The top five African oil producers are Nigeria and Angola, followed by Algeria, Egypt and Libya. Others are Congo Republic, Sudan and South Sudan, Equatorial Guinea, Gabon, Chad and Ghana. These markets jointly produced 7,210,000 barrels per day in 2016 with Nigeria, Angola and Algeria producing 70% of the top 10 markets output.
Local energy insurance expertise is limited on the continent and capacity is a problem among domestic African reinsurers because of the huge oil exposures, especially upstream. Capital flight represents over 90% of premium income in Africa.
In this paper we shall beam our searchlight on the operations of the African Oil & Energy Insurance Pool (AOEP), set-up in 1989 to increase local capacity in the continent.
At the 13th General Assembly of the African Insurance Organisation held in Bujumbura, Burundi on 20th June 1986, it was resolved that an African Oil & Energy Pool be established to address the Capacity constraint facing the African energy sector.
The Pool commenced operations in 1989 with the following objectives:
1. To create capacity within African Oil, gas, petrochemical and energy related insurance risks emanating from Africa with a view to reducing foreign exchange outflow.
2. To provide adequate insurance cover to match the rapid technological advancement of individual African countries and to further ensure that oil companies operating in Africa are charged competitive premium rates in order to enhance profitability and stabilize the African Oil insurance market.
3. To create the manpower capacity and acquire technical expertise in the insurance of oil and gas related risks, through a systematic manpower development.
4. To disseminate technical information to members of the pool on issues affecting oil and energy insurance risk.
5. To give technical support and advice to insurance companies operating in Africa on matters relating to risk management and insurance of oil and energy related risks