“Insurance costs are going to go up exponentially around the world. We anticipate that our insurance premium next year will rise exponentially,” ONGC CMD R S Sharma said.

ONGC had brought down the insurance premium for its offshore assets by around 20 per cent this fiscal in spite of an 8 per cent increase in their valuation, said Sharma while speaking with media persons on the sidelines of conference organised by CII.

The company paid US $27.05 million premium for 2010-11, down over US $7 million from US $34.19 million paid in 2009-10. The value of these assets was pegged at US $26.50 billion, up from about US $25 billion in 2009-10. “I have been saying that this spill is going to be a game changer,” Sharma said.

ONGC insured the offshore assets prior to the spill in the Gulf of Mexico, he said, adding post spill the premium would have gone up by  three times. The US ordered halt in deep-water drilling and extended a ban on new permits after the oil spill caused by  20 April fire aboard the BP Plc-leased Deepwater Horizon rig in the Gulf.  The spill has polluted at least 140 miles of shoreline.

Due to Eurozone crisis we expect prices of crude to remain weak but in long run I expect prices to rise, Sharma said while replying to question.

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