Active jackup rigs slipped slightly in Week 22, 2022 (falling to 379 active units from 383 last week) while floaters continued to hold for the fifth straight week
Dayrates continue to remain high – a consequence of Russia’s war in Ukraine and global post-Covid recovery. As European leaders look to mandate a pivot away from Russian oil in response to the war, Brent crude breached US$120 a barrel on Monday with global supplies tight.
Western buyers looking to replace lost Russian crude supply are making the Middle East the centre of their attention.
In response, Saudi Aramco has embarked on a massive offshore rig contracting spree, doling out 31 new contract awards. The world’s largest oil exporter has awarded 26 new jackup contracts since March and expects to add five more in the next few months, the majority of which are for long-idled or stranded newbuild rigs, with Westwood Global Energy expecting the firm to nearly double its jackup fleet by the end of 2024.
All of the contracts are for multi-year periods ranging from three to five years and with one- or two-year extension options. Dayrates currently sit between US$78,000 and US$98,000 and the contracts contain additional mobilisation fees, ranging from US$15M to as much as US$35M.
All told, Westwood projects Aramco to have 78 jackups under contract by the end of this contracting round and expects the operator will add 10 more units at some point in the near future.
Advanced Energy Systems (ADES) is leading the way among Saudi Aramco’s rig providers, supplying 17 of the 31 rigs to be contracted, with all but one of the rig units having been either purchased or chartered in. Other Aramco contracts went to Arabian Drilling (two), Seadrill (three), COSL (three), Saipem (two), Valaris (two) and Borr Drilling (two).
In the United Arab Emirates (UAE), Abu Dhabi-based ADNOC Drilling recently signed an agreement to purchase the Argent 1, Argent 2, and Argent 3 rigs. All three units are currently stacked in the Bahamas and have not worked since late 2017.
ADNOC also added two premium jackup rigs as it continues its rig expansion programme and aims to scale production up to 5M barrels per day by 2030. The two rigs will enter ADNOC Drilling’s fleet in Q3 2022.
The company said the two Gusto MSC design, cantilever rigs are being acquired from Well Target Five and Well Target Six for an undisclosed sum.
The war in Russia is also hastening the search for new gas fields in Israel, which is renewing natural gas exploration with hopes of exporting that gas to Europe, according to Israel’s energy minister Karine Elharrar.
A new round of tenders for gas exploration off Israel’s Mediterranean coast is expected to begin in Q3 2022. Israel has established a working group with Europe and Egypt, with the focus on exporting gas to Egypt through an expanded pipeline network for liquefication and shipping to Europe. A proposal to connect Israeli gas fields to Europe directly via the proposed Eastmed pipeline is also understood to be on the table.
TPAO, Turkey’s national oil and gas company, has taken delivery of Cobalt Explorer its South Korean-built seventh generation drillship. The Turkish Minister of Energy and Natural Resources, Fatih Dönmez said “After a preparation period of two months at Taşucu Port, our ship will begin its first drilling operations.”
Cobalt Explorer was built by Daewoo Shipbuilding Marine and Engineering (DSME) and is the fourth drillship to be added to TPAO’s fleet.
Vantage Drilling ordered the drillship in 2013 with delivery scheduled for 2015, but the order was cancelled. Northern Drilling later attempted to acquire the vessel for US$350M but the deal fell through in 2019. Vessels Value pegs DSME’s sale price for the drillship at US$180M.
Shell Australia and its joint venture partner SGH Energy have taken a final investment decision (FID) on the Crux natural gas field project which is estimated to cost US$2.5Bn.
Work on the Crux field will begin in 2022 with first production expected in 2027. The field will be operated from Shell’s existing Prelude FLNG facility via a 160-km long pipeline connecting the field to the FLNG. The field is expected to supply up to 550M cubic feet of gas per day to Prelude.
And finally Valaris has made three executive appointments.
Chris Weber will serve as Chief Financial Officer joining in Q3 2022 from LUFKIN Industries. Matt Lyne will take over as Chief Commercial Officer the same period, joining from Seadrill. Davor Vukadin who is currently Valaris’ Associate General Counsel has been promoted to General Counsel. All three will also serve as Senior Vice Presidents.
