Standard Offshore Conditions 2009/10

In accordance with Rule 1.3 of the clubs rules for the time being in force, this entry is to cover Protection and Indemnity risks in accordance with the rules subject always to the following terms and conditions. 1. DEFINITIONS In these Standard Offshore Conditions the words and phrases hereinafter set out shall have the following meanings or effects if not inconsistent with the subject or context and shall prevail in the event of any conflict with the rules or any definition contained therein. Contract work includes but is not limited to materials, components, parts, machinery, fixtures, equipment and any other property which is or is destined to become a part of the completed project which is the subject of the contract under which the entered unit is working, or to be used up or consumed in the completion of such project Crew means any person (including the master, crewmember and apprentices) engaged or employed in any capacity in connection with the business or operations of any unit as part of such unit's complement (or substitute for such person) and includes a supernumerary. Ship, where used in the rules or in these Standard Offshore Conditions, means a unit, unless the context requires otherwise. Underwater vehicles includes but is not limited to submarines, mini-submarines, remotely operated vehicles, untethered underwater vehicles, autonomous underwater vehicles, seaploughs, scarabs, diving bells, and similar equipment. Unit means any offshore unit, any other ship or vessel or mobile or temporarily fixed craft, including the risers, flowlines and umbilicals (provided such risers, flowlines and umbilicals are not separated from the unit by any wellhead or well control equipment), floating hoses, buoyancy floats or tanks and mooring systems, or any other description of unit noted in the certificate of entry, which has been entered in the club for insurance, but always excluding any wellhead, well control equipment, down-hole equipment, or any part thereof whether or not on board or connected to the unit. For the purpose of club cover the unit shall cease at the unit side of the point of connection with the wellhead or the well control equipment closest to the unit. Well includes wellheads and well control equipment Wellhead means any wellhead, Christmas tree, template, flowbase, manifold, or any similar structure, wherever situated. Well control equipment means any blowout preventer, blowout preventer stack, diverter, or any similar equipment used for control of well, wherever situated. 2. Exclusions The exclusions set out in rules 4 and 5 shall be deleted in their entirety and shall be replaced with the following exclusions.

Excluded risks Risks covered by hull policies 2.1.1 Unless otherwise agreed by the managers, there shall be no recovery from the club in respect of any liability against which the member would have been insured if at the time of the incident giving rise to that liability the unit had been fully insured for its proper value under hull policies on terms advised to the managers. War risks 2.1.2 Unless otherwise agreed by the managers, there shall be no recovery from the club in respect of any liabilities (irrespective of whether a contributory cause of the same being incurred was any neglect on the part of the member or on the part of the members servants or agents) when the loss or damage, injury, illness or death or other accident in respect of which such liability arises, was caused by: (i) war, civil war, revolution, rebellion, insurrection or civil strife arising there from, or any hostile act by or against a belligerent power, or any act of terrorism; (ii) capture, seizure, arrest, restraint or detainment (barratry and piracy excepted) and the consequences thereof or any attempt thereat; (iii) mines, torpedoes, bombs, rockets, shells, explosives or other similar weapons of war, PROVIDED THAT: this exclusion shall not apply to liabilities which arise solely by reason of: (a) the transport of any such weapons whether on board the unit or not; or (b) the use of any such weapons, either as a result of government order or through compliance with a written direction given by the managers or the board, where the reason for such use was the avoidance or mitigation of liabilities which would otherwise fall within the cover given by the club, PROVIDED ALWAYS THAT: (a) the exclusion in clause 2.1.2 shall not apply to liabilities of a member insofar only as they are discharged by the club on behalf of the member pursuant to a demand made under a certificate issued by the club in compliance with Article VII of the International Conventions on Civil Liability for Oil Pollution Damage 1969 and 1992 or any amendments thereof to the extent such liabilities are not recovered by the member under any other policy of insurance or any extension to the cover provided by the club; and (b) where any such certificate is provided by the club on behalf of the member as guarantor or otherwise, the member agrees that any payment by the club thereunder in discharge of the said liabilities shall, to the extent of any amount recovered under any other policy of insurance or extension to the cover provided by the club, be by way of loan and that there shall be assigned to the club all the rights of the member under any other insurance and against any third party.

