Editor's note: This Vessels/Rigs column first appeared in the September/October issue of Offshore magazine. Click here to view the full issue.
By Bruce Beaubouef, Houston
The Middle East jackup market remains “solid,” with NOCs deploying increased capex spending for offshore oil and gas production capacity, according to Evercore ISI’s latest Offshore Rig Market Snapshot.
The report said that competitive pricing and longer-duration contract terms offered in the Middle East and solid demand levels “have spearheaded the current revival in the global jackup market, driving jackup moves to the Middle East since January 2022, which is expected to continue over the next few years.” Between 2022 and 2023, the firm noted that 53 jackups have moved to the Middle East, primarily from Southeast Asia, Mexico, and China.
Yet despite the “massive exodus” of jackups to the Middle East, the region “still demands a further influx of units,” the report said. Out of 53 jackups, 66% and 22% were picked up by Saudi Aramco and ADNOC, respectively, while the remainder were allocated to QatarEnergy, Qatargas, North Oil Company, and other operators.
Overall, contracting activity remains strong for jackups, the report noted, with a total of 10 term contracts announced since August 1st. “The primary driver of jackup demand remains the Middle East, which accounts for 50% of term jackup contracts announced between August and September and a notable 41 out of 73 term contracts year-to-date,” the firm wrote. It also noted that the year-to-date average contract for jackups surpassed 800 days, which implies an increase of 27% year-over-year.
There have been a number of key deals and contract awards in recent months that show the high levels of drilling activity in the region. In June, ADNOC Drilling Company confirmed the award of five 10-year contracts, totaling approximately $2 billion, in support of ADNOC Offshore’s growing drilling operations.
ADNOC Drilling said that the contractual conditions, particularly the duration, were agreed with the client in light of the strength of the offshore jackup market with higher day rates. The contracts supporting drilling operations across five fields in ADNOC’s offshore portfolio are for the charter of five high-specification, premium jackup rigs along with all required manpower and equipment. The rigs will commence activity progressively from the end of 2023.
ADNOC Drilling says that the five rigs have been acquired as part of its fast-tracked rig fleet expansion program, designed to enable the delivery of ADNOC’s accelerated production capacity growth timetable. The new rigs – Salamah, Al Saadiyat, Al Sila, Ramhan, and Yas – will be among the most capable, high-specification rigs working in the Arabian Gulf, ADNOC says. Each of the five rigs will be equipped with a battery energy storage system to increase efficiency and reduce emissions. The hybrid power technology system will store energy in its batteries for use when there is a need for continuous power, or to provide instant extra power when there is an increase in demand.
Meanwhile, the Saudi Aramco-Valaris joint venture ARO Drilling has ordered jackups to be built by Lamprell and International Maritime Industries (IMI) as part of a 20-rig newbuild program over the next ten years. Back in 2017, it was disclosed that IMI, a joint venture between Saudi Aramco, Lamprell, Bahri and Hyundai Heavy Industries, would build 20 rigs over the next ten years for ARO Drilling while a new rig design was developed in collaboration with GustoMSC and Lamprell. This made ARO Drilling the first company to take delivery of the LJ43 rigs designed specifically for the regional operating conditions and built at the IMI Maritime Yard at Ras Al-Khair. The two first rigs, ARO 2005 and ARO 2006, will be delivered later this year.
Elsewhere, Neptune Energy reports that it has drilled its first well offshore Egypt. The ADES-operated jackup ADM-8 has spud the Yakoot exploration well, Neptune Energy’s first as operator in the North West El Amal concession in the southern Gulf of Suez offshore Egypt. Targeted final depth is about 3,600 m. Neptune acquired 3D seismic data in 2020 after securing the exploration license in February 2019. The North West El Amal concession covers a 365-sq-km area 42 km southeast of Ras Gharib and 105 km northwest of Hurghada.
Offshore Qatar, Seadrill is in talks to sell the West Castor, West Telesto and West Tucana jackups. All operate under bareboat charters to Gulfdrill LLC, a 50:50 joint venture between the company and Gulf Drilling International. Any transaction remains subject to further due diligence and the negotiation and execution of definitive agreements, Seadrill said.
