Loss of production income (LOPI)

A plant's business interruption is measured in margin: sales minus variable costs. In exploration and production the logic differs, because the barrel not produced is not necessarily lost. It stays in the ground, and will be produced later if the field lasts long enough. LOPI, loss of production income, takes this into account. It repays the income of barrels not produced because of the damage, valued at the selling price of the moment less avoided costs, and it tries to measure what is truly lost, not what is deferred. The dispute turns on this: an operator says its field has a production ceiling and every day of stoppage is a day lost; the insurer answers that the barrel will be produced at end of life and that there was a shift, not a loss. Policy drafting tries to settle it with an indemnity period, a deductible in days (often thirty to sixty) and a reference price clause. LOPI is bought on high-margin fields, and matters most on platforms where a single export point (pipeline, FPSO) blocks everything. It therefore depends on the reliability of the export route, a dependency close to contingent business interruption. Not to be confused with anticipated loss of profit (ALOP) on construction projects, which covers a delay in start-up.