In the event of any dispute as to whether or not any act constitutes an act of terrorism, the decision of the board shall be final. Other insurances 2.1.3 Where a member is insured elsewhere in any manner whatsoever against any of the liabilities enumerated which would otherwise have been recoverable under these Standard Offshore Conditions, no contribution shall be made by the club to such liabilities, on the basis of double insurance or otherwise, to the extent to which the member is so insured; nevertheless, with the approval of the managers, a member may be insured, by special agreement with the club, made either directly with himself or with other insurers, upon the terms that certain liabilities shall be borne by the club notwithstanding such other insurance. Radioactive contamination exclusion clause 2.1.4 In no case shall the club be liable for any liabilities (irrespective of whether a contributory cause of the same being incurred was any neglect on the part of the member or his servants or agents) when the loss or damage, injury, illness or death or other accident in respect of which such liability arises or cost or expense is incurred, was directly or indirectly caused by or arises from: (i) ionising radiations from or contamination by radioactivity from any nuclear fuel or from any nuclear waste or from the combustion of nuclear fuel, or; (ii) the radioactive, toxic, explosive, or other hazardous or contaminating properties of any nuclear installation, reactor or other nuclear assembly or nuclear component thereof, or; (iii) any weapon or device employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter; or (iv) the radioactive, toxic, explosive or other hazardous or contaminating properties of any radioactive matter, other than liabilities arising out of carriage of 'excepted matter' (as defined in the Nuclear Installations Act 1965 of the United Kingdom or any regulations made thereunder) as cargo in a unit. Chemical, Bio-Chemical, Electromagnetic Weapons and Computer Virus Exclusion Clause 2.1.5 This clause shall override anything contained in this insurance inconsistent therewith. In no case shall this insurance cover loss damage liability or expense directly or indirectly caused by or contributed to by or arising from: (i) any chemical, biological, bio-chemical or electromagnetic weapon; (ii) the use or operation, as a means for inflicting harm, of any computer virus. Unlawful and hazardous trades 2.1.6 No claim shall be recoverable from the club if it arises out of or is consequent upon a

unit carrying contraband, or blockade running, or being employed in an unlawful trade, or if the board, having regard to all the circumstances, shall be of the opinion that the carriage, trade, voyage or operation was imprudent, unsafe, unduly hazardous or improper.

Excluded losses 2.2 Except as provided in this rule, or otherwise agreed with the managers, there shall be no recovery in respect of: 2.2.1 Loss of or damage to the unit or any part thereof. 2.2.2 Loss of or damage to any equipment on board a unit or to any containers, lashings, stores, or fuel on board to the extent that they are owned or leased by the member or any associated company. 2.2.3 The costs of repairs to the unit or any charges or expenses in connection therewith. 2.2.4 Loss of freight or hire or any proportion thereof in relation to the unit. 2.2.5 Salvage or other services in the nature of salvage rendered to a unit, and any liabilities in connection therewith, other than such as may be covered under clause 3.5 (pollution risks). 2.2.6 Loss arising out of the cancellation of a contract or other engagement of a unit. 2.2.7 Loss arising out of irrecoverable debts or out of the insolvency of any person including the insolvency of agents. 2.2.8 Demurrage on, detention of, costs of delay to, or running costs of a unit. 2.2.9 Liabilities incurred by a member in connection with any claim, including any consequential losses arising therefrom, brought against him arising out of: 2.2.9.1 the failure by the member to perform any work or the fitness for purpose and quality of the members work, products or services, including any defect in the member's work, products or services; or 2.2.9.2 any loss of or damage to the contract work; or 2.2.9.3 the operation by the member of underwater vehicles unless included within the description of the unit; or 2.2.9.4 the activities of professional or commercial divers where the member is responsible for such activities, other than: (a) activities arising out of salvage operations being conducted by a unit, where the divers form part of the crew of that unit (or of diving bells or other similar equipment or craft operating from the unit), and where the member is responsible for the activity of such divers; and (b) incidental diving operations carried out in relation to the inspection, repair or maintenance of the unit or in relation to damage caused by the unit; and

