Cause of loss and insurance coverage

The uncontrolled gas escape may have been caused by a combination of factors: large gas losses and inadequate reserves of drilling fluid and water. In addition, the safety regulations were not properly observed when attempts were made to remedy the losses. When a "critical gas loss" situation had been reached, for example, the well bore was not closed with the preventer and the drill string was not withdrawn.

This resulted in large volumes of gas escaping under high pressure and igniting – presumably on an electrical unit. In the final analysis, the explosion and fire were due to faulty performance since the work instructions had not been followed during drilling operations.

The policy covered the damage to buildings and drilling installations and the loss of the stored natural gas as current assets. Business interruption was not insured. Cover existed for all instances of loss and damage, including those resulting from gross negligence on the part of the policyholder's employees or those of a party specifically named in the policy, which meant that the breach of safety regulations was also covered.

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