, does not permit the
lenders regret against sponsor asset directly – in case of
project failure;
B2 – Project Finance is an off balance sheet, i.e., these
situations diminish the proportional debt to the sponsors’
assets. This is an important factor because the sponsor can
be involved in other Public bidding processes, which limit
the debt capacity.
c) Project Finance Structure requires a complex network of
guaranties in order to preserve comprised players’ rights
and indicate which part will bear a particular risk, in case
of its materialization. This network usually increases
transaction costs and its arrangements imply many efforts
to conciliate the different interests involved – which are
sometimes in conflict. Generally, it implies that the
funding cost will be higher here than on Corporate
Finance modality;
d) The presence of Multilateral Agencies: many of these new
infrastructure projects have been implemented in
developing countries. So, the lenders’ risk perception will
focus the country risk, regarding political issues, stability
of laws and Public Institutions and interfaced matters. In
this particular, the presence of the Multilateral Agencies
contributes to improve lenders’ risk perception considering
2 SPE 82004
that part of these risks will be assumed by these Agencies.
Therefore, it increases the project credibility consequently
decreasing the capital cost;
e) The use of BOT contracts: many of the developing
countries have been trying to adequate their internal
political and organizational procedures in order to attend to
IMF premises, among other overseas funding corporations,
to get more financial resources for their needs, particularly
for infrastructure assets. This remodeling many times
encloses the use of privatization of several
infrastructure assets.
To achieve this optimal point, it is common to use the BOT
(Build, Operate and Transfer) contracts to attack private
capital, either national or international. Using BOT, the
Government utilizes the private firms to build its projects,
allowing the private partners to get the earnings until a
certain time established in the contract wordings, and
receive the asset at the end of concession time.
BOO (Build, Operate and Own) is another contractual
instrument. However, this kind of contract is not so used
because the private partners will retain the asset until the
end of its useful life. Therefore, if BOO alternative is
chosen the authorities can only interfere in its
administration as a market regulator.
2. The concept of Private Provision of Infrastructure
Projects applied to Oil and Gas Industry
Taking into account that Governmental resources have
been decreasing and are not able to support the construction of
an energy asset, Project Finance modeling is a great option to
attract private capital. These projects, including Oil and Gas
facilities, where the private sector takes an important role in
the funding and administration processes are called Private
Provision of Infrastructure Projects or simply PPI Projects.
Again it is relevant highlight that there are various
different players involved with conflicting interests and rights.
Thus, this will generate complex arrangements of guarantees
in order to face a possible materialization of a specific risk and
determine which part will assume this risk. This kind of
issuing risks is named Risk Allocation.
Arndt (2) proposed three main possibilities to share the
risks among the players:
a) Entrenchment of Rights: in this approach each part has
specifically defined rights and obligations. This is the most
clear and certain kind of risk allocation of all and,
generally, is the most common form used to spread the
risks in a PPI contract;
b) Material Adverse Effect (MAE) approach: this form seeks
to define particular risks, which will arise from
Government or be shared in some way. This type is similar
to the entrenchment of rights approach in that it clearly
allocates the liability for certain defined risks to specified
parties. MAE methods of risk allocation specify a
mechanism to determine which effect the risk
materialization has had on the project and how to
determine the ensuing compensation. The forms of
compensation may be pre-defined and include options such
as allow the tariffs to be increased or extend the term
of concession;
c) Agree to negotiate approach: this is the most flexible risk
sharing mechanism, which encloses the agreement among
the parties to renegotiate the contract in the event of a
major risk occurrence.
3. Risk management Process steps for PPI projects
When one is dealing with PPI projects, the Government
can use a basic Risk Management Process subdivided into
two steps:
1) Risk Identification – this task consists on listing the main
exposures, which can impact the project cash flow, besides
causing severe business interruption losses;
2) Risk Assessment – in this step the Risk Manager could
bear this issue with two instruments as described below:
2.a) Risk matrix – this structure basically comprises a
qualitative approach. The American Bureau of Shipping –
ABS – (3) has described a method for offshore facilities
as follows:
“Another method to characterize risk is categorization. In
this case, the analyst must:
(i) define the probability and consequence categories to be
used in evaluating each scenario and;
(ii) define the level of risk associated with
probability/consequence category combination.
Frequency and consequence categories can be developed in
a qualitative or quantitative manner. Qualitative schemes
(i.e., low, medium, or high) typically qualitative criteria
and examples of each category will ensure consistent risk