(c) recreational diving activities unless otherwise agreed with the managers and noted in the certificate of entry. 2.2.10 Liabilities arising from or relating to:

2.2.10.1 the control, or regaining of control, of a well; 2.2.10.2 loss of or damage to or costs of reinstatement of a well or reservoir; 2.2.10.3 loss of or damage to any property belonging to any person chartering the unit by way of a charterparty or other contract for the employment of the unit or any other party having an owning interest in the concession, prospect or field in respect of which the unit is employed or utilised caused by blow-out, cratering, or any other uncontrolled flow of oil or gas or water from the wells or reservoirs, where the incident arises in connection with a hole or well or subsea or subsurface operation in respect of which the unit is employed or utilised. 2.2.11 Any liabilities or losses in respect of loss of or damage to or recovery or replacement of any drill-string, casing, tubing or well intervention equipment, whether or not in the sea, which is in or connected to any hole or well in respect of which the unit is employed or utilised or which is owned by the member, and the consequences thereof. 3. Scope of cover and risks covered Rules 2.1 and 2.4 and rule 3 shall be deleted in their entirety and be replaced by this clause 3 as follows: The member shall be insured by the club against the following liabilities to the extent only that: (i) the liabilities, shall have arisen by reason of the members interest in the unit out of events occurring during the period of entry of the unit in the club; and (ii) the liabilities shall have arisen in connection with the operation of the unit by or on behalf of the member (including, but not limited to, activity at one or more supply bases, and transport between the unit and a supply base or a port or an airport in the vicinity of the base where such activity or transport is in connection with the operation of the unit by or on behalf of the member); and (iii) the terms of any contract or indemnity (including a crew agreement or other contract of service or employment) giving rise to such liabilities shall have been approved in writing by the managers. Crew liabilities 3.1 Liabilities in respect of crew on a unit (or proceeding to or from such unit), for which the member may be liable arising out of:

1 loss of life, injury or illness; 2 hospital, medical and funeral expenses; 3 repatriation, including effects, following loss of life, or injury to, or illness of, crew, or from the actual or constructive total loss or major casualty of the unit resulting in the signing-off of the crew; 4 the securing, engaging, or sending of substitute crew, to replace crew, or substitutes, on board a unit: (i) who shall have died; or (ii) who shall have been left ashore or repatriated in consequence of injury or illness; or (iii) following the death or serious illness of a close relative; or (iv) in any other case in which the board shall determine that such expenses were reasonably incurred; 5 wages or other compensation payable to crew resulting from: (i) actual or constructive total loss or major casualty of the unit; (ii) injury or sickness of the crew; (iii) death of the crew, payable to the crews estate; 6 loss of or damage to crew personal effects; 7 costs incurred solely for the purpose of landing crew, including the net loss to the member in respect of fuel, insurance, wages, stores and provisions incurred for such purpose or while awaiting a substitute. Liabilities in respect of third parties for death, injury and illness 3.2 Liabilities in respect of any person other than crew of the unit, for which a member may become liable to such person, in respect of: 1 loss of life, or injury or illness; 2 hospital, medical and funeral expenses; 3 costs incurred solely for the purpose of: (i) saving persons at sea and landing such persons; (ii) landing stowaways, refugees, or an injured or sick person and securing their necessary treatment, including the net loss to member in respect of fuel, insurance, wages, stores and provisions incurred for such purpose.

