The consequences of subsea crude pipeline failure drastically affect the continuity of oil supply and the ability of operating companies to meet market demand. Moreover, it reduces clients’ confidence and reliance on operating companies. There are mainly two types of failures that severely affect the integrity and operability of a pipeline. These are the leakage caused by gradual thinning of the pipeline due to corrosion and the leakage caused by a rupture pressure. The first form of failure results in a constant slow leakage that go over time without being noticed. While the second form of failure takes place without warning which makes the restoration effort extremely difficult and time consuming. Both forms of failure result in delayed production, environmental damage, legal claims as well as financial losses that operating companies could incur. Moreover, leaked oil products adversely impact other industries which bring these industries into a halt. Such industries may include fishery, maritime transportation, and tourism industries. This paper presents a method for predicting the financial losses that a company could incur in the event a corroded pipeline undergoes the abovementioned failures. Basically, this method can be used as a standard estimating tool for predicting the financial losses if such events occur.

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