Practical protocol for handling tricky and expensive FPSO claims.

(From Lloyds List)

Byline: Bruce McMichael

OPERATORS now have over 20 years experience of handling floating production storage and offloading vessels in stormy relationships in yards and open waters.

Many of the legal and insurance problems in the FPSO market have sprung from poor initial contract negotiations, as the speed of the technology has often outstripped understanding of the contractual and legal issues.

FPSO projects are often led by the shipbuilding contractor who has a different approach to the topsides sub-contractor, notes Peter Cassidy of the London-based law group Masons.

Historically the most popular contracting strategy used to bring a field into production is the engineering, procurement, installation and commissioning (EPIC) model, where every activity necessary to bring an offshore facility to production is combined under one contract, notes Cassidy.

'EPIC contracts, with their 'one-stop-shop' approach, are often seen by operators as a means of passing the risk and responsibility of design and construction on to the shipbuilding contractor who then seeks to pass the risk to, among others, the topsides sub-contractor. The key benefits of an EPIC contract are the savings in time due to the fact that detailed design is undertaken concurrently with construction and the risk of any engineering changes to the design is transferred to the contractor.'