classification. Multiple consequence classification criteria
may be required to address safety, environmental,
operability and other types of consequences. The tables 3.1
and 3.2 provide examples of criteria for categorization of
consequences and probability.
Category Description Definition
1 Negligible Passenger inconvenience, minor damage
2 Marginal Marine injuries treated by first aid,
significant damage not affecting
seaworthiness, less than 25K
3 Critical Reportable marine casualty (46 CFR 4.05-
1)
4 Catastrophic Death, loss of vessel, serious damages
incident (46 CFR 4.03- 2)
Table 3.1 Risk categorization example (ABS).
Probability* Description
Low The mishap scenario is considered highly unlikely
Low to Medium The mishap scenario is considered unlikely. It
could happen, but it would be surprising if it did.
Medium to High The mishap scenario might occur. It would be too
surprising if it did.
High The mishap scenario has occurred in the past
and/or is expected to occur in the future.
Table 3.2 Example of probability classification.
* Probability assessments are for the remaining life of the system,
assuming normal maintenance and repair.
Once assignment of consequences and probabilities is
complete, a risk matrix can be used as a mechanism for
assigning risk (and making risk acceptance decisions),
using a risk categorization approach. Each cell in the
matrix corresponds to a specific combination of probability
SPE 82004
and consequence and can be assigned a priority number or
some other risk descriptor (as shown in Figure 3.1). An
organization must define the categories that it will use to
score risks and, more importantly, how it will prioritize
and respond to the various levels of risks associated with
cells in the matrix.”
High A M U U
Medium to
A M U U
High
Low to
A A M U
Medium
Low A A A M
Negligible Marginal Critical Catastrophic
Figure 3.1 Example of Risk matrix.
Legend: A = Acceptable
M = Marginal
U = Unacceptable
2.b) Loss Matrix: Heins and Williams (4) have mentioned the
basic concept of Loss Matrix and its application on
Insurance Industry. In this regard, according to some
insurance concepts, we have adopted this Loss matrix in
order to help the Risk Manager of Oil Company involved
in the decision of buying or not a specific insurance
coverage hedging his company against a particular risk of
material damage materialization. Before showing this
matrix, let us define some important insurance notions that
will be used in the Case Study in section 4, according to
ERC Frankona (5):
• Estimated Maximum Loss (EML): an estimate of
monetary loss that could be sustained by insurers on a
single risk as a result of single fire or explosion or other
material risk considered to be within the realms of
probability. The estimate ignores such remote
coincidences and catastrophes as may be a possibility but
which still remain unlikely;
• Maximum Possible Loss (MPL): this value means the
monetary loss which may occur in extraordinary
coincidences of most disadvantageous circumstances
with the effect of preventing or hindering fighting
measures, so that the material risk continues to damage
until its extinguishments;
• Normal Loss Expectancy (NLE): it is an estimate of the
largest loss – excluding a catastrophic loss – which is to
be expected at a given site, assuming that all available
protective system and measures function properly;
• Worry Factor (WF): as pointed by Reins and Williams
(4), regarding Oil and Gas Industry, this is a subjective
estimative of the financial loss due to a risk grade
decreasing evaluation by Risk rating Agencies or the
financial loss due to a materialization of a possible
material damage that could affect – in a short term – the
value per share issued by the Oil Company;
• Risk Premium (RP): this value is the monetary amount
paid by the insured to get their insurance coverage during
a certain period;
3
• Loss not Insurable (LNI): this amount represents that
part of loss which is not covered under the
policy wordings;
• Insurable Losses (IL): this amount represents that part of
loss which is covered by insurance policy, although it
would take into account the deductible prescribed in
the wordings;
• Cost of safety measures (CSM): the cost to improve loss
prevention measures.
The Loss Matrix structure is shown below:
Decision Costs NLE EML MPL No Claim
IL
1 LNI
WF1
IL
2 LNI
CSM
WF2
3 RP
LNI
Table 3.2 Loss matrix scheme.
Decision 1 – Insured makes a total retention of its risk
Decision 2 – Insured retains its risks assuming CSM
Decision 3 - Insured buys an all risks insurance policy
Hypothesis of Loss Matrix model:
i. the decision criterion is the expected value
minimization for each range of loss;
ii. assume that CSM will not imply on the modification of
financial value of loss. However, these measures will
decrease the probability of occurrence of a material
damage risk;
iii. The most common way to evaluate the WF value is
assume a range of loss corresponding to the WF
assumed and verify if the decisions remain coherent;
iv. The IL, LNI and RP will be deducted from the Income
Tax as they are considered expenses which will be
deducted from the Operational Profit, decreasing owed
Income Tax;
v. The WF, as a subjective and intangible value, will not
be deducted from the Income Tax.
Reins and Williams (4) present the decision equations
derived from the Loss matrix in order to obtain the WF values:
Total Retention:
(IL + LNI) x p1 + WF1
Retention with adoption of CSM:
(IL + LNI) x p2 + (CSM) x (1 – p2) + WF2
Buy all risks insurance policy:
RP + WF
Modifying the WK value, within the range pre-determined, it
will result in two comparative equations:
4 SPE 82004