Collision liability 3.3 Liabilities incurred as a result of a collision with another unit with costs and expenses incidental thereto, if and to the extent that such liabilities are not covered under the hull policies

PROVIDED THAT: (a) the hull policies are for the proper value of the unit on terms agreed in writing by the managers; (b) unless otherwise agreed at the time of entry, a member shall not be entitled to recover from the club any excess, franchise or deductible borne by him under the hull policies; (c) if a claim arises under this clause 3.3 upon a collision involving two units belonging to the same member, he shall be entitled to recover from the club, and the club shall have the same rights as if the units had belonged to different owners; (d) if both units are to blame, then unless the liability of the owner of one or both of them becomes limited by law, claims under this clause 3.3 shall be settled upon the principle of cross-liabilities, as if the owner of each unit had been compelled to pay the owner of the other unit one-half or such other proportion of the latters damages as may have been properly allowed in ascertaining the balance or sum payable by or to the former in consequence of the collision; (e) there shall be no recovery from the club insofar as the collision liability, with costs and expenses incidental thereto, is not recoverable under the hull policies by reason of a breach or breaches of any term, warranty or condition of such policies. Damage to property 3.4 Liability for loss of or damage or delay to or for interference with rights in relation to: 1 any property or equipment, or any fixed or moveable thing whatsoever; 2 any other unit, ship, vessel or any property therein, where such liability costs or expenses under this clause 3.4 are: (i) imposed by statute; or (ii) arise out of the negligent navigation or management of a unit, or other negligent act or omission on board, or in relation to a unit; or (iii) arise under the terms of an indemnity given by the member PROVIDED THAT: (a) such property is not owned or leased by the member; (b) there shall be no recovery under this clause 3.4 in respect of any liabilities which are within the scope of clauses 3.3 (collision liability) and 3.5 (pollution risks).

3.5

Pollution risks

Liability, including fines imposed in respect of the accidental escape or discharge of oil or any other substance, for loss or damage or contamination caused by: 1 seepage of or pollution by; 2 discharge or escape of (or imminent danger thereof); 3 clean-up or containment of, oil or any other seeping or polluting or contaminating substance emanating from, or resulting from the operations of, the unit (including measures to avert or to minimise or to prevent such occurrence or the threat thereof) arising under: (i) statute or general law; or (ii) contractual agreements; or (iii) voluntary agreements assuming strict liability; or (iv) a salvage agreement to compensate salvors for work done or measures taken to prevent or reduce the risk thereof; or (v) any liability being incurred after the unit has become a wreck, PROVIDED THAT: there shall be no cover, nor any entitlement to recovery under this clause 3.5: (a) for liabilities, including fines and any consequential losses therefrom, which are recoverable under the hull policies or any other insurance; or (b) for liabilities, including fines and any consequential losses therefrom, which arise out of: (i) pollution from the hole or well or subsea or subsurface operation in respect of which the unit is employed or utilised and measures taken to avert or minimise such liabilities; (ii) subsea or underground pollution; (iii) seepage or an uncontrolled flow from any flow-line, riser, floating hose, umbilical, or mooring system connected to the unit or out of measures to avert or minimise such liabilities or losses unless such equipment is included with, and is part of, the description of the unit; (iv) loss of or damage to any property belonging to any person chartering the unit by way of a charter party or other contract for the employment of the unit and any other party having an owning interest in the concession, prospect or field in respect of which the unit is employed or utilised caused by seepage or pollution from the wells or reservoirs,

PROVIDED THAT: the liability arises in connection with a hole or well or subsea or subsurface operation in respect of which the unit is employed or utilised or

(c) for any liability, including, without limitation, liability for the cost of any remedial works or clean-up operations, arising as a result of the presence in, or the escape or discharge or threat of escape or discharge from, any land based dump, site, storage or disposal facility of any substance previously carried on the entered unit whether as cargo, fuel, stores or waste and whether at any time mixed in whole or in part with any other substance whatsoever, unless the board otherwise determines; or (d) for liabilities, including fines and any consequential losses therefrom, which arise out of any oil pollution incident within the United States Exclusive Economic Zone, unless agreed in writing by the managers. Wreck removal 3.6 Liabilities: 1 of and incidental to the raising, removal, destruction, lighting or marking of the unit, or parts thereof, which became a wreck as the result of a casualty; of and incidental to the raising, removal, destruction, lighting or marking of the drill string or any part thereof which has been lost or deposited on the seabed as a result of a casualty and which is not in or connected to any hole or well; incurred by reason of the presence or involuntary shifting of the wreck of the unit as a result of a casualty; resulting from the unit causing an obstruction,

