Offshore staff
LONDON — Westwood’s latest Asia-Pacific offshore drilling insight reports that 14 rigs in the jackup, drillship and tender-assist categories have exited the region over the past year, while one more semisub has been operating.
Although the exodus of jackups to the Middle East has slowed, in Singapore only six jackups currently remain (Admarine 687, Admarine 689, Arabdrill 150, Tivar, Heidrun and Huldra), all of which are bound for new assignments in the Persian Gulf.
According to senior rig analyst Paul Ezekiel, although prospects for rig construction often seem to perk up when availability becomes limited, several factors are holding the market back compared with the previous industry upturn.
One is financing, with banks and financial institutions distancing themselves from fossil fuel-related investments. Another is construction costs, with the anticipated return on investment not what it used to be; rig builders would want favorable payment terms to avoid being saddled with huge debts and stranded assets in the event of another downturn.
As of January, Westwood tracked 19 jackups, four semis, five drillships and four tender-assist rigs available in Chinese shipyards to interested parties.
The jackup segment in Asia-Pacific is now close to being sold out at 97%, while drillships are said to be fully booked. Tender-assist use is 5% lower than a year ago, while take-up of semis in the region is down due to increased supply and lower demand.
Overall, day rates in the region have been rising, with some jackup deals fixed at $67,000 per day more than their previous or current arrangements. One drillship in the region is commanding $240,000 per day more than its prior assignment.
The same applies to semis, with some recent fixtures up to $113,000 per day higher than for their previous contracts.
But contract award activity is lower, with only 13 rig contract awards between January and May this year compared with the same period in 2022.
Operators are looking to lock in rigs on longer deals before prices rise further, Ezekiel suggested, while NOCs are known for setting pricing limits for different categories of rigs, adjusted periodically. This means that new contracts often cannot be awarded because the rate is higher than anticipated.
Westwood subsidiary RigLogix lists 21 requirements in Southeast Asia or Australia already at a tender stage, totaling more than 14 years of potential demand. Of this, 73% is for jackup campaigns while the remaining tenders are for semis.
Petronas Carigali Indonesia and Pertamina OSES & ONWJ’s are jointly tendering for a jackup. VietSovPetro is seeking a jackup for an eight-month program offshore Vietnam, scheduled to start in the third quarter, while Petronas Carigali Malaysia is on the lookout for a jackup for P&A operations in the third or fourth quarter.
It is also assessing proposals for an HP/HT floater program, due to start in the fourth quarter.
05.25.2023