(I) WF1 > RP – (IL + LNI) x p1 M5 Passing vessel collision with Operational failure on passing
FPSO or shuttle tanker vessel
Error in response by tanker
(II) WF2 > RP – (IL + LNI) x p2 + (CSM)(1 – p2) Failure to initiate evacuation in
time
Therefore the possible decisions would be: M6 Strong collision by supply Operational error on supply
1o) If (I) and (II) are true the best decision is buy an All vessel with FPSO or shuttle vessel
tanker Failure to react timely in case of
Risks Insurance Policy; warning
2o) If (I) is true and (II) is false the best decision is Total M7 Other vessels or floating Operational error on installation
Retention; structures operating on the field Failure to react timely in case of
3o) If (I) is false and (II) is true the best decision is colliding with FPSO or shuttle warning
tanker
Retention with safety measures.
M8 Collision during offloading Operational error on shuttle
tanker
4. Case Study: The decision of buying an insurance Error in response by tanker
coverage for the event of an oil leakage on an FPSO- Failure to initiate evacuation in
type production unit in Gulf of Mexico time
M9 Rapid change of wind direction Error to respond timely by
operating turret or thrusters
A new oil field to be developed in deep water can be Failure to initiate evacuation in
explored by FPSO-type units. These production systems time
present an excellent performance on the wild waters of North M10 Multip[le anchor failure Error to respond timely by
operating turret or thrusters
Sea and are also used in Campos Basin, Brazil. Failure to initiate evacuation in
Our case will be focused on a new field in the area of Gulf time
of Mexico since the leakages probabilities are available as for H1 Leak that may lead to fire or Errors during operation or
several types of causes and severity grades in DNV (5). explosion in process plant maintenance of equipment
Error during response to
On the decision making process the steps to be followed accident development
are: Failure to initiate evacuation in
Step 1: Main risks identification; time
Step 2: Events probabilities attainment and worry factors H2 Leak from turret systems that Errors during operation or
may cause fire or explosion in maintenance of equipment
estimation;
turret Error during response to
Step 3: Loss Matrix construction (an instrument used for accident development
decision-making). Failure to initiate evacuation in
time
Step 1: Risks identification for FPSOs systems H3 Leak or rupture of riser Errors during operation or
maintenance of equipment
Error during response to
Starting from risks relations in FPSOs and its probable accident development
causes due to human failures, elaborated by Vinnem (6), the Failure to initiate evacuation in
main events that can affect a FPSO production system will be time
H4 Impacting loads due to crane Failure to take necessary
presented in Table 4.1. operations (swinging loads) on precautions
The author classifies the risks of this type of facilities in 3 a moving vessel. Failure to avoid contact with
categories: equipment
• Category M: accidents related to marine conditions acting H5 Dropped object from retrieval Failure to take necessary
of cargo pumps. precautions
on vessel hull causing possible impacts over the structure Failure to avoid contact with
of the same; equipment
• Category H: accidents on hydrocarbons H6 Severe rolling during critical Failure to carry outwork tasks
processing systems; operations, such as crane safety due to extensive
operations. movements
• Category A: accidents on ancillary production systems. Failure to control possible
threats due to extensive
No hazard Typical Human Error movements
M1 Hull failure due to extreme Failure to react to increasing H7 « Topside » fire threatening Error during response to
wave load sea state cargo tank accident development
Failure to initiate evacuation in Failure to initiate evacuation in
time time
M2 Hull failure or marine accident Failure during ballasting and/or H8 Emergency flaring with Failure to warn vessel in time
due to ballast failure or failure loading/off-loading operations approaching shuttle tanker or Failure to react to warnings
during loading/off-loading Error to respond timely to during off-loading.
operations warnings H9 Unintended release of riser. Error in responding to alarms
Failure to initiate evacuation in H10 Work in open air spaces during Errors during operation or
time winter conditions. maintenance of equipment
M3 Leak from cargo tank caused by Error during preparations for A1 Failure of cargo tank explosion Failure to respond adequately to
fatigue interventions prevention function threat
Error during inspection or repair Failure to initiate evacuation in
M4 Accident during tank Error during preparations for time
intervention interventions A2 Fire or explosion in pump room Errors during maintenance
Error during inspection or repair Error during response to
SPE 82004 5