when such liabilities are compulsory by law or are legally recoverable from the member under contract PROVIDED THAT: (a) no sum shall be recoverable if the member shall, without the consent of the managers, have transferred his interest in the wreck otherwise than by abandonment; (b) the value of all property salved, including the wreck, shall be credited to the club; (c) there shall be no cover for, nor any entitlement to recovery, of: (i) any liabilities incurred by a member in connection with any claim brought against him relating to clean-up of debris, tools, machinery or equipment lost or deposited on the seabed during operations, save to the extent recoverable under clause 3.6 1 - 4 above; or

(ii) any liabilities incurred more than two years after the unit became a wreck, without the consent of the managers. 3.7 Fines 3.7.1 Fines imposed for failure to comply with regulations relating to declarations of goods or, relating to the documentation of the unit or its cargo; 3.7.2 Fines imposed for smuggling or any infringement of any customs law or customs regulation relating to the construction, adaptation, alteration or fitment of the unit; 3.7.3 Fines imposed for breach of any matter relating to immigration in respect of a unit; 3.7.4 Fines imposed in respect of a unit (other than fines covered in clause 3.5, pollution risks, above or in sub-clauses 1 to 3 of this clause 3.7) to the extent that: (i) the member has satisfied the board that he took such steps as appear reasonable to it to avoid the event giving rise to the fine or penalty; and (ii) any amounts claimed in respect of such fines shall be recoverable to such an extent only as the board in its discretion may determine without having to give any reason for its decision, PROVIDED THAT (in relation to sub-clauses 1 to 4 of this clause 3.7 inclusive): (a) (i) the fine has been imposed on the member; or (ii) the fine has been imposed upon any crew of the unit or other person whom the member is legally liable to reimburse or reasonably reimburses or reasonably discharges the fine; or (iii) the member is legally liable to indemnify a third party for the fine in whole or in part; (b) there shall be no recovery from the club in respect of a fine imposed on any crew of a unit or other person by reason of any wilful misconduct committed by such crew or other person unless: (i) the member has been compelled by law to pay such fine; or (ii) the member has reasonably paid such fine in order to prevent the arrest of the unit or any other unit or property belonging to such member or in order to secure its release from arrest; or (iii) the board in its discretion shall otherwise determine; (c) unless the board in its discretion otherwise determines there shall be no recovery in respect of a fine imposed for or arising out of: (i) the overloading of a unit; or

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(ii) any personal act or default on the part of the member or on the part of his managers. Enquiry expenses 3.8 Costs and expenses incurred by a member in defending himself or in protecting his interests before a formal enquiry into the loss of or casualty to a unit in cases in which, in the opinion of the managers, a claim upon the club is likely to arise out of such loss or casualty, or in other cases to the extent and on such conditions as the board in its discretion may determine. Costs of sue and labour 3.9 Extraordinary costs and expenses reasonably incurred on or after the occurrence of any casualty, event or matter liable to give rise to a claim upon the club and incurred solely for the purpose of avoiding or minimising any liability or expenditure against which the member is wholly, or by reason of a deductible, partly insured by the club but only to the extent that those costs and expenses have been incurred with the prior agreement in writing of the managers or to the extent that the board in its sole discretion may determine; PROVIDED ALWAYS THAT: unless the managers, or the board, as the case may be, otherwise decide, there shall be deducted from such costs and expenses the deductible, if any, which would have been applicable had the liability or expenditure against which the member is indemnified by the club been incurred. Expenses incurred by direction of the board or incidental to the operation of the unit 3.10 Liabilities and losses: 1 incurred by a member by special direction of the board;

2 incidental to the business of owning, operating or managing units, but only if and to the extent that the board in its discretion may determine.

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