Voluntary Insurance of Drilling Operations

Objects of Insurance – Oil, gas, geothermal, water, and other wells where:

• Work is carried out on drilling, deepening, maintenance, repair, restoration, or preparation for production – until completion of these works or until insurance termination for other reasons;

• Oil, natural gas, or other liquid or gaseous minerals are being extracted;

• Production of oil, natural gas, or other minerals is temporarily stopped for any reason, and the well is plugged or otherwise mothballed;

• Production is stopped after oil- or gas-bearing layers feeding the well are depleted;

• Costs associated with eliminating consequences of damage to the natural environment, including air, water, soil, and subsoil pollution in the contract territory.

Civil Liability Coverage – Under the insurance contract, the risk of civil liability can be insured:

• For harm caused to the life and health of third parties;

• For damage caused to the property of third parties.

Obligation of the Insured – The Insured must inform the Insurer about the condition of the wells applied for insurance, as well as the period of work during which insurance is being concluded.

Drilling Equipment Coverage – Insurance also applies to equipment specified in the insurance contract:

• Drilling equipment, operational and maintenance equipment for oil and gas wells, derricks, cranes, boilers, drill pipes, tools, spare parts, units, accessories, and other items used for drilling operations;

• Mobile equipment, rolling stock, cement, drilling fluids, chemicals, casing pipes, access roads, drawings, plans, documents, and property in warehouses. Coverage applies only if specifically provided for in the contract.

Equipment and property are insured only within the insurance territory. If moved to another territory, insurance continues only if the Insured notifies the Insurer at least 1 month in advance. The Insurer may adjust premiums based on the changed risk.

Additional Coverage (with extra premium) – Insurance may cover:

• Damage to drilling or other equipment rented, leased, or transferred to the Insured by the customer or other persons, to the extent the Insured is legally or contractually obliged to compensate;

• Necessary and reasonable salvage expenses in the event or threat of an insured event requiring payment of insurance compensation.

Covered Losses – Insurance also covers losses from:

• Unexpected release of oil or gas;

• Sudden formation of craters, gryphons, or sinkholes;

• Raising or lowering masts, crane booms, or derricks;

• Subsidence or retraction of drilling rigs, derricks, or masts into the well;

• Ground transportation within the insurance territory.

Underground Drilling Tools – Considered insured only against losses caused by:

• Unexpected release of oil or gas;

• Sudden formation of craters, gryphons, or sinkholes;

• Fire;

• Explosion.

Definitions –

• Blowout: Sudden, uncontrolled release of drilling fluid from a well, causing oil, gas, or water to flow uncontrolled due to formation pressures exceeding drilling fluid pressure.

• Sudden formation of craters, gryphons, or sinkholes: Bowl-shaped depressions around the wellhead formed due to soil erosion by uncontrolled flow from the well.

Exclusions – Insurance does not cover the costs of extinguishing a fire in a well or drilling field, nor the cost of valuable compounds, foaming agents, or other materials used.