accident development An expected value of loss in each decision, choosing the

Failure to initiate evacuation in one that presents the lower value, will be calculated.
time
A3 Spill from off-loading system. Operational error during making It should be stood out that the insurance premiums will not
connection or disconnection be arbitrated since they will vary, depending on risk selection
A4 Engine room fire or explosion Errors during maintenance criteria (which reflect the insurer risk aversion), adopted value
Error during response to for the deductibles and loadings that have been used. It is
accident development
Failure to initiate evacuation in
important to highlight that it is admitted the use of gross
time premium (already loaded).
A5 Helicopter crash Pillot error during approach To the purpose of a better idea of methodology, the losses
Pilot failing to react to special scenario on Table 4.2 has been enlarged to include the new
wind conditions
worry factors.
Table 4.1 Main risks affecting an FPSO facility associated This way, the following table 4.2a has been obtained:
with human failures (see reference 6)
V Max Loss WF
Step 2: Attainment of oil leakage probability and Prob.
(x 104 bbl) (x 106 US$) (x 106 US$)
estimation of worry factors values 1st Scenario 2nd Scenario 3rd Scenario
1<V<5 1.35 0,36 0.5 0.5 5
5<v<10 2.75 0,36 1 1 10
With the intent of determinate the oil leakages probability, 10<V<50 13.5 0,28 0.5 5 50
the event was restricted to previously mentioned risk category V>50 neglected 0,00 - - -
H, which probabilities have been determined as a function of Total - 1,00 - - -
leakage severity from the study named above (5). Table 4.2a – Loss Scenarios.
The worry factors have been arbitrated as a function of loss
financial consequences. To this end, the oil barrel price was The best decision in each losses scenario will be
considered equal to US$ 27.00 (WTI oil average on calculated in succession.
April 2002).
So, the following was obtained: In the following tables, presented in the end of the paper,
Leaked Oil Volume Max Loss Probability WF (x 106 we built three possible losses scenarios, considering three
(V) (bbl) (x 106 US$) US$) alternative decision above mentioned.
1<V<5 1.35 36 5 In the sequence is shown the outcomes of the best
5<V<10 2.75 36 10
decisions for each loss scenario:
10<V<50 13.5 28 50
V>50 neglected 0 -
Total - 100 - 1st Scenario: Lower Losses
Table 4.2 – Losses scenarios. (a) Expected Value of Total Retention Loss

The worry factors values have been arbitrated in E(p)1 = Σ (LNI + WF) x pi
consideration only of the environmental fines that are to be
imposed against arising from an oil leakage to the ocean. Where:
Losses referring to oil company image resulting from this type pi = probabilities by event severity grade
of accident have not been computed since they are very
difficult to earn. On an actual case they would be estimated, So:
for instance, as on the loss event of Petrobras P-36 on 2001, by E(p) = (1,400,000.00) x 0,36 + (2,850,000.00) x 0,36 +
means of the value fall on stock exchange of the (14,000,000.00) x 0,28
company stocks.
Furthermore, WF values were arbitrated in consideration E(p)1 = US$ 5,450,000.00
of the non-existing coverage to the event. In case the oil
company had a total insurance against leakage risk, the worry (b) Expected Value of Loss in Insurance with deductible
factor would be zero. Still further, in case the insurance
included a deducible deductible application, the own E(p)2 = Σ(LNI+ WF)x pi + RP2
deductible would equal the worry factor value. It should be
stood out that losses referring to image and other intangible E(p)2 = (550,000.00) x 0,36 + (600,000.00) x 0,36 +
possible factors are being discarded. (1,000,000.00) x 0,28 + RP2

Step 3: Losses Matrix Building E(p)2 = US$ 694,000.00 + RP2

Three possible decisions to make will be studied:
Decision 1: Total retention of risk;
Decision 2: Buy an insurance coverage with US$
500,000.00 of deductible;
Decision 3: Buy a total insurance (all risks type, no
deductible).
(c) Expected Value of Loss with Total Insurance
In this case, the sole cost will be the insurance
acquisition. Then, it can be obtained:
E(p)3 = RP2
6 SPE 82004
Conclusion
(i) With expected losses values amounts more than
US$ 4,756,000.00 and less than US$
5,450,000.00 the right decision is to buy a
insurance with deductible.
(ii) If RP2 < E(p)2 + RP1 the right decision is to buy a
insurance all risks policy.
2nd Scenario: Intermediate Losses
(a) Expected Value of Total Retention Loss
E(p)1 = Σ (LNI + WF) x pi
E(p)1 = (1,850,000.00) x 0,36 + (3,750,000.00) x 0,36
+ (18,500,000.00) x 0,28 = US$ 7,196,000.00
(b) Expected Value of Loss in Deductible Insurance
E(p)2 = Σ (LNI + WF) x pi + RP1
E(p)2 = (1,00,000.00) x 0,36 + (1,500,000.00) x 0,36 +
(5,500,000.00) x 0,28 + RP1
E(p)2 = US$ 2,440,000.00 + RP1
(c) Expected Value of Loss with Total Insurance
E(p)3 = RP2
Conclusion:
(i) With expected losses values amounting more
than US$ 4,756,000.00 and less than US$
7,196,000.00 the right decision is to buy a
insurance with deductible.
(ii) If RP2 < E(p)2 + RP1 the right decision is to buy a
insurance all risks policy.
3rd Scenario:Critical Losses
(a) Expected Value of Total Retention Loss
E(p)1 = Σ (LNI + WF) x pi
E(p)1 = (6,350,000.00) x 0,36 + (12,750,000.00) x 0,36
+ (63,500,000.00) x 0,28
E(p)1 = US$ 24,656,000.00
(b) Expected Value of Loss in Deductible Insurance
E(p)2 = Σ (LNI + WF) x pi + RP1
E(p)2 = (5,500,000.00) x 0,36 + (10,500,000.00) x 0,36
+ (50,500,000.00) x 0,28 + RP1
E(p)2 = US$ 19,900,000.00 + RP1
(c) Expected Value of Loss with Total Insurance
E(p)3 = RP2
Conclusion:
(i) With expected losses values amounting more than
US$ 6,756,000.00 and less than US$ 24,656,000.00
the right decision is to buy a insurance with
deductible.
(ii) If RP2 < E(p)2 + RP1 the right decision is to buy a
insurance all risks policy.
Final Comments
The applied methodology is one of easy application and
comprehension as long as one can have on hands the estimated
losses and its probabilities. The insurances prize will be
attained by means of quotations in the insurance market.
The sole value that presents a high degree of incertitude is
the intangible losses value expressed by WF variable.
Taking account of general behavior of decision makers risk
aversion and the large losses involved, the larger decision
makers will be the more comfortable buying an all risk policy.
5. Conclusions
The inclusion of the Loss matrix in the Risk Assessment
process will be beneficial for an appraisal of the best
alternative of risk allocation among all players involved in a
PPI project within the Oil and Gas industry.
Therefore, it will allow the improvement of Project
Finance modeling to new offshore facilities in developing
countries.
Acknowledgements
We would like to make a special mention for ANP (Agência
Nacional do Petróleo) and Cunningham Lindsey International,
which have sponsored our research.
References:
1. Aschauer, D. :Is Public Expenditure Productive ?, Journal of
Monetary Economics, n 23, p.177-200, Mar.1990.
2. Arndt, R.H. : Getting a fair deal: Efficient Allocation in Private
Provision of Infrastructure, The University of Melburne, PhD
Dissertation, July 2000.
3. ABS (American Bureau of Shipping): Risk Assessment
Application for Marine and Offshore Oil and Gas Industries
(2000)
4. Heins, J; Williams, M: Risk Insurance Management. Detroit.
1985.
5. ERC Frankona: EML or PML Does It Make a Difference?
www.geercgroup.com/gpc/resource_center/publications/
6. Det Norske Veritas (DNV): Frequency Analysis of Accidental Oil
Releases from FPSO Operations in the Gulf of Mexico. Houston.
Janeiro 2001.
7. Vinnem, J.: Risk Assessment of FPSOs. Journal of Offshore
Mechanics and Artic Engineering. Volume 118, no 3,
August 1996.
SPE 82004 7

1st Scenario: Lower Losses

Decision Costs Expenses by Leakage Range (US$)

10000<V<50000 (bbl) 50000<V<100000 (bbl) 100000<V<500000 (bbl)
Total Retention PAS 0 0 0
PANS 1,350,000.00 2,750,000.00 13,500,000.00
WF 50,000.00 100,000.00 500,000.00
PS 0 0 0
Total Insurance PAS 850,000.00 2,250,000.00 13,000,000.00
With a deductible of PANS 500,000.00 500,000.00 500,000.00
US$ 500,000.00 WF 50,000.00 100,000.00 500,000.00
PS PS1 PS1 PS1
Total Insurance PAS 1,400,000.00 2,850,000.00 14,000,000.00
PANS 0 0 0
WF 0 0 0
PS PS2 PS2 PS2
Table 4.3 – Loss Matrix on 1st Scenario (lower losses).

2nd Scenario: Intermediate Losses

Decision Costs Expenses by Leakage Range (US$)

10000<V<50000 (bbl) 50000<V<100000 (bbl) 100000<V<500000 (bbl)
Total Retention PAS 0 0 0
PANS 1,350,000.00 2,750,000.00 13,500,000.00
WF 500,000.00 1,000,000.00 5,000,000.00
PS 0 0 0
Total Insurance PAS 850,000.00 2,250,000.00 13,000,000.00
With a deductible of PANS 500,000.00 500,000.00 500,000.00
US$ 500,000.00 WF 500,000.00 1,000,000.00 5,000,000.00
PS PS1 PS1 PS1
Total Insurance PAS 1,850,000.00 3,750,000.00 18,500,000.00
PANS 0 0 0
WF 0 0 0
PS PS2 PS2 PS2
Table 4.4 – Loss Matrix on 2nd Scenario (intermediate losses).

3rd Scenario:Critical Losses

Decision Costs Expenses by Leakage Range (US$)

10000<V<50000 (bbl) 50000<V<100000 (bbl) 100000<V<500000 (bbl)
Total Retention PAS 0 0 0
PANS 1,350,000.00 2,750,000.00 13,500,000.00
WF 5,000,000.00 10,000,000.00 50,000,000.00
PS 0 0 0
Total Insurance PAS 850,000.00 2,250,000.00 13,000,000.00
With a deductible of PANS 500,000.00 500,000.00 500,000.00
US$ 500,000.00 WF 5,000,000.00 10,000,000.00 50,000,000.00
PS PS1 PS1 PS1
Total Insurance PAS 6,350,000.00 12,750,000.00 63,500,000.00
PANS 0 0 0
WF 0 0 0
PS PS2 PS2 PS2
Table 4.5 – Loss Matrix on 3rd Scenario (critical losses).